Common mistakes can happen when outsourcing your fulfilment and you may think that the answer to this is obvious. However, we have had new clients integrate with us, only to find that they’ve probably been far too quick to outsource their fulfilment.
The first thing you need to do is really establish that there is definitely a market for your goods. The best way to do this is by testing the market selling the goods and in the very first stages, fulfilling the good the orders yourself. This will give you so much insight into your own business operations. It will help you understand the pain points, the issues, the problems that need to be addressed, as well as other things that you may not have considered.
When looking at outsourcing your order fulfilment, there are some common pitfalls to avoid:
Overstocking
The best way to get over this, especially when starting out, is by using the ‘just in time approach to your stock so that you aren’t taking up unnecessary storage space to keep costs down and not have your cash tied up in non-moving stock, especially in the early days.
Extending product ranges
This is a common pitfall we notice which is when e-commerce business owners extend their product ranges in a bid to increase their sales. Whilst of course this depends entirely on your market demographic and the product that you are going to be selling it also doesn’t necessarily mean you will sell more by having a larger range of stock. It could be that you end up with more cash tied up in your stock as well as costing more in storage. Therefore, this decision needs to be made once you have explored all other routes of maximising best sellers in your product portfolio.
Insufficient margins
When customers of ours don’t leave enough margin to outsource their products and they are selling items at a meager value with insufficient margin to make the business profitable long term. We have tried to evaluate if there is a sweet spot for an actual value for sending these out. However, the truth is it entirely depends on the size and format of your parcel. For example, if you can send your goods as a large letter format then the postage cost will be much less than if by sending via small parcel. However, this obviously does depend on so many other criteria such as customer satisfaction (amongst many other factors) that it shouldn’t be used as gospel!
Seasonal stock
Another problem we should highlight (which is often out of our client’s control) is when the businesses have seasonal stock with ranges of stock that come in and out of season. We’ve seen tragic incidences of customers finding their stock stuck in the Suez Canal or with Brexit delays and customs issues causing them to entirely miss not just one, but as many as two or three seasons for selling that particular stock. Of course, this is catastrophic for any small to medium-sized enterprise, and even larger-scale retailers would feel the pain of problems such as this.
Outsourcing so you can spend more time ON your business
Finally, assuming you can avoid those pitfalls, that you have a good product that has been tested in the marketplace that is building momentum and traction, and you are getting to a point whereby managing the day-to-day operations of the business is way too time-consuming and putting a throttle on your business growing (you are spending more time in your business rather than ON it!) then you absolutely need to outsource as soon as you potentially can.
But make sure that your numbers all have been stacked up properly! We can help you work this through to make sure that outsourcing works for you. And if it transpires it doesn’t then I’m afraid to say you don’t currently have a particularly scalable business and maybe this will help focus on the ways in which you can make it so!
OFEX are the Order Fulfilment Experts. We provide an efficient, transparent service in order to take the stress of order fulfilment out of your hands. After all, the more time you have, the more opportunity you have to grow your business. If you’re interested in the order fulfilment opportunities OFEX can offer your business, contact us today. If you’re still unsure about making the move to outsource your fulfilment, OFEX offers a free trial, so you can experience the benefits for free, risk-free.
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