A quick Google search will give you many blogs on whether to outsource fulfillment or go it alone. However, I think the better question is, “When is the right time to outsource my order fulfillment?”
Over the years, we have accepted new customers who haven’t even manufactured anything yet and customers who have been shipping on their own for years. There is no clear-cut timing on when to outsource but here are some factors to consider in making your decision.
Do you have any sales? If not it would be best to hold off on the finding a fulfillment company. The majority of fulfillment companies charge a monthly minimum and that can eat away at cash if you are not doing any shipping. If, on the other hand, you have people lining up at the door it is certainly time to start looking at outsourcing.
Sometimes startups feel like they need to outsource their fulfillment because they need somewhere to store product. There are, however, other more cost effective options such as long term storage companies that can store most of your product while you keep some on hand to fill the orders you are getting. At DreamWise, we work with several small businesses that need storage but are not yet ready to ship and we would be happy to discuss storing your product until you are ready to outsource the actual shipping.
Shipping Rates & Expertise
There is no doubt that the fulfillment experts do know more about shipping than you do. They have a better handle on all of the available options and probably get better rates than you do with some shipping carriers. However, if you are only shipping a couple orders a day they aren’t going to save you that much money on shipping costs. The real savings will come when you are shipping enough orders that saving a couple of dollars per order will make a big difference.
More often than not the decision to outsource comes down to time. Do you want to spend your time shipping orders? If it’s only a few orders a day you may not mind, especially if you are short on cash. On the other hand, it can be a determent to a business if sales, marketing, and other things are being put aside to ship orders or if you can’t take a day off because of shipping needs.
For a startup that is considering hiring additional staff to do the shipping, outsourcing is likely a far better option. Shipping out a few orders per day is certainly not a full-time or even part-time job and it would likely cost far more to hire someone than to outsource. If, on the other hand, a member of your staff has some spare time in their day then they may be able to do the shipping.
So, when is the right time to outsource? It’s a tricky question and the right answer depends on a lot of factors. If you are currently weighing the options we would be happy to meet with you and help you sort out the benefits of either option. We can be reached at 303-858-1025 or by completing the Request a Consultation in the right-hand column of this page.