Outsourcing has become the code of modern business. It divides labors into specialized companies, which later can provide professional services with the least amount of budget. Compared to upgrading your facilities and equipment, outsourcing is much more beneficial.
Here, we’ll discuss specifically warehousing and fulfillment service as it is vital for any companies who want to expand their reach.
Helps You to Grow New Markets
An expanding business is followed by infrastructure and equipment upgrades. Needless to mention, it will also require new employees, management systems, etc. When those factors are calculated and transformed into costs, the number will be scary. Luckily, a fulfillment company can save you from that. Even when your decision of expanding your market reach turns out to be a mistake later, you won’t end up with wasted investment and employment termination paperwork. Therefore, hiring a fulfillment service when you want to expand your business is the most affordable and risk-free strategy.
Allow Seasonal and Sales Fluctuation Flexibility
While no one should complain about selling more than anticipated, there are headaches associated with unforeseen surges in sales and seasonal rushes. To adequately respond to higher than normal ordering, additional workers are hired, more capital equipment is purchased, possibly even extra warehouse space is leased to ensure timely and proper fulfillment. The problem is, what happens when sales inevitably trend down to “normal” levels, and you have these extra workers, equipment, and square footage you no longer need?
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.
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.
Focus on Your Core Competencies
The logistics of order fulfillment can be complex. If it’s not your area of expertise, or if you find you are unable to hire the right people for the job, an order fulfillment services company may be just the thing. You worry about making your product and making it better, and hire someone else to do all the stacking and packing that they can do better than you.