When it comes to ecommerce warehousing and order distribution, Thill Incorporated is one of the top fulfillment companies in the United States. Thill has worked for hundreds of ecommerce merchants across the U.S., helping them grow their business and online presence in the country.
While we’re often asked a wide range of questions about fulfillment services, some specific to the types of distribution companies that are found here in the U.S., others that focus on other areas of the fulfillment process.
As it pertains to U.S. warehousing and order distribution, there’s a wide range of things you’ll need to be informed on and aware of.
Ecommerce Warehousing In The USA
By definition, an order fulfillment warehouse is a place where different types of merchandise are stored and shipped to customers. Also referred to as a distribution center, ecommerce order fulfillment warehouses are a key component to a successful fulfillment process.
There’s 2 common ecommerce distribution centers that ecommerce sellers rely on.
- Outsourced Fulfillment Warehouses
- Drop Ship Warehouses
Let’s take a look at both.
Outsourced Fulfillment Warehouses
Outsourced fulfillment warehouses refers to fulfillment by a third party, one that requires merchandise to carry stock. This is usually referred to as a 3PL company (third-party-logistics),
While drop shipping is a component of order fulfillment, with this business model, retailers have their manufacturers send orders to customers that place an order. Outsourcing your fulfillment via a 3PL company, the retailer uses a 3PL that specializes in order fulfillment.
A lot of ecommerce sellers outsource their fulfillment. Here at Thill, we partner with commerce merchants. These companies ship their products to us or have their orders shipped to us from a manufacturer. From there, we’ll warehouse their goods until they’re sold. When orders come in, we’ll pick, pack and ship their products out to their customers.
Why Outsource Your Ecommerce Fulfillment
There’s a number of benefits your business will get by outsourcing your commerce fulfillment and order distribution.
Cheaper Shipping Cost
A big benefit working with a 3PL fulfillment company is lower shipping cost. These ecommerce distribution centers have extensive networks so you can take advantage of the lower shipment cost. Having the ability to ship out of one warehouse versus multiple warehouses will also save you money.
Since a majority of our clients purchase their goods in bulk versus smaller orders, it saves them money. Since your business can take advantage of lower shipping cost, it equals more profit for you at the end of the day.
Ecommerce merchants need fast delivery, that keeps customers happy and turns them into repeat buyers. If you’re outsourcing fulfillment to a 3PL company, you can leverage their strategic locations to reach your customers fast and cost-effectively.
Downfalls Of Outsourcing Order Fulfillment
As with all strategies, there’s a few downfalls to outsourcing your fulfillment, we’ll take about them now.
More Capital Needed
If you’re using outsourced 3PL, you’re going to need more inventory for your order warehousing. More inventory means more capital for the short-term. For some companies, that could be a sizable investment.
Benefits Of Using Drop Shipping
Now, if you’re just starting out in ecommerce or have a small operation, drop shipping may be a great strategy to use. Drop shipping refers to order fulfillment via a wholesaler or manufacturer. This means the retailer doesn’t carry stock, rather it’s delivered by your wholesaler or manufacturer.
Using the drop shipping business model has its benefits, we’ll discuss a few of those right now.
Get Started With Little Money
One of the biggest reasons ecommerce sellers turn to the drop shipping business model is because it doesn’t cost much to get started. All you need to do is build an online store and find products to sell, it really is that simple.
Furthermore, if you’re solely using drop shipping, you don’t need to stock products or keep inventory. When a customer places an order, it’s sent to your partner to be picked, packed and shipped.
Minimal Effort Needed
If drop shipping is your primary pillar, you have a big leverage point to use. You don’t need inventory, you don’t need to keep stock nor do you have to worry about ordering new products when inventory is low.
That means your primary focus can be on growing your business rather than fulfillment. However, as you grow your business and want to expand, you may have to take a new look at your fulfillment.
Downfall Of Using Drop Shipping
Higher Shipping Cost
Drop shipping can lead to higher order fulfillment and shipping cost for online sellers and ecommerce merchants. Some U.S. manufacturers may not be built to handle commerce warehousing and order fulfillment well, which can end up costing you more money.
With drop shipping, you’re usually buying a limited amount of products at a time. If you are buying products in bulk, you can save some money. The bad thing, you’re often the middle man because you’re not making your own products, so profits are often less.
While a lot of ecommerce sellers don’t bring this up, delivery times are often longer versus using a 3PL provider or someone that specializes in ecommerce order fulfillment company. Since delivery times are vital to happy customers, you have to be aware of the wholesalers and manufacturers you buy your products from.
A new term being coined in the industry is hybrid order fulfillment, which refers to using multiple strategies for your ecommerce warehousing and distribution. Some brands are using 3PL, drop shipping and other ecommerce fulfillment options very well.
Ecommerce warehousing and distribution is vital to your business, vital to your success and vital to your growth.