5 signs it’s time to outsource e-Fulfilment
For many eCommerce retailers, managing e-fulfilment in house is absolutely the right approach. It allows you to control every aspect of the customer experience, and be in close contact with your stock. However, there often comes a time when growth, costs, resources, or timescales begin to escalate to a point when managing e-Fulfilment in house is no longer feasible. Here are some (slightly tongue in cheek) helpful hints to help identify ‘that time’.
1. Your warehouse is full
That doesn’t look organised to us. Our warehouse managers would have a field day tidying that mess up. There doesn’t appear to be any product or location identification, structure, or even thought as to how best to organise this space. A warehouse can often end up looking like this due to a lack of space, poor stock management, poor pick location selections, or simply because the warehouse as reached its capacity. If any of those sound familiar, it’s time to think on…
2. The warehouse dock has developed a queue
Any e-Fulfilment warehouse has to operate efficiently. Not only to ensure customers get their orders on time, but also to ensure goods arrive on time, and in an organised and efficient manor. At Spark Response for example, we receive goods in via RF, meaning once stock is received, the product becomes available for sale via our clients’ websites, once scanned. A failure to receive goods in efficiently can cost sales. For those that don’t have RF, this process takes even longer. If you find it’s taking an excessive amount of time to receive, allocate, and store goods in, then it’s time to think on…
3. Customer reviews are slipping
Does the above look familiar? Poor reviews being posted to your site can be damaging, potentially costing future sales, but most importantly, it’s a sign that something isn’t working as it should, and the causes should be investigated to try and rectify the problem. If points 1 and 2 above apply, then that would be a good start in identifying why problems in e-fulfilment persist.
4. e-Fulfilment costs are beginning to spiral
e-Fulfilment can potentially cost an eCommerce retailer around 15% of annual sales. Clearly then controlling costs in this area is imperative. If the fulfilment operation isn’t being run as efficiently as it could be, costs will quickly escalate. Sending products out via the wrong delivery option, sending the wrong products, handling returns, paying for additional warehouse operatives to manage a backlog, all come with a cost. For many eCommerce retailers, outsourcing e-fulfilment can reduce costs, both through saving on rent/rates, and switching to flexible, activity based pricing, but also by taking advantage of economies of scale an outsourcer can provide in packaging, and shipping.
5. You’ve outgrown your warehouse operations
You’ve outgrown your home, or more appropriately, your warehouse. Firstly, this is a good problem to have. It shows you’re growing. Hopefully with fast moving stock. If you have slow moving stock that’s building up, then that’s another problem altogether. Often, it’s not immediately apparent that you’ve reached capacity. Sometimes, it’s not until peak season that you realise that you’re full to capacity. Often in retail, Christmas can sneak up, and suddenly, warehouse operators realise they’re simply too full to handle more stock, and ship the higher volume of orders.
Another example is growth. If the business is growing month on month, it can quite quickly sneak up on you, that pretty soon, you won’t have the capacity to handle the increased volumes in your current warehouse. Options here include buying/renting additional space, moving warehouses entirely, or of course outsourcing e-Fulfilment.
In 2012, Micro Scooters appointed Spark Response to manage both e-Fulfilment, and retail distribution. Read about the move in our Micro Scooters Case Study.