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Updated Feb 21, 2023

Benefits of Using an Order Fulfillment Service

Outsourcing your order fulfillment can free up time, energy and resources for you to focus on growing your business.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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Order fulfillment services can eliminate many headaches for businesses that must ship multiple products to fulfill customer orders. We’ll explore how outsourcing your order fulfillment needs can lower shipping costs, eliminate fixed costs, save time and resources, and much more.

What are order fulfillment services?

Order fulfillment services allow companies to outsource their ordering process’s fulfillment needs. These services store your inventory and ship out customer orders. Clients typically include online retailers, e-commerce businesses, and brick-and-mortar stores without distribution centers or warehouses.

According to content marketing influencer Adam Enfroy, order fulfillment centers provide users with the following services.

  • Receiving: An order fulfillment service will receive, unpack and store a client’s inventory.
  • Inventory management: Order fulfillment services handle inventory management with the help of specialized inventory software; they track the number of products on hand, noting excess inventory and inventory that must be replenished.
  • Order management: Order management services include tracking the ordering process from beginning to end, handling order processing, delivery and product returns.
  • Product listings: Some order fulfillment services provide SEO-friendly product listings that companies can post on their websites.
  • Advanced reporting: Some order fulfillment services provide companies with detailed reports that help companies track the entire logistics process.
FYIDid you know
In addition to inventory management, order fulfillment services can help with SEO tools, including optimized product listings you can post on your website.

Benefits of using order fulfillment services

There are several advantages to outsourcing all or part of your order fulfillment process. Outsourcing order fulfillment is particularly attractive for merchants with an online store that lacks warehouse and distribution facilities. Even established brick-and-mortar businesses contract with order fulfillment services to reduce infrastructure costs and improve operational efficiency.

  • Flexibility to manage seasonal sales fluctuations: While increased sales are always desirable, unforeseen surges and seasonal rushes can create headaches. To respond to a higher-than-normal amount of orders, a business may hire additional workers, buy more capital equipment or even lease extra warehouse space. When sales inevitably trend down to “normal” levels, you’re left with extra workers, equipment and square footage you no longer need. An order fulfillment service lets you effortlessly ramp up for sales surges and scale back when needed.
  • Fewer employees: A fulfillment services company eliminates the need to hire, train and manage workers. If sales decline, you don’t have to let any employees go. Your only concern is providing the fulfillment services company with your products in the quantities required to meet demand. 
  • Lower shipping costs: Free shipping is an excellent marketing tool. However, no shipper will send your goods to customers for free. If you’re not big enough to maintain facilities throughout the country, using an order fulfillment company with a regional, national or international infrastructure lets you utilize their bulk delivery discounts, resulting in lower shipping costs for your customers.
  • Ability to grow new markets: An order fulfillment company can extend your reach without undue capital investment. If a new market you’ve ventured into doesn’t work out, you haven’t expended money and resources on expanding your infrastructure. Your order fulfillment services partner supplies the infrastructure and scales it over time to grow as your business grows. You don’t have to commit to high and potentially risky new overhead costs.
  • Ability to eliminate fixed costs: When you carry inventory, you’ll pay the same rent and utilities for warehouse space even if your sales are flat or in decline. By contracting with an order fulfillment services company, that fixed cost is now a variable cost. When business is slow, your order fulfillment costs go down. Of course, they also go up when sales increase, but that’s a price well worth paying.
  • Ability to focus on your core competencies: The logistics of order fulfillment can be complex. An order fulfillment company is equipped with employees and management who understand the ins and outs of order fulfillment. By contracting their services, you can focus on improving your product without spending money and time hiring and training new employees in order fulfillment.
Bottom LineBottom line
Order fulfillment services help you cut business expenses and expand into new markets with minimal risk so you can focus on improving your products and growing your business.

Types of businesses best suited for order fulfillment services

These are some businesses that benefit most from order fulfillment services: 

  • E-commerce retailers
  • Subscription box businesses
  • Companies selling heavy or specialized items

E-commerce retailers

E-commerce is based on customers selecting the products they want and the shipping method they prefer. This model creates a constant stream of order fulfillment and shipments of varied, unique orders. Sales tend to ebb and flow with the seasons, so tracking orders, fulfilling them and shipping them on time can be challenging. 

An order fulfillment service can remove these burdens from e-commerce businesses while providing a digital tracking system that acts as a central inventory database. They also handle the hassle of returns and exchanges. 

TipBottom line
Online shoppers often leave items in their shopping carts. Implement an email marketing strategy to reduce cart abandonment that offers discounts or other incentives for customers to complete their purchases.

Subscription box businesses

There are many different kinds of subscription box services (groceries, health and beauty items, clothing), but order fulfillment is an essential element of them all. Fulfilling orders can become a challenge as there are more subscribers. 

With subscription box fulfillment and shipping, you’ll need to regularly deliver a group of products to customers with a fulfillment process customized to various shipment deadlines. An order fulfillment service can handle this complex process using delivery waves based on how far away subscribers live from the storage facility. 

Heavy or specialized items

All businesses generally have the same six order fulfillment steps: receiving inventory, organizing it, picking out a product for an order, packaging it and shipping it. This process is affected when items are particularly heavy, specialized or easily breakable. An order fulfillment service can safely store such items while developing an effective method of packing and shipping bulky or heavy packages.

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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