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1. What is outsourcing fulfillment?

8 advantages of outsourcing fulfillment for your online business

In the dynamic world of ecommerce, businesses continually look for strategies that streamline their operations, boost efficiency, and ultimately increase profitability. One such strategic decision that can substantially contribute to these objectives is outsourcing fulfillment. Essentially, this entails delegating various tasks typically related to handling fulfillment in-house to external specialists or partners. This comprehensive guide offers an extensive look at outsourcing fulfillment, discussing its fundamental aspects, the numerous benefits it affords businesses, diverse approaches to outsourcing, and useful tips for choosing the most suitable outsourcing partner.

Main takeaways from this article:

  • The strategic decision to outsource fulfillment can substantially optimize your ecommerce business operations and increase profitability. By delegating tasks such as warehousing, picking and packing orders, shipping, and inventory management, you're free to focus on core business activities like product development, marketing, and customer service.

  • Various methods of outsourcing exist, including print on demand services, dropshipping, and third-party logistics (3PL) providers. Each offers distinct advantages, but print on demand services often stand out for their flexibility and cost-effectiveness, making them particularly suitable for startups and small businesses.

  • Key benefits of outsourcing fulfillment include more time for core activities, reduced shipping and operational costs, faster delivery times, expanded business reach, streamlined operations, and improved customer satisfaction. However, choosing the right fulfillment partner requires careful consideration of their services, operational capabilities, customer service, and adaptability.

What is outsourcing fulfillment?

02_What is outsourcing fulfillment

At its core, outsourcing fulfillment involves handing over tasks related to order fulfillment to a third-party company. These responsibilities might encompass warehousing, picking and packing orders, shipping and handling returns, and managing inventory.

Businesses often decide to outsource fulfillment when they recognize that while these tasks are crucial to their operations, they can be time-consuming and distract from core business activities. These activities might include product development, marketing, or customer service, which are paramount to business growth and profitability.

Methods for outsourcing fulfillment

03_Methods for outsourcing fulfillment

There are different methods for outsourcing fulfillment, each catering to specific needs and business models. These include print on demand services, dropshipping, and traditional third-party logistics (3PL) providers. Here's a snapshot of each fulfillment services provider:

  • Print on demand services: Businesses using this model outsource their fulfillment to companies like Gelato. These providers print, pack, and ship products as orders come in, meaning you can say goodbye to inventory management.

  • Dropshipping: Ecommerce businesses often outsource their fulfillment via dropshipping. Suppliers in dropshipping handle the inventory and ship products directly to customers when an order is placed, giving the ecommerce store more time to focus on marketing and customer service.

  • Third-party logistics (3PL) providers: Many businesses turn to 3PL services like FedEx Supply Chain or DHL Supply Chain for their outsourcing needs. These companies take care of warehousing, order fulfillment, and shipping, often providing global logistics support to help businesses reach international customers more effectively.

Eight benefits of outsourcing fulfillment

04_Eight benefits of outsourcing fulfillment

Outsourcing your fulfillment process offers a host of benefits, turning it into a game-changer for ecommerce businesses. Here are eight great reasons why you'll love it:

1. More time for what matters

The primary benefit of outsourcing order fulfillment is that it affords you more time to concentrate on key business operations, such as marketing, sales, and product development. As your business grows and orders start to accumulate from a range of sales channels, managing fulfillment in-house can turn into an overwhelming challenge. By allowing fulfillment experts to manage this aspect of your business, you are better able to focus on strategic actions to scale your business.

2. Save money on shipping costs

Outsourcing fulfillment can bring about significant cost savings, especially with regard to shipping. A fulfillment partner with an expansive network of warehouses guarantees your goods are stored closer to your customers, which translates to decreased shipping costs. Additionally, bulk shipping discounts that large fulfillment companies often receive can further contribute to cost savings.

3. Fast track delivery times

With warehouses strategically located across different regions, you can dramatically expedite delivery times. This meets and often exceeds customer expectations for quick delivery and allows you to compete with larger retail chains in terms of delivery speed.

4. Clear, accurate shipping information

In the ecommerce industry, it's crucial to provide consistent, transparent shipping information. A competent fulfillment partner ensures the accuracy of shipping details and guarantees timely deliveries, both of which significantly enhance the customer experience and foster trust in your brand.

