6 Signs Your Business is Ready for 3PL Outsourcing
So many companies these days start in a living room. A home office. A garage. Eventually, they begin to grow, and maybe take over a small commercial building. Because this growth happens slowly, you may look up one day and realize you can no longer handle your business on your own. Maybe you had always planned to outsource eventually, but how do you know when the timing is right? Check out our six signs that it may be time to consider 3PL outsourcing for your company.
1. You’ve Outgrown Your Warehouse
Many small companies start with a makeshift warehouse, figuring it’ll work “for now.” And in many cases, it does work, until inventory or order volume gets too high. At that point, you’ll have to make a decision: will you take the leap and rent or buy a large warehouse space? Or will you consider 3PL outsourcing?
There’s no wrong answer, but if you’ve just started to outgrow your warehouse space, you may not have the capital to purchase or lease a new one. There may not be any available spaces nearby that fit the bill. Or, you may not want to expand internally, since it will require additional logistics planning and hiring. In these cases, the benefits of outsourcing logistics may outweigh the benefits of handling logistics yourself.
2. You Spend Too Much Time Worrying About Fulfillment
Starting a small business means having a hand in every aspect of your operations, from product development and marketing to shipping and fulfillment. As your company grows, you may find yourself spending too much time worrying about your logistics, and not enough time planning new products and initiatives.
If you’re feeling spread thin between all of your responsibilities, or if you’re struggling to find employees you trust to take over these tasks, 3PL outsourcing may be the best solution. Outsourcing your fulfillment can help you free up your own time, as well as other human resources within your company, to work on more important matters. That means you can spend more time growing your business, working on new products and initiatives, and planning your overall business strategy.
3. Your Product Went Viral
These days, products can go viral overnight based on recommendation from bloggers, celebrities, or social media stars. If you manage to hit it big – congratulations! The downside is that you’ll now have to organize logistics for a much larger operation literally overnight. And if you wait too long to fulfill these orders, you may lose the boost in sales just as fast as you gained it.
The easiest and most sustainable way to grow your business quickly is to consider 3PL outsourcing for all of your warehousing, fulfillment, and shipping needs. They are used to taking over logistical operations quickly and will help you avoid many first-time mistakes you might have made on your own. They may also be able to negotiate better packaging and shipping pricing, improving your overall profit. And many 3PL providers handle customer service and reverse logistics for you, saving your team further time and hassle.
4. You’re Struggling with Your Fulfillment Strategy
Managing a warehouse is no easy task. Many businesses have difficulty finding a manager who can keep up with ordering, warehousing, fulfillment, shipping, customer service, and human resources. Low product alerts may be missed. Fulfillment accuracy may go down. Your reverse logistics strategy may have your company bleeding money without even realizing it.
The role of a third-party logistics company is to take all of your worries away when it comes to fulfillment strategy. From investigating gaps or delays in your supply chain to taking customer service calls, they can handle every aspect of your fulfillment process. The peace of mind they provide is one of the major benefits of outsourcing logistics.
5. You’re Struggling to Compete in Your Market
Many companies start off small and don’t have much competition in their market. They may have had a great idea for a product and were the first one to market and sell it. However, as companies and industries grow, the stakes get higher. Competition grows as other companies create generic or even iterative versions of the product.
Now, the original company who invested time and money into their product can’t compete with the newcomers who were able to learn from their mistakes. They can’t compete with their low prices or free shipping if they keep tackling everything themselves.
This is the point when many businesses choose to partner with a 3PL provider to better serve their customers. 3PL outsourcing can reallocate time, energy, and capital to help you remain a market leader.
If you’re having trouble negotiating lower shipping rates, feel like you’re overpaying for fulfillment, or are struggling to thrive amidst a market of strong, new competitors, it may be time to consider a 3PL partner. Making the decision early will help you offer faster shipping times, lower shipping costs, and maybe even lower product prices, depending on the savings you get with 3PL outsourcing. If you wait too long, your sales may dip, and you may lose loyal customers you’ve earned over the years.
6. Your Need for Reverse Logistics is Increasing
It’s the age-old blame game: why is my need for reverse logistics growing? It could be inaccurate fulfillment due to an untrained workforce, outdated technology, or an understaffed shift. It could be poor product photography or descriptions. It could even be a decline in product quality after switching manufacturers. Reverse logistics are one of the most ineffective processes in any small business. But regardless of the reason behind these returns, 3PL outsourcing can help.
One of the benefits of outsourcing logistics is assuming far less risk. 3PL providers use the latest technology, invest in training their staff, and take responsibility when a return was caused by a mistake in fulfillment. Typically, this results in fewer requests for returns and exchanges, and it makes your reverse logistics process far more efficient when it is required.