6 Signs It's Time to Start Outsourcing Your Fulfillment | Sherpack

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When to Start Outsourcing Your Fulfillment

6 min read
inside of fulfillment center

Order fulfillment can be vital for a company’s growth – at the right place and time. But how does a growing business know when it’s time to start arranging for third-party fulfillment services?

For many small businesses, keeping shipping and other order fulfillment tasks in-house is very efficient. They can easily control costs, handle any unique orders, and rapidly change packaging or shipping details if necessary. But at some point, the business grows large enough that managing orders in-house like this is no longer efficient or feasible. The key is understanding when that point is!

6 Signs It’s Time to Start Outsourcing E-Commerce Fulfillment

At Sherpack, we’re happy to arrange a consultation to discuss your company’s unique position and what fulfillment solutions could be useful. But you may also want to take a look at these key signs that it may be time to outsource shipping needs.

1. Your Shipping Costs Have Grown Too High

This part is common sense: If your shipping costs are too high? It’s time to look for a less expensive outsourcing option, right? The problem is knowing when your business has reached that point. Generally, if a business is spending a few thousand dollars on shipping costs annually, they should start looking at fulfillment services. Fulfillment companies can offer savings or bulk discounts for a certain number of orders, which can allow businesses to save more money compared to their in-house model. If your annual shipping expenses have risen to several thousand dollars, it’s time to consider a third-party solution.

2. Your Business Now Needs Significant Storage Space

Even businesses that are well prepared for their growth and new orders often run into an associated problem: Lack of storage space. Expanding production or inventory means that you also need to expand storage, but this can be a challenge for a smaller business. Storage can be expensive, and it’s not a very flexible expense.

If your company is dealing with inventory that requires extra space and all your storage options look painful to your bottom line, it might be time to look at fulfillment services as a solution.

3. Customer Service is Getting Overwhelming

Are you getting a lot of customer service calls about shipping, packaging, or order fulfillment in general? Is your team struggling to deal with these calls in a timely manner, or find ways to fix the issues that customers are bringing up? This points to two key growth issues that fulfillment services can help with:

  1. Orders have grown so much that the company is making more mistakes. This is a common point that small businesses reach when they see sudden order growth. They had enough resources and labor to deal with previous order numbers, but with the new demand things are starting to get sloppy…and customers are starting to get mad. Nothing turns a customer away from a brand like a poor shipping experience, but fulfillment services can offer much greater accuracy than in-house teams can provide.
  2. Orders have grown to a point where customer service needs are naturally more common, but difficult to fulfill for small companies. In this case, it’s important to note that fulfillment companies offer 24/7 support, quick returns or exchanges, and refunds – all tasks that the business now doesn’t need to worry about. This also includes services that a company may not be able to offer solo, like more free shipping, two-day shipping options, and other things that online customers now frequently expect when they shop.

4. Your Business is Ready to Upgrade to Better Item Tracking and Inventory Management

This step is particularly common among small companies that are ready to really grow with an online store, or companies that were e-commerce to begin with and are ready to upgrade. These companies want the latest in item tracking and inventory management technology, but may not be able to easily implement it themselves. At this point, fulfillment services like Sherpack can step in and say, “Sure, we can integrate our services with your website and make sure both you and your customers have access to immediate shipping data – along with security, payment processing, and anything else you may need covered.”

This is a boon to companies with big e-commerce goals! It can also help fix certain problems you may be noticing, such as a high cart abandonment rate (which shows at least some customers are dissatisfied with some aspect of your shipping offering). Similarly, fulfillment services can also make customized shipping or kit shipping options much easier.

5. You’re Starting to Ship to New Regions or Ship Internationally

Shipping to new areas can not only greatly increase shipping expenses, but it can also add requirements for new shipping regulations and packaging needs. Companies expanding into new regions or offering international shipping are often ill-equipped to quickly meet these new requirements. Such a shipping expansion is a great sign that you should take a look at fulfillment options, which can easily handle shipping distances and regulations so that you don’t have to.

6. Your Experience and Competencies are Better Used Elsewhere

Ultimately, one thing all these signs have in common is that the business can better spend its time elsewhere. A small business needs to focus on competencies like selling, partnerships, product features, and brand management. At a certain point, those competencies should no longer include the shipping services that fulfillment companies can provide. If you don’t have anyone that can handle your current shipping needs, look for an outsourcing solution before you consider hiring a new team.