There are many aspects of business that can be frustrating. Costs are one. Not growing fast enough is another.
Many forward-thinking businesses are well-versed in outsourcing and delegating aspects of their business to third-parties in order to deal with both, but for some businesses, outsourcing the order fulfilment process is one that is met with trepidation.
However, for companies that are looking to grow, there are many advantages to outsourcing order fulfilment.
Growing Pains
Growth, and growing quicker than expected, can cause new challenges.
Growing your business too fast can mean it gets much tougher to fulfil all of your orders without falling behind schedule. You can simply run out of space to fulfil orders to store stock. Rushed staff can make mistakes and customer support and refunds can spike. Processes can simply be overwhelmed and start to break down.
Growing your business can be expensive, both in terms of capital and person-power. And, dealing with issues like these can be even more expensive when they are reactive or rushed, becoming a real drag on the business finances and stifling or even killing the momentum of your growth.
Companies that outsource their order fulfilment to the right fulfilment partner however, find it a much simpler process to keep things running smoothly, can take advantage of any momentum they generate and can greatly reduce the impact on their finances.
In 2017, 90% of Fortune 500 companies had outsourced at least some aspect of their order fulfilment and this trend is growing across medium and small companies as well. If your company is considering outsourcing its order fulfilment but you are unsure about how much you would actually save, read on to find out more.
Let’s examine some different ways that your business can save through outsourcing order fulfilment.
Savings With Outsourced Order Fulfilment
Less Staff & Training Time
As every business owner knows, it takes a significant amount of time and money to train employees.
The salary for a warehouse manager role in the UK ranges from £19k to £38k on average and £15k to £23k for a warehouse worker. In Ireland these roles range from €24k to €50k and €20k to €30k respectively.
Customer service representatives salaries in the UK range from £15k to £25k on average and €21k to €34k in Ireland.
Getting excellent staff usually means going above and beyond the usual averages and training staff members for these roles takes time. These salaries and training times add up, particularly over years and years of business operations and with additional benefits on top, salary and training expenses can make up a significant portion of your overall expense bill.
Outsourcing your order fulfilment allows you to replace these costs entirely with a monthly expense on a pay-per-parcel basis. So, you only pay for what you need, without any of the additional overheads and HR requirements.
Now, many companies don’t like the idea of redundancies, and either adopt a hybrid approach to their order fulfilment or redistribute their workforce, upskilling their staff members in other core areas of operations. So these are always options as well.
Storage & Warehousing Costs
The obvious costs associated with order fulfilment are the huge capital costs and rental costs required for the warehousing and storage units needed to store all of the necessary stock.
There are also utility costs associated with warehouses, including water, heat, electricity, and sewerage. Materials also cost money, and order fulfilment requires purchasing boxes, tapes, labels, label printers, employee safety gear, forklifts, and more. Also add in the cost of damage during handling and lost inventory costs etc that are common to almost all businesses.
How much capital expenditure did your company invest in its current storage and warehousing facilities? How much are you spending monthly/annually on additional storage locations for excess stock? How much do you invest annual on rates, utility costs, equipment costs? How much does insurance cost on your facilities?
How much time and money do you invest in reviewing your fulfilment processes and implementing improvements to ensure everything is running smoothly?
The simple fact is, when you are trying to grow your business, these costs tend to increase. And they normally do so unpredictably and are higher than expected. It’s commonplace for companies to invest in new premises to keep up with their rate of growth, only to find they have surpassed their new premises years in advance and have to move again to keep up.
Outsourcing your order fulfilment to a third party allows you to replace these costs entirely with a flat monthly expense that reflects only the space you need, as you need it. The cost savings can be dramatic. You only pay for what you need and you don’t have to worry about having enough space in future to capitalise on any growth in sales.
You can scale this cost up or down depending on your expected stock turnover and you have far more control and visibility on exactly what your warehousing and storage costs your business.
Reclaiming Lost Revenue
Fulfilment errors cost companies huge amounts of revenue every year.
A mistake made in the warehouse can result in a poor brand experience for a customer. They have the initial disappointment upon opening their delivery, then they have to get in touch with customer support, rearrange for the correct item to be sent out, arrange for their incorrect order to be sent back… It can be a real pain for them, and they will complain to their friends and colleagues about it.
All the while, they are costing you time and money – with your customer support team, warehousing team and repeat delivery costs. They’ll likely not shop with you again and might even cost you future sales because of who they tell.
Even the best-run companies struggle to keep up with levels of efficiency that third party order fulfilment companies can deliver. At ParcelPlanet, our order fulfilment accuracy is a proven 99.72% and 100% of all orders are picked, packed and shipped the same day, with a late order cut-off of 9pm.
Not only can outsourcing your order fulfilment improve your accuracy, it can also improve your delivery times to same day or next day delivery and your late order cut-offs. All of these improvements can allow you reduce the costs of returns, refunds and support as well as directly increasing your sales, allowing you to reclaim lost revenue you hadn’t even accounted for!
Your company can end up getting a significant boost in terms of credibility, especially if enough customers are active on social media. Even if your outsourced fulfilment savings means that 10% of your customers are more likely to buy again – that could potentially mean thousands, or even millions in revenue, depending on your industry.
Get Started With A Quote
The only way to know for sure how much you can save by outsourcing your order fulfilment is to look at each of the expenses above and calculate how much you currently spend on your order fulfilment.
Then, get a quote for your order fulfilment from third party suppliers. Our team at ParcelPlanet are standing by to help you work out exactly how much you can save, so get in touch here by phone, email or using the contact form.
You should always get three quotes for services as important as order fulfilment, just make sure that ParcelPlanet is one of them. You’ll be glad you did!
