Every Friday, we answer a common question about fulfillment, shipping, or business. This week’s question comes from one of the fans who entered our giveaway contest for a copy of the board game Terraforming Mars. Today we will answer the following question: “when does it make sense to outsource fulfillment?”
6 Signs Your Business Needs to Outsource Fulfillment
Once your business starts selling enough items, it becomes a pain for you to ship them in-house all on your own. This is a simple truth that provides the bedrock foundation of Fulfillrite as a business, and we’ve been in business for over 10 years! There is no hard and fast number of orders when a business definitely needs to outsource fulfillment. Technically, businesses can fulfill their own orders forever, if they want. Likewise, they can outsource fulfillment even if they have one order every three months. So instead of focusing on the precise moment in which outsourcing fulfillment becomes necessary, let’s think more abstractly. A while back, we did a post for Noissue called 6 Signs Your Business Needs to Outsource Fulfillment. Those six signs are:
- Your customer base is growing faster than you can keep up.
- Order fulfillment is becoming slow or inaccurate.
- Your employees are working too much.
- Your business is becoming really complex.
- Shipping is becoming expensive.
- You’ve run out of physical space.
If any of these signs are apparent in your business, then you should at least consider outsourcing fulfillment. It could make your day-to-day life a lot easier.
Outsourcing Fulfillment Isn’t Free, But Neither Is Doing It Yourself
We’ll shoot straight with you. It makes sense to ship your own orders at first. While outsourcing fulfillment is not a luxury, it’s not, strictly speaking, a necessity either. It makes more sense for you to ship your own orders at first. Until you ship enough orders to justify regular account maintenance and storage fees, you’re better off shipping your own orders. However, it will make sense to outsource fulfillment sooner than you think. To give you a general rule of thumb:
- If handling 20 orders per month, outsourcing fulfillment should at least be on your radar.
- Once you’re shipping 50, you might break even on fulfillment.
- After you break 100, outsourcing fulfillment is often cheaper than doing fulfillment in-house.
This is just considering the financial elements of outsourcing, too. The more intangible benefits – the simplicity of business processes, happier employees, and so on – cannot be tracked or measured as easily. Worrying about your business may not be a financial cost, but it is still a cost (albeit a mental one).
There is no specific right time for outsourcing fulfillment. Our recommendation is to outsource fulfillment once it has become a pain. By the time you get to that point, you likely have a steady order volume and the additional financial cost of outsourcing is minimal. Once you’re at that point, outsourcing fulfillment will help you get your life back 🙂