Fulfillment Center Pros & Cons
If you are a business that requires shipping your product(s) to consumers, you will at some point have to decide whether you want to handle receiving, inventory management, and shipping internally, or use a fulfillment center to handle the whole process for you.
There are many “pros” to outsourcing these services to a fulfillment center, and there may be some potential “cons” as well. We’d like to break down both to help you make the most informed decision when determining which route is the best for you and your business.
Fulfillment Center Pro’s
Focus on business
Utilizing a fulfillment center like Thill Inc., allows you to hand over the fulfillment process to a trusted partner so you can focus on building & marketing your business, increasing your sales, and sourcing products. That’s increased revenue for you!
Lower payroll & benefits costs
Even if you have internal staff that handles the fulfillment process, inevitably as you grow, additional manpower will be needed, which equates to higher payroll dollars and benefit packages that cut into your bottom line. You also face issues with staff turnover which can be costly when you consider the time needed to train employees to do their jobs correctly.
Keep overhead costs low
There are many costs involved with handling your own fulfillment needs. You will have costs related to warehouse rental, additional staff & payroll, equipment, utilities and warehouse management software. By choosing a fulfillment center to manage these areas, you will be able to better budget and predict profits as you will know the recurring costs associated with the partnership.
As an individual business, you are almost certain to pay higher shipping costs than if you contract with a fulfillment center. A fulfillment center is able to negotiate lower shipping rates with the various carriers because of the volume they output. Additionally, if the fulfillment center you contract with has multiple locations in different areas of the country, shipping rates are lower simply due to their proximity to your customer and how carriers calculate shipping costs.
Taking inventory of your products can be extremely time consuming and costly. Partnering with a fulfillment center like Thill Inc. removes that burden from your shoulders. We use the most advanced inventory management tools & software available to manage and report inventory. The information is always available to you in real-time, so you know what your inventory stock is and what you need to re-order.
Speed of delivery
Because a fulfillment center focuses on just fulfillment, in many cases your customers orders are processed and shipped much more quickly than if the steps are handled in-house. The lack of time or staff internally, incorrect inventory counts, and lack of space can slow everything down and delay shipping. This in turn, makes for unhappy customers, which we all know is bad for business.
Growing your business
While your fulfillment center does the work for you, you have more time to grow your business and expand. As your business grows, you don’t have to worry about finding a larger warehouse or hiring additional staff. Fulfillment centers are equipped to handle your expanding business and inventory so you don’t have to worry about finding more room for storage or paying for storage space that you are not utilizing.
Dealing with customer returns
The task of dealing with customers and processing returns can be extremely tedious, time-consuming, and sometimes even frustrating. When you choose to partner with a fulfillment center like Thill Inc., all aspects of customer support and returns are handled for you, alleviating the headaches associated with this part of the business.
Peace of mind
Fulfillment centers have staff that is trained and knowledgeable in all aspects of order fulfillment. At Thill, we take that to the next level. We are passionate about what we do and dedicated to “The Art of Fulfillment”. You can rest assured that your receiving, inventory, processing, packing, shipping and customer service is being handled by true experts in the field.
Fulfillment Center Con’s
There are very few drawbacks to partnering with a fulfillment center, but some customers do have specific reasons for deciding to keep their fulfillment operations internal. These are the biggest obstacles clients feel prevent them from contracting with a fulfillment center.
Giving up control
Business owners like to be in full control of every aspect of their day-to-day operations and this includes order fulfillment. It can be a hard decision to make but in the end, if you partner with a top rated fulfillment center like Thill, it will make for an easy transition. You will see all the benefits in a very short amount of time and the end results will speak for themselves. We are very proud to say that Thill Inc. was named a Multichannel Merchant Top 3PL for 2018 so you are in the best of hands!
Some merchants like to put their own unique twist on things when it comes to fulfilling orders. Handwritten or personalized notes or even brand unique packing materials are the most common areas of customization. It’s true that when you outsource to a fulfillment center, some of these details may have to be sacrificed but the lower costs which you are able to pass on to your customers, coupled with the extra time you can spend expanding your business, will make up for these little things.
The potential for higher costs
Most customers will lower their overall costs by contracting with a fulfillment center, but once in a while the choice may actually raise costs even though you are saving on shipping fees. We see this most often with sellers who deal in very small quantities and volume. In the end, these smaller customers may still actually benefit from a partnership with a fulfillment center as it allows them to focus on sales, marketing and the overall growth of their business.
Vendors can make mistakes
It happens from time to time. Whether your vendor sends too little or too much product, the wrong product or worst case- damaged goods; when you outsource to a fulfillment center you may not have immediate knowledge of the issue. In very rare cases, the problem does not even come to light until your customers complain. Working with the professionals at Thill will minimize these issues as we make sure to stay on top of your fulfillment process from beginning to end. Customers should always remember however that these things can happen, and need to be prepared when infrequent issues like this occur.
Making the decision
In the end, the pros greatly outweigh the cons but the ultimate decision on outsourcing to a fulfillment center requires careful calculation and consideration. As a retailer, you have a lot on your plate not only providing customers with the products they want but also marketing them, providing customer service and still performing the rest of your day-to-day operations. Contracting with a fulfillment center can streamline a considerable portion of those daily duties freeing up time and resources.
At Thill Inc., we have been perfecting fulfillment since 1959 and have built our reputation on our dependability, innovation, and thinking outside the box. A partnership with us may be just what you need to take your business to the next level.