Before, it's all about the location. Now it's about branding. Entrepreneurs can conveniently set up shop in their own corner of the internet without the hassle of a brick and mortar establishment.
It's easier to start a business, but sustaining it is a huge undertaking that will involve a lot of strategic decision-making to succeed. Should you outsource inventory management and order fulfilment?
Inventory and Order Fulfilment
The biggest challenge for online retailers is managing inventory, shipping, and storage. In most cases, SMEs don't have the warehouse capacity and distribution network to cope with a large volume of orders. More importantly, a smooth operation makes all the difference in ensuring satisfied customers.
Outsourcing Order Fulfilment Operations
Every business decision has to be carefully planned or else it will become a costly initiative. This is very important for SMEs who are already working on limited resources.
Here are three criteria that can be considered to find out if you should outsource order fulfilment:
- Products can be shipped as-is and do not require complicated instructions.
- Products don't take up a lot of warehouse space.
- Few stock keeping units (SKU).
If your products don't meet these criteria, outsourcing may not work. Personalised packing, large items, and many SKUs can be expensive. If they do, you can take advantage of the following outsourcing benefits:
- Economies of Scale - It's easier to grow and expand. You can easily increase warehouse capacity to meet your needs.
- Short turnaround time - Service providers that specialise in logistics have multiple warehouses spread out across the country, and for some, even around the world. As a result, you can send orders in 1-2 business days no matter where your customers are. You can reduce costs with less distance coverage compared to shipping from your home location.
- Concentrate on the business - spend more time growing your business by delegating inventory management to a third party.
- Tap other markets - extend your global reach by taking advantage of your service provider's distribution network.
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