Order fulfillment is actually an outsourcing option. This outsourcing option is particularly attractive for merchants with only an online store that lacks warehouse and distribution facilities.
Order fulfillment centers make inventory management much easier and allow store owners more time to focus on other areas of their business. Order fulfillment centers enable ecommerce merchants to outsource warehousing and shipping. This relieves online business of the necessary physical space to store all products, which is beneficial for merchants without the capacity to directly manage inventory. Sellers send merchandise to the fulfillment center, and the outsourced provider ships it to customers for them.
There are 3 major benefits you can get from a professional order fulfillment center:
- Lower Shipping Costs. No one likes to pay for shipping, so it’s a great marketing tool to offer free shipping. However, no shipper is going to send your goods to customers for free. So how do companies afford to offer free shipping? Warehouses and distribution facilities located strategically around the country significantly lower shipping costs to the point where it becomes economically feasible to offer customers free shipping. But if you’re not big enough to maintain facilities throughout the country, what do you do? Contract with an order fulfillment company that does have a regional/national/international infrastructure in place and take advantage of bulk delivery discounts that most order fulfillment companies can offer because of that scope.
- Grow New Markets. Looking to expand, but holding back because you lack the infrastructure to ship overseas or even west of the Mississippi? An order fulfillment services company can extend your reach without undue capital investment. And should dipping your toes in some new market waters prove not worth getting completely soaked, you haven’t spent the same amount of money and resources you would have if you went about it alone. Your order fulfillment services partner supplies the infrastructure and scales it over time to grow as your business grows, without your commitment to high and potentially risky new overhead.
- Eliminate Fixed Costs. The cost of carrying inventory rises when sales are flat or in decline, but you still pay the same rent and utilities for warehouse space. By contracting with an order fulfillment services company, your fixed cost is now a variable cost. When business is slow, your order fulfillment costs go down. Of course, they also go up when business improves, but that’s a price well worth paying and not one you need to maintain when it’s not necessary.