Drea Knufken
This is a guest post by Shipwire’s Nate Gilmore.
A common growth strategy among SMBs (small and medium-sized businesses) and start-ups today is outsourcing the non-core parts of their businesses so they can focus on selling and marketing their products.
Thus, it shouldn’t be a surprise that many small to medium sized e-tailers are beginning to leave the warehousing and shipping of their products to “the specialists.” Moreover, as I’ll discuss below, e-tailers who are thinking of outsourcing storage and fulfillment will reap particularly big benefits as we near the holiday shopping season.
Boxing Late into the Night
Many e-tailers typically begin by selling a product online on eBay, Amazon or through their own web store. However, a seemingly straight-forward business can quickly present a number of big headaches when it comes to actually packaging up orders and getting them to customers in a timely fashion.
In terms of fulfillment, do you really want to be boxing up orders late into the night? And, have to find the time to get to the post office each day to ensure that your customers get their packages on time?
With growth, do you really want to plow cash into a warehouse and warehouse employees instead of sales and marketing? What about having to deal with the foreign customs officials who are prone to holding your packages for days on end for reasons of “security”?
Then there’s issue of actually storing your inventory: Most entrepreneurs quickly learn that keeping product in one’s house or apartment does not allow for easy scaling. Of course, managing a warehouse presents a whole slew of other challenges. It’s precisely because of all of these issues that e-tailers are increasingly turning to companies that can store, “pick, pack and ship” their merchandise on their behalf.
Why Outsourcing Works
An outsourced order fulfillment company can be particularly valuable as we get closer to the holiday shopping season. The benefits I’ve noted below are relevant year-round but are especially acute during the peak buying season:
“Calling Backup”: Consider that you can plug into order fulfillment services on-demand. With no contracts or volume commitments, you can leverage an outsourced company as backup to your primary in house fulfillment. Get behind shipping your core products, just route the orders to your outsourced fulfillment provider and let them back you up.
Save hassle and cash: With an experienced outsource provider, you won’t have to pay for extra warehouse space or hire additional workers. Hiring staff for a short period of time is not only time consuming, it’s inefficient as well. And nobody needs to tell you how much extra warehouse space costs to lease and occupy for a short amount of time.
Save money on shipping: Warehousing your goods closer to your buyers, is another way to cut shipping costs. Your customers also get their goods faster and they pay less in shipping costs because the goods don’t have to be shipped across the country or internationally.
Make sure your fulfillment provider has warehouses in multiple locations. If you sell overseas, ask your fulfillment provider if they have a warehouse in your country of choice.
Invest in your core business: Saving money on fulfillment means you’ll have more money to invest in inventory, sales and marketing during your peak season.
Delight your buyers: As an online retailer you know how important it is to satisfy your customers. You also know how hectic your business can get around your peak selling season.
However, some online retailers just don’t understand the importance of satisfactory order fulfillment. They aren’t realistic about the high level of service their customers expect when it comes to having their orders filled.
This is especially true if you acquire business though major marketplaces like eBay™ or Amazon™. If you fail to ship products on time, you will amass negative feedback and potentially get kicked off these marketplaces. Having a fulfillment service as a primary shipper or a back-up shipper could protect your business.
Perhaps consider that your peak season is a perfect time to leverage a partner to handle some of your high volume shipping.
Nate Gilmore’s official bio:
Nate is the V.P of Marketing and Biz Dev for Shipwire, an e-commerce product fulfillment service. Previously, Nate was at Concentric, acquired by XO Communications, where he ran product management, sales and marketing. Over his six year career with Concentric, he developed dozens of new business channels, by initiating new products for small- and mid- size businesses, developing partner programs for those products, and working with web developers and systems integrators to provide ongoing support of those products. Nate has also held various legal positions in intellectual property and business law. He holds a B.A. in History, and a J.D., from Santa Clara University.
