Comprehensive guide to outsourced fulfillment

Making sure a product gets to the customer, or order fulfillment, is critical to running a successful ecommerce brand. More than ever, customers expect fast shipping and accurate tracking information. While some brands can handle this in-house, outsourcing order fulfillment to a fulfillment partner can prove to be beneficial for any growing ecommerce brand.

What Is Outsourced Fulfillment?

Outsourced fulfillment is the process of hiring a third-party logistics (3PL) company to handle the storage, packaging, and shipping of your products. By outsourcing order fulfillment tasks, brands can focus on other aspects of their operations, such as product development, marketing, and customer service.Outsourced fulfillment services can save brands time and money while improving their overall customer experience.

Components of Outsourced Fulfillment

Outsourced fulfillment typically includes five key components: receiving and inventory management, order processing, shipping and delivery, returns management, and customer support. Together, these services help ecommerce brands manage the fulfillment process without handling every operation internally.

Receiving and Inventory Management

This involves receiving products from suppliers, checking inventory for accuracy, and storing products in a warehouse until they are ready to ship. A 3PL can manage these processes and provide inventory management technology to help brands track stock levels and availability.

Order Processing

Order processing includes receiving customer orders, picking products from inventory, packing items, and preparing shipments. Outsourcing these tasks allows brands to reduce manual fulfillment work and focus on other business priorities.

Shipping and Delivery

Fulfillment providers coordinate shipping and delivery by working with carriers based on cost, speed, and reliability. Shipment tracking and delivery visibility help brands keep customers informed about their orders.

Returns Management

Returns management can include receiving returned products, inspecting their condition, determining whether items can be restocked, and coordinating the return process. Efficient returns handling helps brands maintain inventory accuracy and improve the post-purchase experience.

Customer Support

Fulfillment providers may offer operational support for shipment tracking, delivery issues, and fulfillment-related inquiries. This helps brands resolve logistics problems while maintaining direct relationships with their customers.

Outsourced vs In-House Fulfillment

In-house fulfillment involves a brand managing storage, picking, packing, shipping, and related operations internally. This typically requires warehouse space, equipment, technology, and dedicated staff. Outsourced fulfillment, on the other hand, allows brands to delegate these operations to a third-party fulfillment provider.

The table below compares the key differences between in-house and outsourced fulfillment.

Benefits of Outsourced Fulfillment

Why outsource fulfillment? Outsourced fulfillment can be especially beneficial for e-commerce brands because it allows them to store their products in a warehouse closer to their customers—which means faster shipping times and lower shipping costs. Additionally, outsourcing fulfillment can help brands scale their operations quickly and efficiently without having to invest in their own warehouses, equipment, and personnel. Outsourcing order fulfillment applies to both B2C and B2B fulfillment needs.

Cost Savings & Efficiency

Outsourcing fulfillment to an ecommerce order fulfillment provider means a brand no longer has to pay for warehousing, equipment, labor, and utilities for its own fulfillment center. This can lead to significant cost savings. Since 3PLs often have multiple clients, which enables them to benefit from economies of scale in areas such as shipping and transportation costs. Brands can take advantage of those cost savings.

Scalability & Flexibility

Outsourcing fulfillment allows brands to quickly and easily scale their operations up or down in response to changes in customer demand. This flexibility is critical for brands who are just starting up, and can also result in significant cost savings.

Enhanced Customer Experience

Outsourcing fulfillment can lead to faster shipping times, improved order accuracy, enhanced tracking, and access to customer support. All of those factors combine to improve the customer experience—which can lead to repeat orders and loyal customers.

Access to Advanced Technology & Expertise

A 3PL provider offers advanced tracking and visibility tools, which can allow customers to track their orders in real time and receive regular updates on their delivery status. A 3PL provider will use robust inventory management systems, which can ensure products are always in stock and available for customers to purchase.

Reduced Risk & Liability

A 3PL partner has experience and expertise in managing inventory, packing, shipping, and handling returns. They have dedicated systems and processes in place to ensure that orders are accurately fulfilled and shipped on time. This reduces the risk of errors and delays that could lead to customer dissatisfaction and liability for the brand.What’s more, 3PLs typically have insurance policies in place to cover the cost of lost or damaged inventory, as well as liability insurance to protect against claims related to product defects or injuries. This can help ecommerce brands mitigate risk and avoid costly legal disputes.

Choosing the Right Outsourced Fulfillment Partner

Choosing the right fulfillment partner depends on each brand’s unique needs. Brands should start by identifying their needs and then use that list to evaluate fulfillment partners to make a decision.

Identifying Your Fulfillment Needs

Brands should think about their specific needs in different areas of the fulfillment process. Here are a few examples:

• Location: Where are your customers based, and does this partner have warehouses close to your customers?
• Technology: Does the partner’s inventory management software integrate with your ecommerce platform?
• Scalability: Does the partner have flexible pricing and service options that can handle seasonal spikes in demand?
• Expertise: Does the partner have experience in your industry or product category?

Evaluating Potential Providers

Brands should then take the list of their specific needs and use it to evaluate potential partners. In addition to considering location, technology, scalability, and expertise, brands should also consider customer service, cost, and reputation.Brands should evaluate the customer service and support provided by your potential fulfillment partner. Look for partners that are responsive, transparent, and proactive in resolving issues.Cost is a key factor in choosing any partner. Brands should compare the costs of different fulfillment partners, including fees for storage, picking, packing and shipping, and returns.

Look for partners that offer competitive pricing and transparent billing practices.A partner’s reputation can benefit or hinder an ecommerce brand, so brands should do research and check the fulfillment partner's reputation and track record. Look for partners with positive reviews and a history of delivering high-quality service.

How Flowspace Supports Outsourced Fulfillment

Flowspace helps ecommerce brands outsource fulfillment operations through a nationwide warehouse network and integrated fulfillment technology.

With centralized order management, real-time inventory visibility, and integrations across sales channels, Flowspace helps brands manage inventory, process orders, and scale fulfillment without operating their own warehouses. Explore Flowspace's fulfillment services or talk to our team.