5. Reduce operating costs

A substantial benefit of outsourcing fulfillment is the reduction in operational expenses. Traditional in-house fulfillment necessitates investment in storage space, shipping and packaging materials, and hiring personnel. By outsourcing, these overhead costs can be significantly reduced or eliminated. Moreover, when combined with print on demand (POD), you only pay for what you sell, thereby minimizing inventory costs.

6. Expand your reach

An efficient fulfillment partner can propel your business growth, both nationally and globally. Navigating the complexities of shipping rates and delivery times, particularly for international orders, becomes considerably more manageable. This enables you to tap into new markets and reach a broader customer base with relative ease.

7. Streamline your operations

Fulfillment partners leverage advanced technology to optimize your back-office operations. They provide valuable insights into inventory management, item tracking, security, shipping and handling, carrier selection, and payment processing. These data-driven insights can guide decision-making processes and ensure that your operations run smoothly and efficiently.

8. Enhance customer satisfaction

Outsourcing fulfillment leads to faster, more cost-effective shipping, accurate delivery information, and a broader reach, all of which greatly enhance the customer experience. Satisfied customers are likely to become repeat customers, and they often serve as brand ambassadors, recommending your business to others. Enhancing customer satisfaction is, after all, the ultimate goal of any business, and outsourcing fulfillment can play a significant role in achieving this objective.

How to outsource your order fulfillment

05_How to choose the right fulfillment provider

Contemplating outsourcing your order fulfillment? It's a significant move that could propel your ecommerce business to the next level. However, like any substantial decision, it requires careful planning and well-informed decision-making. So, let's break it down into manageable, actionable steps:

1. Understand your business needs

Your journey begins with an in-depth understanding of your business specifications - these might include your current and projected order volumes, the nature and diversity of products you're selling, your primary target market, and any particular logistics requirements your business might have. Thoroughly understanding these aspects will aid you in identifying the specific services you require from a fulfillment partner and ensure the partnership aligns with your business objectives.

2. Find potential partners

Embark on a research expedition to discover potential fulfillment providers. Consider their reputation within the industry - just as you would read reviews before purchasing a new product. In addition, evaluate their range of services, operational capabilities, technology integration, ability to scale up to meet your business's growth, and, importantly, their pricing structure. Your goal should be to create a shortlist of providers that meet your primary needs and are within your budget.

3. Check out their customer service

The optimal partner for your business needs to thoroughly understand your business and its needs. Equally, they need to demonstrate top-tier customer service, as they'll play a significant role in shaping your customers' shopping experiences. Gauge their responsiveness, attentiveness, and problem-solving capabilities - these are vital attributes that can significantly impact your business's reputation.

4. Look for adaptability

Each business has its unique character and will evolve over time. Consequently, you need to choose a partner that offers flexible, customizable solutions that can be tailored to fit your business's specific needs and potential growth. A rigid, one-size-fits-all approach may not be suitable for the unique demands of your business.

5. Understand the fine print

Once you're on the brink of finalizing the partnership, it's essential to pore over the service agreement's terms and conditions. Be clear about costs, responsibilities, termination provisions, and dispute resolution procedures. If necessary, consult with a legal professional to ensure you understand all contractual obligations.

6. Test before you go all in

Always remember, it's wise to 'try before you buy'! Implement a pilot test before transitioning all your fulfillment operations to the new system. During this test phase, you can identify potential hurdles, measure performance, and adjust your processes accordingly. This will give you a realistic view of what to expect and help you mitigate any risks before going all in.

How to choose the right fulfillment provider

Finding the right fulfillment provider for your ecommerce business is a pivotal decision. With a myriad of options out there, understanding what each brings to the table will guide you to the perfect fit. But here's a little secret: Print on demand often stands out as a champion in the fulfillment arena. Here's why:

Print on demand providers

These providers are your dynamic teammates, ready to swing into action with flexibility at their core. They produce items as needed, as and when orders roll in. This approach means there's no need for you to manage or store stock.

The true magic of print on demand providers is their close partnership with fulfillment centers. These centers take over the responsibility of packing and shipping, leaving you to concentrate on product design and marketing. It's a neatly tied package: reduced overhead costs, less inventory risks, and more time for you to grow your business creatively.

