Comprehensive Guide to Outsourced Fulfillment

Allison Champion
8 min read
June 21, 2023

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

The components of outsourced fulfillment services include receiving and inventory management, order processing, shipping and delivery, returns and refunds, and customer service.

Receiving and product inventory management involves receiving products from the manufacturer or supplier, checking them for quality and accuracy, and storing them in a warehouse until they are ready to be shipped to customers. Oftentimes, this means brands need to invest in inventory management software as well as warehouse space—unless they partner with a 3PL to outsource fulfillment and manage those aspects of fulfillment.

Order processing includes receiving orders from customers, picking and packing the products, and preparing them for shipping. A 3PL or an ecommerce order fulfillment provider like Flowspace will also manage this aspect of fulfillment, which can save brands time and money to focus on other aspects of their business.

Shipping and delivery involve partnering with a shipping carrier based on factors including cost, speed, and reliability and ensuring that the products are delivered to customers on time. Today’s consumers expect fast, reliable shipping, but they also expect to be able to track their packages and know when they’re going to arrive.

Managing returns and refunds involves directing customer returns and refunds, including inspecting returned products, processing refunds, and restocking inventory. This aspect of fulfillment can involve a lot of time, but if it’s handled well can build customer satisfaction and encourage repeat business.

Customer service includes handling inquiries, tracking shipments, and resolving issues that may arise during the entire shopping experience. A top-notch 3PL or ecommerce fulfillment center host should provide customer service.

Outsourced vs In-House Fulfillment

In-house means exactly that. In-house fulfillment involves a brand handling every aspect of fulfillment internally, which includes storage, picking and packing, shipping, and customer service. This requires the business to own or lease a warehouse, purchase equipment, and hire staff. 

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:

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

Location: Look for a fulfillment partner that has facilities located close to your target markets. This can help reduce shipping times and costs, as well as minimize the risk of inventory shortages or overstocks.

Technology: Evaluate the technology platforms and systems that your potential fulfillment partner uses. Look for partners that have robust inventory management, order tracking, and reporting systems that can integrate with your ecommerce platform.

Scalability: Choose a fulfillment partner that can scale with your business. Look for partners that have flexible pricing and service options, as well as the ability to handle seasonal spikes in order volume.

Expertise: Look for a fulfillment partner that has experience and expertise in your industry and product category. Ask for references and case studies that demonstrate their success in fulfilling similar products.

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.

The Flowspace Advantage in Outsourced Fulfillment

Flowspace is a leading fulfillment service provider that offers several advantages for ecommerce brands looking to outsource their fulfillment operations.

Comprehensive Services & Solutions

Flowspace is a comprehensive service provider that offers ecommerce brands a full service fulfillment management solution, including fulfillment, order management, warehouse management, network optimization, insights, and analytics.

Industry-Leading Technology

Flowspace’s leading-edge software centralizes inventory, orders, and fulfillment management in a single dashboard, with real-time visibility into inventory levels, order status, and delivery stages, across channels.

Customer-Centric Approach

Flowspace’s customer-centric approach is built around providing customized, high-quality outsourced fulfillment solutions that align with the needs of ecommerce brands and their customers. By prioritizing transparency, flexibility, and communication, Flowspace ensures a positive experience for everyone involved. In fact, Flowspace was named 2022 Organization of the Year in the Excellence in Customer Service Awards.

Seamless Integration with E-commerce Platforms

Flowspace offers shopping cart integration with popular ecommerce platforms, including Shopify, WooCommerce, Magento, and BigCommerce. This integration allows for real-time synchronization of order data, inventory levels, and shipping information between the ecommerce platform and the Flowspace dashboard.

Making the Transition to Outsourced Fulfillment

Transitioning to outsourced fulfillment can be a big change for ecommerce brands, but with proper planning and preparation, the process can be smooth and successful.

Preparing Your Business for the Switch

Ecommerce brands should evaluate their current fulfillment operations, including their order volume, SKU count, storage requirements, shipping costs, and staffing needs. This will help them identify areas for improvement and determine their outsourcing needs.

Brands should also research and evaluate potential outsourcing providers based on factors such as location, pricing, services offered, technology, and customer service. They should also request references and case studies to ensure that the provider has a track record of success.

Planning for inventory transfer is a critical part of the process. This step involves  coordinating with the provider on shipping logistics, labeling requirements, and inventory management procedures. Training staff on the new system and communicating with customers are also steps brands need to think about when changing to outsourced fulfillment.

Implementing & Monitoring Your New Fulfillment Strategy

Implementing and monitoring a new fulfillment strategy is essential for ecommerce brands to ensure that they are meeting their business goals and customer expectations. Brands should set clear goals and KPIs for their fulfillment operations, such as order accuracy, shipping times, and customer satisfaction. These metrics should align with the overall business objectives and be specific, measurable, achievable, relevant, and time-bound. Just setting the KPIs isn’t enough; brands need to ensure they are tracking and reporting on those KPIs and looking for areas of improvement.

Communication with the new fulfillment partner in the early stages of the partnership is critical to setting expectations and optimizing the arrangement to work for the brand’s needs. This may involve weekly or monthly check-ins, as well as ad-hoc discussions to address issues or opportunities.

Measuring Success & Ongoing Optimization

Brands should continuously improve their fulfillment strategy based on the data and feedback they receive—from both the new partner and customers. This may involve making changes to the SLAs, technology, staffing, or processes, as well as experimenting with new value-added services to enhance the customer experience.

Brands should also conduct regular audits of their fulfillment operations to ensure that they are compliant with industry standards and best practices. This may involve reviewing inventory accuracy, order accuracy, and shipping performance, as well as conducting site visits and inspections.

Turn to Flowspace for your outsourced fulfillment needs. Get in touch today.

Written By:

flowspace author Allison Champion

Allison Champion

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.

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