The pros and cons of outsourcing Internet fulfilment

By Amy Fowler

A growing number of companies are opting to outsource their Internet fulfilment services. Outsourcing can be a good way to keep costs down, especially when your business is still growing.  However, there are downsides to outsourcing.  You will need to choose your provider carefully if you want to ensure that things run smoothly.

The Pros:

Using a third party for your Internet fulfillment services is a good choice for several reasons:

• Costs are often lower – the economies of scale mean that a large outsourcing company can negotiate volume discounts that you would not be able to access yourself as a small or medium sized business owner.
• Fewer fixed overheads – instead of paying for equipment and a warehouse that may not always be used, you only pay for the orders you process.
• More efficient reporting – fulfilment providers have sophisticated systems for order processing, tracking and reporting, allowing you to automate the process of your customers information about the status of their order.
• Scalability – Internet fulfilment companies are in a better position to handle high or unpredictable volumes of orders.
• Returns processing – when you outsource, you have one point-of-contact for shipping, storage and returns, making the process efficient and simple for both you and your customers.

The Cons:

Some companies are reluctant to outsource their Internet fulfilment services, for a variety of reasons:

• Inventory must be off-site – if you like to have full control over your inventory, then allowing another company to handle storage and order fulfilment may be a leap of faith.  One way around this is to outsource only part of your fulfilment.  Some companies outsource international orders, for example.
• Costs – some small business owners, especially those that pack and ship their own orders by hand, struggle to rationalize the cost of outsourcing internet fulfilment. As the business grows and order fulfilment starts to take more and more of the owner’s time, the financial investment becomes more worthwhile.
• Branding – if your company has a reputation for packaging things in a certain way, or shipping from a certain location, you will need to take this into account when outsourcing.
• Communication – if you want to run special offers, or change something on your packing slips, you will need to communicate this carefully to the people that handle your orders. For a small company that is used to moving quickly, it may take a while to get used to dealing with third parties.
• Customer service – putting your company’s reputation in the hands of a third party can be a scary thought at first.  However, if you do your research carefully you should find that customer service improves when you outsource.

For many business owners, choosing to outsource is the first step in allowing their company to grow from a cottage industry to a truly profitable, sustainable business. Most of the perceived downsides of outsourcing centre on the issue of giving up control over your business. 

While it is important to ensure that your company retains control over your brand, and that your customers get the best service possible, you should take care not to cling so tightly to control over your company that you sacrifice growth opportunities in the process. Learning how and when to delegate is an important part of running a successful business.

This article was written by Amy Fowler on behalf of Hallmark Consumer Services, experts in internet fulfilment services. Click this link to find out more on internet fulfilment services.