For startups and small businesses looking to make a mark without excessive capital investment, print on demand providers are your golden ticket.

Dropshipping suppliers

While dropshipping suppliers offer a hands-off approach to physical stock and handle direct shipping to customers, they don't offer the same level of control and flexibility that print on demand providers do. And remember, in dropshipping, your business relies heavily on a third party's stock availability, which can sometimes be unpredictable.

Third-party logistics companies (3PLs)

A third-party logistics company offers comprehensive operation, warehousing, and transportation services. While they provide a wide array of services, they may not provide the same level of customization and flexibility as print on demand services. With print on demand, your products are made to order, which makes it easier to offer custom designs or limited-edition products.

The bottom line

In the journey of selecting the right fulfillment service, the print on demand model often emerges as a top contender, especially for those looking for flexibility, reduced overheads, and a keen focus on creativity. Always remember that the aim is to simplify your business life and increase customer happiness.

The impact of outsourcing fulfillment on sustainability

Sustainability is becoming a crucial consideration for many consumers when choosing who to buy from. Fortunately, outsourcing fulfillment can contribute to more sustainable business practices. By streamlining the supply chain and reducing warehousing needs, businesses can minimize their carbon footprint. Fulfillment centers often adopt eco-friendly packaging and shipping methods, further promoting sustainability. By choosing a green fulfillment partner, not only do you contribute to the environment, but you also appeal to the growing market of eco-conscious consumers.

Handling returns and exchanges with outsourced fulfillment

While much attention is given to the front-end of order fulfillment – the storage, packing, and delivery of goods – handling returns and exchanges is an equally important aspect of customer satisfaction. When outsourcing, it's important to ensure that your partner has a robust and efficient system for handling returns and exchanges.

A good fulfillment partner will offer a hassle-free returns process, quick refunds or exchanges, and responsive customer service. This can greatly enhance the customer experience, encouraging repeat business and fostering loyalty. Discuss the returns process with potential outsourcing partners and ensure it aligns with your business's values and customer service goals.

Outsource your fulfillment with Gelato and scale your business

Outsourcing fulfillment is a transformative move that can catalyze your ecommerce business to higher levels of success. By freeing up your time, reducing overhead costs, and ensuring quicker, more reliable deliveries, it not only streamlines your operations but also elevates the shopping experience for your customers.

But how you outsource matters too. Gelato, the world's largest platform for local print on demand production, is uniquely positioned to become your fulfillment partner. Gelato enables entrepreneurs, creators, and global brands alike to reach up to 5 billion potential consumers overnight. Whether you're a rising creator or an established brand, Gelato helps bring your creativity to life and turns it into a thriving business.

What makes Gelato stand out is its commitment to sustainability. With production and shipping happening locally in 34 countries, we significantly reduce carbon emissions and promote a more sustainable global supply chain. Our environmentally friendly approach aligns with the values of today's conscientious consumers, adding an additional competitive edge to your business.

Sign up for Gelato, the leading print on demand provider, and start designing and selling today. Let us handle your fulfillment needs while you focus on creating and innovating.

Outsourcing fulfillment FAQs

What is outsourced fulfillment?

Outsourced fulfillment is a business practice where ecommerce companies delegate their order processing and delivery tasks to third-party fulfillment companies. This includes storing inventory, picking and packing products, and shipping orders to customers.

Why do we outsource fulfillment?

Outsourcing fulfillment helps businesses focus on core tasks like product development and marketing. It allows them to leverage the expertise and resources of fulfillment providers, potentially reducing shipping costs, accelerating delivery times, and enhancing customer satisfaction.

Does Amazon outsource fulfillment?

No, Amazon does not typically outsource fulfillment. They have their own extensive fulfillment operation known as Fulfillment By Amazon (FBA). However, they do work with external sellers who can choose to use FBA or fulfill their orders independently.

What is outsourcing in shipping?

Outsourcing in shipping involves transferring responsibilities related to storage, packing, and delivery of goods to third-party logistics or fulfillment companies. These companies handle all the complex logistics, ensuring goods reach customers efficiently and in a timely manner.


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