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The Capital Investment of In-house vs. Outsourced Fulfillment

The Capital Investment of In-house vs. Outsourced Fulfillment

Congrats! Your small business is up and running and growing exponentially. Were you expecting to be able to get back to your core business strategies and product development, but are now finding it difficult to find the time? At this point, you may be straddling the fence between doing your own fulfillment or outsourcing fulfillment to a third-party logistics company. On the one hand, you may not feel like you can afford a fulfillment company and on the other, you’re inundated with orders that needed to be picked, packed, and shipped yesterday, with no real plan in place to handle your increasing sales. While many businesses wish they had your problems, you should look at both sides of this dilemma.

What is the capital investment and cost opportunity spending your time doing your own fulfillment? What do you need to make your own fulfillment work?

  • Expense #1: Warehousing
    Leasing or buying storage space for your growing inventory and purchasing equipment, such as forklifts, cherry pickers, and a large quantity of shelving units.
  • Expense #2: Packing supplies
    Shipping boxes, protective materials, branded packing materials and invoices, packing tape, etc.
  • Expense #3: Shipping
    Need to know everything about freight regulations, carrier options and the most cost-effective way to get your orders to your customers on time, on a consistent basis.
  • Expense #4: Warehouse staff
    Fulfillment center staff trainer, warehouse staff plus salaries and benefits for these team members.
  • Expense #5: Customer service
    Because e-commerce sites don’t allow customers to physically interact with your team in store, reliable customer service reps need to be available via phone to answer questions about your products and their orders.
  • Expense #6: Technology
    Supply chain fulfillment and inventory software must integrate with e-commerce shopping carts.

Time is money

If you are finding that you are spending more time fulfilling orders than managing your expansion, you might also discover that other essential business functions are on the back burner, such as:

  • Sales and marketing initiatives that provide revenue
  • Planning strategies that help you grow and save money
  • Developing new products

Doing the math

Factoring into the cost opportunity of in-house fulfillment, consider the hours you and your employees spend each week performing fulfillment responsibilities. Say you spend 20 hours a week packing and shipping, annualized at a $65,000 salary, those 20 hours total $32,500.

On the flip side

Outsourcing your fulfillment operations is considered a cost-cutting tool by 59% of companies participating in a Deloitte survey. Industry experts say that:

  • Fulfillment center storage costs are generally close to (or lower) than warehouse leases.
  • Shipping costs can be a huge savings opportunity, especially if you ship in high volume.
  • Packing supplies can be a lot more cost-effective because reputable fulfillment centers buy in bulk and pass those savings on to their clients.
  • Skilled fulfillment personnel save your company time and money.

Phase V: Outsourcing that works with you and scales to your needs

When considering outsourcing, choosing a company that fits your fulfillment needs is an essential element to your expansion and success moving into each new phase. The benefits of working with Phase V include:

  • Partnering with you to custom design your fulfillment needs
  • Learning about your company in order to help streamline your supply chain needs
  • Saving you time and money by automating your fulfillment process
  • Providing state-of-the-art fulfillment and inventory management technology that promotes transparency in ordering, tracking and inventory management
  • Implementing real-time inventory tracking that lets you set up low inventory alerts in time to restock and avoid back ordering frustrations
  • Live customer service reps that can address your customers’ every question and concern Saving you time and money whenever possible throughout the fulfillment process
  • Scaling your labor needs to your business cycles
  • Technology that integrates easily with your shopping carts and coordinates your various multi-channel marketing

Centrally located in Ft. Myers, FL, Phase V is dedicated to helping your business cut overheads and give your customers on-time delivery and excellent customer service that will build brand loyalty and help you move to your next phase of success. Best of all, Phase V affords you the opportunity to get back to concentrating on your core business. Stop straddling the fence of in-housing or outsourcing your fulfillment. Contact Phase V and learn more about our services and your bright future!