“Am I Too Small to Outsource eCommerce Order Fulfillment?”

The middle.  In the world of eCommerce, the middle is precisely where many small-but-growing companies find themselves.  On one side, you realize that, if your company is going to truly grow, you can’t keep your fulfillment operation small and nimble.  On the other side, however, are things like warehouses, forklifts, and teams of pickers and packers – things that seem much too BIG for your operation.

What do you do?  Keep things the same?  Or, do you entrust your eCommerce order fulfillment to a third-party logistics (3PL) provider?  If the latter option seems like the right answer but you worry that you may be too small, read on.  You may be pleasantly surprised. 

When to consider outsourcing

ecommerce order fulfillmentIf you’re looking for a number or an equation to help you determine a benchmark you need to meet before outsourcing, you won’t find it here.  That’s because only you can determine when you’ve outgrown your current fulfillment operation (in many instances, that means outgrowing yourself).  To help you assess the situation, however, here are some important questions:

Can you keep up with order volume yourself?  Customer satisfaction means everything to eCommerce companies, whether big or small.  If your operation struggles to keep up with order volume – resulting in delayed shipments – you run the risk of losing customers and damaging your reputation.  3PLs can help by providing the infrastructure, systems, and resources to handle your fulfillment reliably while you focus on growing your business.

Can you keep up with peak order volume?  If you feel confident in your ability to handle your order volumes in general, how do you feel about your peak periods?  Do you struggle during your busiest periods while holding steady the rest of the year?  If so, you may want to consider a combination approach: partnering with a 3PL provider for your busiest periods and then going it alone the rest of the year.

Can you afford to pay dedicated employees?  At any significant volume, fulfillment takes work.  From picking, packing and inventory management to returns processing and systems management, there’s a lot that eCommerce companies need to do (and, therefore, pay people to do).  This can come with a hefty price tag if you hire your own employees.  With a 3PL, you only pay for the actual work performed for your operation, never for non-productive time.

Are you running out of space?  More sales means more inventory.  For many small companies, it doesn’t take long before this inventory overwhelms your facility and leaves little-to-no working space.  Many 3PLs can remove this headache by providing as much space as your operation requires.  This ‘flex warehousing’ space can expand and contract as your needs fluctuate and, as with labor, you only pay for the space you use.

 “I want to outsource eCommerce order fulfillment, now what?”

The questions above should help you determine if you’ve outgrown your current operation.  It then becomes a matter of finding the right 3PL provider to handle your fulfillment services.  Some of the larger ones will have minimum volume requirements (i.e., they won’t work with you unless you have a certain order volume per month), while others handle eCommerce order fulfillment for companies of all sizes.

Once you’ve found the right 3PL, the process typically works like this: the 3PL will work with you to obtain all the information it needs about your operation before submitting a proposal.  Once an agreement is reached, your 3PL will be ready to receive inventory and integrate with your eCommerce platform (e.g., Shopify, Amazon, Magento).  Once inventory is in and systems are set up, it’s time to rev up your new fulfillment operation engine.

At Kanban Logistics, we pride ourselves on being the “right 3PL” for multiple small and mid-sized eCommerce companies across a variety of industries.  We have no minimum volume requirements – we can start small and support your operation through every growth stage.  As part of this support, we offer value-added services such as kitting, rework, packaging, returns processing, and cross docking.  To learn more about how Kanban can support your company’s growth, contact us today.