Why Outsourcing Your Automated Order Fulfillment Can Be Beneficial

E-commerce has exploded in recent years, with online sales growing rapidly each year. This increase in online shopping has led to challenges for e-commerce businesses, which must find ways to fulfill large volumes of customer orders efficiently. One solution many merchants are turning to is automated order fulfillment. In this article, we’ll examine what automated order fulfillment is, how it works, and why you should consider outsourcing this function. 

What Is Automated Order Fulfillment?

Automated order fulfillment refers to using technology and automation in warehouses and fulfillment centers to improve the speed, accuracy, and efficiency of order processing and shipping. It includes the use of automated storage and retrieval systems to pick and pack orders, automated conveyor systems to move products, barcode scanning to track inventory, and integration with order management software to sync with e-commerce platforms. 

Robotic systems and automated machinery now handle tasks previously done manually, such as locating products in a warehouse, picking items from shelves, packing boxes, applying shipping labels, and moving packages between workstations. This automation provides a hands-off process from the time an order is received to when it ships out.

How Automated Fulfillment Works?

An order placed on an e-commerce site is sent to a fulfillment center that uses automated systems. First, the order details are received in the warehouse management software, which directs robotic pickers or automated picking systems to the location of the items ordered. 

Using barcode scanning and inventory management technology, the right items are picked from the shelves and brought to a packing station. Another automated system packs the items into shipping boxes and applies labels. The packages then move along conveyor belts, are sorted by shipment destination, and are made ready for outbound shipping. 

Integrations between the e-commerce platform, order management system, and warehouse management software allow this to happen seamlessly. The automated fulfillment center tracks each order from receipt to ship out, providing visibility for merchants and customers.

Learn why maintaining inventory accuracy is crucial for your business success and discover effective strategies on how to improve inventory management for streamlined operations.

Why Outsource Fulfillment?

For e-commerce sellers, managing the fulfillment process in-house can be complex and costly when done manually. Automated fulfillment improves efficiency, but requires a significant upfront investment in warehouse automation and software. Many businesses choose to outsource this function to a third-party logistics (3PL) provider because they provide the automated systems, warehouse space, labor, and inventory management required – capabilities that are expensive for merchants to implement on their own. Having fulfillment handled offsite by logistics experts allows online sellers to focus on sales, marketing, and product development. In addition, outsourced providers can handle fluctuations in order volumes seamlessly. Where an in-house operation might struggle during peak sales, third-party fulfillment centers are designed to scale up or down efficiently.

By leveraging outsourced fulfillment, e-commerce businesses can deliver a superb customer experience through fast, accurate order processing and shipping. The right provider makes automated order fulfillment simple and cost-effective.

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Benefits Of Outsourcing Order Fulfillment

Outsourcing order fulfillment to a third-party logistics (3PL) provider offers numerous benefits that enable e-commerce businesses to grow and scale efficiently. Here are some of the top advantages of outsourced fulfillment services:

1. Focus On Growing Your Business: Handling fulfillment in-house requires significant time, resources, and staff dedicated to the process. Outsourcing to experts frees up time and resources to focus on sales, marketing, product development, and growing your core business.
2. Lower Shipping Costs: 3PLs have negotiated discounts with carriers based on high volumes that you can take advantage of. Their expertise and carrier relationships help minimize fulfillment and shipping costs.
3. Increase Shipping Speeds: Automation and streamlined processes of 3PLs mean orders can be processed faster. Many 3PLs offer same-day shipping capabilities that match or beat what you could do in-house.
4. Accurate Shipping Information: Integration of 3PL systems with your e-commerce platform keeps customers updated with real-time tracking and delivery estimates, reducing inquiries.
5. Reduce Operating Costs: No need to lease warehouse space, invest in automation, or hire staff when outsourcing. The costs shift to a “pay as you go” variable model with outsourced fulfillment.
6. Scale Your Business Easily: A 3PL makes it easy to expand into new regions or channels without adding staff or warehouse space. They provide the capacity you need to enter new markets.
7. Organize And Streamline Operations: Experienced 3PLs implement optimized processes and best practices for order processing, inventory management, storage, and more.
8. Improve Customer Service: With 3PL fulfillment, customers receive faster and more accurate deliveries, leading to improved customer satisfaction and loyalty.
9. Enhanced Inventory Management: Leverage sophisticated WMS, automation, asset tracking, real-time inventory visibility, and advanced management systems of 3PLs.
10. Avoid Long-Term Leases: Outsourcing means you can easily adjust warehouse space and labor capacity as needed rather than committing to long leases and fixed overhead.
11. Manage Seasonal Fluctuations: The scalable warehouse networks and flex labor of 3PLs can seamlessly handle your busy periods like holidays and promotional sales spikes to avoid fulfillment delays.
12. Reduce Order Errors: Highly experienced staff, automated validation technology, and optimized quality control processes significantly reduce picking errors, shipping defects, and customer returns.

Understand the significance of maintaining inventory accuracy about fulfillment services versus supply chain management, and how it impacts your business efficiency and customer experience.

When To Outsource Fulfillment? 

As an e-commerce seller, you may find your current order fulfillment process is no longer working sustainably. How do you know when it’s time to hand off fulfillment to experts? Here are three signs it may be time to outsource:

1. Decline in Service Levels: If you cannot meet buyer expectations for fast shipping and delivery times, this directly impacts the customer experience. Factors like inventory inaccuracies, warehouse congestion, and inadequate staffing can result in delayed or incorrect orders. Outsourcing improves service through 3PL optimization.
2. Fulfillment Costs Eating Into Margins: In-house fulfillment requires significant investments in warehouse space, staffing, materials, and systems. As sales grow, these costs can eat into profits. 3PLs provide economies of scale and more favorable rates.
3. Deteriorating Performance in Other Business Segments: When your team is overwhelmed by fulfillment responsibilities, it distracts focus from developing the business. Free up time and resources to refocus on sales, marketing, and product.

Discover why maintaining accurate inventory records is vital for calculating ending inventory correctly, ensuring financial accuracy, and informed decision-making for your business.

Conclusion

Automated order fulfillment provides transformative benefits for today’s e-commerce businesses, allowing them to meet rising consumer expectations. By outsourcing this function to a specialized third-party provider, online sellers can focus on their core business while easily managing high order volumes. Outsourced fulfillment provides specialized expertise, optimized processes, flexibility, and scalability that enable e-commerce sellers to improve operations and delight customers as their business grows. The right 3PL partner provides strategic value far beyond just shipping orders. Outsourced services can get you back on track if order fulfillment is no longer scalable or sustainable in-house. Choosing the right logistics partner that can enable your continued success is key.