Reasons to Outsource Inventory to Third-Party Warehousing
Are you also worried about spending most of your time on order fulfillment for your business? Does the presence of warehouses and online fulfillment impact how quickly your products get to your customers?
High shipping costs are the main reason why buyers abandon their shopping carts, and 66% of buyers want free shipping. At the same time, consumers also want fast delivery. More than 90% of American consumers use two to three days as a benchmark. Research shows that 39% of online merchants receive better reviews through fast shipping, and 59% of merchants say that a two-day shipping guarantee helps bring them repeat customers. Improving your shipping process is important to customer satisfaction, it can effectively improve the customer's purchasing experience and build trust in your brand.
Outsourcing inventory to third-party warehousing can provide businesses with several advantages.
12 reasons why choose to outsource inventory management to third-party warehousing
Reduce management costs
Eliminates the need for companies to invest in warehouse infrastructure, maintenance and labor. This can significantly reduce operating costs. Third-party warehouses often serve multiple customers, allowing them to benefit from economies of scale. This means the cost per unit of storage or distribution may be lower compared to managing an in-house warehouse.
Reduce operating and transportation costs
Most third-party delivery companies have warehouses across the country, and even some overseas, and can offer better shipping prices. When you choose a fulfillment provider, you can expect to save 15% to 35% on shipping costs. Affordable and fast shipping not only increases conversion rates, but also increases average order value.
Ability to focus on core competencies
It enables businesses to focus on their core competencies while leaving logistics and inventory management to the experts, ensuring efficient and optimized operations.
Customized value-added services
When it comes to DIY order fulfillment, there's a lot of customization that needs to be done after a customer places an order. Working with a third-party outsourcing partner gives you access to a team of industry experts who can deliver better, faster, and at scale. These customized value-added packaged services.
Third-party warehousing provides the flexibility to scale operations up or down based on business needs. This is especially beneficial for seasonal businesses or those experiencing rapid growth.
Reduce risk exposure
Inventory management comes with various risks, such as theft, damage or obsolescence. Third-party warehouses have the ability to implement security measures and handle risks, transferring part of the risk burden for enterprises.
Make the returns process as smooth as possible and customized to your unique needs. Your customers can send returned items back to the fulfillment center, and you have complete control over whether the inventory is donated, resold for resale, or discarded.
Technology and Innovation
Third-party warehouses often invest in advanced technology for inventory management, order processing, and tracking. Businesses can take advantage of these technologies without making large upfront investments. Having advanced inventory management software eliminates human error and allows you to manage inventory levels from anywhere.
A 3PL fulfillment company with the help of an inventory management system enables the 3PL to quickly store, retrieve and load orders for shipment. You want to be sure that their system will work efficiently for you and that you will have real-time knowledge that your order will reach the customer on time. Additionally, a good inventory management system will allow the 3PL to update you with the latest information about your fulfillment orders.
For businesses engaged in international trade, third-party warehouses with global reach can provide distribution services in multiple regions, promoting faster and more cost-effective international transportation.
Shorten delivery time
One of the main reasons for outsourcing is to save time, and third-party warehouses are often strategically located to reduce shipping time and costs. This speeds up delivery to customers, thereby increasing overall customer satisfaction.
Third-party warehousing service centers generally have multiple warehouses across the country, which will increase shipping speeds. Outsourced fulfillment can allow you to provide faster delivery by placing inventory closer to buyers.
Share compliance expertise
Third-party warehouses often have expertise in meeting complex regulatory requirements related to shipping, handling, and storage. This is particularly important for businesses that deal with products that are subject to specific regulations.
Outsourcing to a third-party warehouse allows for faster, cheaper shipping, accurate delivery information, global coverage, and more time spent on marketing and sales leading to more, happier customers.
By outsourcing fulfillment services, you can solve the problem of a lack of in-house automation, quality control checkpoints, and scanning capabilities that can spell disaster for accurate inventory counting and tracking of items that have been shipped, delivered, damaged, or even returned.
Adapt to seasonal and fluctuating needs
For businesses with fluctuating or seasonal demand, third-party warehouses provide the flexibility to scale operations accordingly and avoid the need to maintain excess capacity during the off-season.
Third-party logistics companies typically charge fees for picking up, packaging, shipping, and storing goods. Shopv offers 1 month of free storage, so you may not even have to pay for storage.
Why Choose Outsourcing for Fulfillment Operations?
Picture a scenario where returned packages are on the rise, failing to meet customer expectations. Dealing with returns within your inventory management system and promptly resending orders can be a time-consuming challenge. The more returns, the greater the strain on your warehouse. A fulfillment partner steps in, alleviating this pressure and ensuring swift corrective action on returned orders.
And what about the strain on your warehouse team when order quantities exceed capacity? It's not just your warehouse that's in distress; your employees are fatigued from keeping up with excessive order volumes. The cost-effective alternative is to hire a third-party fulfillment company, bypassing the need to expand your team.
If managing inventory levels is consuming more of your time than strategizing the next steps for your business, the signal is clear—it's time for external expertise.
Key Considerations When Choosing a 3PL Fulfillment Provider
The goal of hiring a 3PL is to simplify your business operations. Understanding their services and post-hiring expectations is crucial in determining if they are the right business partner. Essential services like cross-docking play a pivotal role, and reputation is equally important. Before proceeding with interviews, schedule a visit to their warehouse facilities. Witnessing firsthand how a 3PL operates can be eye-opening. Experienced 3PL providers often evolve into reliable partners.
The Sustainability Impact of Outsourcing Fulfillment
In a world where sustainability influences consumer choices, outsourcing fulfillment emerges as a champion of green practices. By optimizing the supply chain, reducing warehousing needs, and adopting eco-friendly packaging and transportation methods, businesses can minimize their environmental impact. Choosing green fulfillment partners not only contributes to the environment but also attracts the burgeoning market of eco-conscious consumers.
Outsourcing fulfillment is a strategic decision that goes beyond cost-cutting—it's about reshaping your business trajectory. More time for core activities, reduced costs, faster delivery, expanded reach, streamlined operations, and heightened customer satisfaction are the promises of outsourcing fulfillment. Ready to unlock your business's full potential? Dive deeper into the world of strategic fulfillment solutions. Discover how outsourcing can transform your e-commerce operations, making them more efficient, profitable, and sustainable.