Online order volume increased by 59% for eCommerce companies last year. At the same time, 51% of respondents reported increased fulfillment costs. Lockdowns and closures of physical stores due to the pandemic prompted a rapid increase in online buying, introducing more consumers to the ease of eCommerce businesses and establishing new, long-lasting purchasing habits. So, retailers must provide a seamless digital and in-store shopping experience with different fulfillment choices that meet customers’ needs for cost-effectiveness, speed, and convenience, even though customers are now returning to in-store purchasing.
So, eCommerce retailers are outsourcing the labor-intensive tasks of eCommerce fulfillment to third-party logistics companies, also known as outsourced fulfillment partners, due to the rise in volume, fulfillment costs, and customer expectations for quick delivery. It also enables them to deal with issues like supply chain disruptions and labor shortages. Achieve superior CX with businesses that outsource retail services to the retail contact center and fulfillment.
A retailer may find it challenging to keep up with order fulfillment. Also, they often have to deal with labor shortages and rising shipping and transportation costs. Moreover, they may face difficulties implementing the newest technology and automation independently. In such a situation, outsourcing all or a portion of your fulfillment operations could be a wise strategic decision to enhance the customer experience, offer a competitive edge, quick scaling capability, and reduce expenses. By following this guide, find out if retail order fulfillment outsourcing is a good fit for your business.
Outsourced Fulfillment: So, What Exactly Is It?
When a retailer contracts with a third-party logistics firm to handle part or all of their order fulfillment process, such as:
- order processing,
- inventory visibility, and management,
- picking and packing,
- shipping orders, and
- reverse logistics (returns) management.
- It is known as outsourced order fulfillment. Retail businesses that outsource retail services also outsource fulfillment of large orders.
How Fulfilment Outsourcing Work?
Fulfillment outsourcing partners usually own and operate their own network of warehouses and distribution facilities in addition to their own personnel, technology, and supplies to deliver orders on behalf of customers. While serving multiple clients simultaneously, an outsourced fulfillment partner usually has the capacity to tailor services and packaging for every client, ensuring that customers have a flawless brand experience. Retailers outsource retail services, and fulfillment can enjoy a steady team and infrastructure.
They function as a member of the retailer’s partner network and do work on behalf of the retailer. Major shipping carriers are negotiated pricing and delivery schedules by these outsourcing fulfillment partners for retail outsourcing services. Order fulfillment is essentially the area of expertise for these outsourced fulfillment companies with skilled workforces and necessary resources, just like customer services to retail contact centers.
Retailers who choose not to outsource fulfillment are required to manage their own fulfillment procedures accurately. The infrastructure needed is extensive, and it is a part of their daily operations. Large retailers usually handle all or part of the fulfillment process in-house, using outsourcing to support and augment their need for growth and cost reduction.
Running their own fulfillment process will require online retailers without physical storefronts to purchase real estate and oversee a sizable physical infrastructure. Compared to outsourcing fulfillment to a partner with the infrastructure already in place, this is usually more expensive to run. So, outsource order fulfillment for your retail businesses and outsource retail services for more efficiency and cost-effectiveness.
Benefits of Outsourcing Out Fulfillment
Outsourcing fulfillment, whether in full or in part, enhances the overall order fulfillment process and has several advantages to offer for retailers:
Many eCommerce firms find it challenging to develop the internal infrastructure and fulfillment expertise required to operate at maximum efficiency. Moreover, it is difficult to continuously enhance the customer experience by establishing industry-leading fulfillment operations. To guarantee they can offer their clients the best possible business results, fulfillment outsourcing partners put a great deal of money and expertise into their fulfillment operations.
The rate of outsourced fulfillment increased in tandem with the sharp rise in order volumes. By entrusting their fulfillment operations to a partner adequately equipped to handle demand and potential volume increases, businesses may grow fulfillment more quickly than they could if they tried to construct, employ, train, and manage bigger fulfillment operations.
If markets collapse or there is a disruption, investments made in brand-owned fulfillment operations are also more challenging to cut down quickly. However, releasing outsourced partners does not require significant financial losses. So, retailers decided to outsource retail services, and fulfillment stays more flexible and scales faster.
Retailers that outsource to third-party logistics businesses generally find that the efficiency and scope of an outsourcer’s operations reduce the cost of fulfillment and relieve them from bearing the operational costs of fulfillment. Retailers may cut down or altogether avoid expenses related to the following when they outsource fulfillment:
- real estate,
- property taxes,
- shipping, and
- reverse logistics.
Most Recent Technologies
Retailers frequently find it difficult to adopt and upgrade to the newest technologies, such as machine learning (ML) and artificial intelligence (AI), as soon as they become functional in the fulfillment sector. Outsourced fulfillment partners offer sophisticated order management systems, distributed order management abilities, automated tasks, and operations, including the newest technologies in robotics and more advanced additions in tools and tech in the market. Outsource retail services and order fulfillment to a tech-enabled outsourcing partner capable of offering technologies and tools required for seamlessly executing all operations.
Lower Carrier Rates
Because of their long-standing connections to the leading shipping companies, fulfillment outsourcing companies can bargain for lower prices on behalf of their customers. They may also negotiate the best prices and delivery choices with shippers because they deal with large volumes.
The best part of outsourcing is the freedom to concentrate on core activities, innovation, and expanding business. The market for retailers is becoming increasingly competitive as internet purchasing gains traction. So, fulfillment outsourcing gives a retail company more time to concentrate on expansion plans and enhancing customer experiences to set itself apart from competitors. A fulfillment partner may frequently provide a competitive edge by offering superior shipping costs, delivery times, total order fulfillment services, and outsourcing retail services to retail contact centers.