Possibly the only thing more challenging than growing your e-commerce business in today’s economy is managing its logistics needs and demands. Warehousing, cold storage, order fulfillment, and logistics management all take a toll on your time and energy, to say nothing of draining your resources – including cash flow.
As a way to curtail and even circumvent these responsibilities, many e-commerce providers have begun outsourcing their order fulfillment needs to third party logistics providers. These logistics managers take over control of warehousing, storage, order fulfillment processing, and customer service on behalf of the ecommerce client.
The Order Fulfillment Partnership Is A Two Way Street
A small business or e-commerce business owner employs an order fulfillment service for one or more tasks. The partnership agreement is pre-negotiated and binding, with both sides legally beholden to abide by its conditions.
The profit structure is surprisingly simple. In most cases, the fulfillment service will take as its fee a percentage of each unit of product sold by the ecommerce client. The fulfillment service then has a vested interest in efficiently and quickly moving as much of the ecommerce client’s products as possible: the more merchandise sold, the higher the profit for both parties.
Fulfillment Services Handle Merchandise Directly
Third party logistics providers are able to take control of inventory directly from the manufacturer, so that time and resources aren’t lost shipping inventory from the ecommerce client to the fulfillment provider’s warehouse facilities. Instead, this streamlined approach to delivery absolves the ecommerce client from dealing with inventory and shipping, leaving them free to concentrate on marketing and business growth.
Many fulfillment service companies offer a variety of warehousing options, including wholesale fulfillment, cold storage, palette storage, and cross docking and hub induction. The options can better help the ecommerce client diversify their catalogue and their selling capacity.
Fulfillment Services Also Handle Mailings, Publicity Messages
Many fulfillment services are also able to manage newsletter and catalogue mailings on behalf of their ecommerce client, overseeing the printing, postage, and successful mailings of promotional materials provided to them by the ecommerce client.
Ecommerce Businesses Should Choose Carefully
When making the decision to outsource to a third party logistics provider, ecommerce business owners should shop several different companies to find the right size and right agreement for their individual needs. The agreement is legally binding, so ecommerce businesses should hire the fulfillment company in which they discover the greatest client satisfaction and confidence.