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Fulfiling orders yourself: is it as cost-effective as it seems?

Fulfiling orders yourself: is it as cost-effective as it seems?Photo from Pexels

Originally Posted On: https://www.stowsafefulfilment.co.uk/fulfiling-orders-yourself-is-it-as-cost-effective-as-it-seems

 

If you’re at the helm of a small eCommerce business, a key priority is to cut costs where possible. Many startups begin life at home, with a garage or spare room doubling as a warehouse for stock. At this stage of your business’s development, a “DIY” approach can save you money.

However, as your business starts to grow, so too do the hidden costs lurking behind its operations.

Take order fulfilment. As your business scales there will come a point when you’re too big for “home fulfilment” – with stock stacked up in a corner of the house – and are ready to invest in something bigger.

At this point, you might start weighing up whether to invest in your own fulfilment facilities – some warehouse space of your own, with new personnel to pick, pack and dispatch.

But before you take the plunge, it’s important to remember that there are multiple hidden costs underlying the self-fulfilment process – and it may be better for your bank balance if you outsource the process entirely.

Materials and supplies for packaging

The more orders you’re fulfilling, the more money you have to shell out on packaging materials. Envelopes and boxes are the big ones, but you’ll also need labels, packing tape, bubble wrap, mailing bags, printer ink, and more. On top of this, you’ll need to monitor supplies to ensure you’re not short on tape the day an order is supposed to ship.

And there’s more! When sourcing your own supplies for fulfilling orders, you need to spend valuable time scan comparison sites for the hottest deals.

The time and money involved in this side of operations mean that self-fulfilment can work out as more costly overall.

By partnering with a 3PL like Stowsafe, you get the best of both worlds – choice, flexibility, and customisability of packaging, but without the hassle of having to research the cheapest printer paper. In addition, packaging tends to work out cheaper with a 3PL as they’re able to buy materials in bulk.

Transport

When you’re operating as a start-up with a small customer base, trips to the local Post Office aren’t that onerous. When you’re still in the home fulfilment stage, you’re unlikely to find these transport costs to be noticeably draining on your wallet or demanding of your time.

However, as your orders grow, so too will your travel expenses – and even at a time when fuel prices aren’t rocketing sky-high, money spent on fuel for your vehicle and maintenance costs is money you might struggle to recoup. Taken individually, these costs are far from eye-watering, but they do add up over time.

As with money spent on stationery, transport costs can be reduced by outsourcing shipment to a 3PL.

Paying for infrastructure

Let’s say you’ve decided that the time is ripe to move out of the garage and look for dedicated storage space for your stock. Whether renting or buying, you’ll be looking for sufficient floor space as well as storage space – after all, you’ll need room in your facility for packing up orders.

As well as paying rent on your storage space – which has, incidentally, tended to increase in price in line with the eCommerce boom – you also need to pay employees to pick, pack, dispatch, and deal with returns.

A 3PL like Stowsafe furnishes your growing business with a dedicated space in a warehouse. The firm will check stock as it arrives, store it safely and securely and keep the warehouse space clean and environmentally controlled.

Reduced efficiency and speed in processing orders

Perhaps a less apparent cost when self-fulfilling orders is a general reduction in efficiency and speed in processing orders, which has the potential to lead to a loss of custom.

If you don’t have a warehouse management system (WMS), locating items for dispatch can be a laborious process. This can work against you, as speed and efficiency are vital to building a customer base.

At Stowsafe, we have a cutting-edge WMS that integrates it with all major eCommerce platforms (Amazon, eBay, Shopify…) This means inventory is automatically updated and you’re instantly notified when an item’s stock is running low.

This level of sophisticated and integrated automation significantly lowers the risk of you running out of stock and missing an order.

Increased margin of error

If you’re self-fulfilling orders and returns, the chance of making a mistake increases as your business grows. Mistakes in picking and packing can lose you future custom, so outsourcing the process can be a moneymaker in the long run.

When self-fulfilling, you’re likely to try to find the cheapest available shipping. This is fine, to begin with, but people more and more expect fast shipping thanks to the example set by Amazon and other retail giants.

A 3PL will help you meet customer expectations with fast shipping, and thereby boost your chances of having customers return for more.

When should I look for a fulfilment partner?

There are three key situations in which partnering with a 3PL for help with fulfilling orders could be right for you:

  1. If you’re struggling to keep on top of orders – hindered, perhaps, by manual processes.
  2. You’re struggling to find time for marketing or product development because of the responsibility of picking, packing, and shipping.
  3. More generally, you’re looking to expand.

At the end of the day, self-fulfilling isn’t as cost-effective as it appears at first glance. As your business grows, it pays to outsource menial, repetitive tasks so that you can focus on what you do best.

At Stowsafe, we’re here to help you build your customer base and grow your brand – and we do that by taking care of eCommerce fulfilment. Let us help you save cash and give customers the type of delivery they expect.

If you’re looking for a fulfilment partner, we’d love to hear from you.

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