Everyone can be an entrepreneur these days, working and shipping products from a home office, garage, or really anywhere you can dream of. One day, you might wake up and realize you can’t run your business by yourself anymore. This may mean hiring other team members, moving to an office or small commercial space, and even looking at different fulfillment options. But how do you know when your company is ready for the next step?
We can’t tell you when to hire new team members or move to a new space, but we can help you learn more about your fulfillment options!
Here are a few signs your business is ready for 3PL outsourcing:
- You have outgrown your warehouse.
- You spend too much time worrying about fulfillment and fulfillment strategy.
- Your product went viral.
- You’re struggling to compete in your market.
- Your need for reverse logistics is increasing.
The Trade-Offs between 3PL and In-House Fulfillment
There are a variety of different fulfillment options for your growing business. So what are the benefits of outsourcing to a 3PL versus staying with your current in-house fulfillment strategy?
3PL Benefits
- Convenience - You don’t need to invest in a large warehouse space (or multiple), hire employees, or worry about negotiating shipping rates. The right 3PL can handle all of this for you.
- Partners - 3PLs are already partners with experts in the logistics industry. They likely already have relationships with retailers, shipping companies, integration softwares, and anyone else you may need to work with.
- Efficiency - 3PLs pick, pack, and ship products all day every day. They know how to get your products to consumers in the most efficient and effective way possible. Some 3PLs even have multiple warehouses to get your products to consumers quicker.
In–House Benefits
- Control - When you own your fulfillment strategy, you have full control over inventory and logistics operations. You understand your business better than anyone else, and by handling your own orders, you have the freedom to make every decision.
- Communication & Problem Solving - It can be much easier to communicate and solve problems when you are dealing with internal team members. You can make small (or large) tweaks faster and easier when you don’t have to deal with a third-party.
- Customized Experience - You can create a more personal touch when working with customers since you won’t have to pay extra fees for special packaging or customization. You have the flexibility to tailor each purchasing experience to the unique consumer.
You will need to decide if your growing company wants to prioritize convenience or autonomy. If you have strong communication skills and want to hand over the majority of fulfillment responsibilities, working with a 3PL is the way to go. But if you aren’t willing to give up any control and have the bandwidth, you may be better off staying with in-house fulfillment.
There is a reason that about 90% of Fortune 500 companies use 3PLs. 3PLs are experts at what they do and want to build a partnership with eCommerce brands. As your business grows, it tends to make the most sense to outsource fulfillment to a 3PL.
How can I transition to a 3PL without disrupting day-to-day business operations?
So you decided to leave in-house fulfillment behind. Here are a few tips to make the move to a 3PL without having to shut your business down during the transition.
Pick a reliable 3PL provider that matches your growth, technology, and distribution needs.
To check if they are a good fit, ask these questions to start:
- Are they big enough to fulfill all of your needs, while remaining small enough to treat you like a partner?
- Do they offer customization?
- Do they support all of your channels?
- Do their softwares integrate with yours?
- Did they get a good referral from a friend or trusted colleague?
Get your inventory to them
- You can either send all of the inventory that you currently have, or send them newly manufactured products. Be careful about sending the inventory if you don’t foresee it selling, moving products can get very expensive.
Decide how to split inventory
- You can slowly move inventory in case of emergencies or other problems that could arise while your inventory is being received.
- If some inventory sells much slower than others, you can store it by yourself to avoid unnecessary storage fees.
- It is up to you how much inventory you want to send to your 3PL. If your 3PL allows it, you can send a small amount at first and send more as you get a feel for how the partnership works.
At the end of the day, outsourcing fulfillment to a 3PL should be built on the basis of a strong and trustworthy partnership. This means collaborating, communicating, and adapting as needed. Leaving in-house fulfillment for a 3PL will require flexibility, but is definitely worth it so you have more time to focus on the core competencies of your business.
Only you can know when your business is ready to outsource fulfillment. If you're feeling overwhelmed or questioning whether to outsource fulfillment, it might be a good time to contact a 3PL to explore your options.
Reach out to Brandfox to learn more about outsourcing your fulfillment.