There are many reasons why growing companies switch from managing their warehousing in-house to hiring a third-party fulfillment company. There are many hidden costs and challenges when you manage your fulfillment and warehousing in-house, especially if you are a startup company. Although using a fulfillment partner may seem more expensive up front, you will ultimately save more money in the long run as your business grows. Here are some of the hidden costs of in-house warehousing, so that you can weigh your options and save on costs with a fulfillment partner.
No matter what your industry is, if you work in a retail environment that sell products, you’ll need to gather inventory. If you are trying to store all your materials and products in your office or home, the cost and inconvenience is high. Consider this: the average pallet takes up about 3.65 square feet and you will also need space to organize and access your products. You may think that you have enough space to store your materials at home or in your office, but it’s a good idea to double the space you think you might need, so that you can navigate through your materials easily and accommodate larger shipments.
While you are focusing on marketing and sales, you may need someone to oversee your warehouse management and customer service. The cost of employing such a person can add up, as there are additional expenses to their salary. You will also need to invest some of your time in training them, so that they work to your expectations. Hiring an employee requires additional expenses such as holiday pay, insurance, workers compensation, recruiting, overtime, and more.
Your inventory is essentially your income. The success of your retail business will depend on how many products you can sell. Without security, your inventory could be damaged or stolen, costing you hundreds or thousands of dollars. You should also consider the type of inventory you store and whether it needs to be in a climate-controlled environment. These are some features that are difficult to accommodate in-house. You may need to pay for surveillance and set up additional security measures to protect your inventory.
Warehouse and Inventory Management
How well you manage your warehouse and inventory will have a significant impact on your success. When a customer places an order, you need to fulfill these items quickly and accurately manage your inventory count. To do this, you will need to invest in inventory management software, and make sure that whomever you hire to handle your warehouse management is correctly recording the changes in your inventory.
Just as you would seek home insurance to protect the value of your possessions in the case of a catastrophe, you will also need to pay for insurance for your inventory.
Inventory Management Inaccuracy
Inventory management accuracy means that you are constantly ensuring that your products are stored securely to prevent them from getting damaged or lost. It also means that you need to accurately measure stock levels, so that you can provide the correct information to your customers. In addition to investing in an inventory management software, you can also partner with a fulfillment provider that offers a variety of inventory management solutions to help you.
High Mailing Prices
Mailing out your products will be simple if every package is the same size, weight, and sent out to similar postal areas. However, if your packages differ in size, weight, and need to be sent to different states or countries, it is unlikely that you will get the most competitive rates and the best service levels when you work in-house.
Lack of Expertise
Running your own business is an exciting process. You are in complete control of your schedule and workload, and all the success goes straight to you. However, if you do not completely understand fulfillment management, you may find the process more complicated than you think. Outsourcing your order fulfillment to a company that fully understands the process and can provide you with cost benefits will allow your business to be more flexible and scalable. Partnering with a logistics provider means that you will be less impacted by seasonality, and you will be better able to predict your profits.
Hire APS Fulfillment, Inc. as Your 3PL Provider for Warehousing Services
It’s true that handling your own warehouse and fulfillment provides you with extra control and comfort, but the many hidden costs may not be worth that freedom. As you evaluate your options for managing your warehousing, take some time to consider the benefits of working with an outsourced fulfillment provider. They can help you reduce your costs and improve efficiency in the long-term with their proven systems and processes. With the right 3PL partner, you can provide customers with convenience and an enjoyable online shopping experience. Managing your operations can be a difficult task on your own, especially as your business grows through your marketing efforts. A 3PL provider can help you keep up.
APS Fulfillment, Inc. is one of the most experienced and trustworthy 3PL providers. We offer dependable, quality, and effective e-commerce fulfillment services and we can help you if your growth has become too challenging to manage on your own. That way, you can focus on the key parts of your marketing and sales efforts. We offer our clients a variety of hands-on services including product fulfillment, fulfillment solutions, fulfillment markets, and more. We also use the most current and quality software systems and technology to manage your warehouse. Leave the heavy lifting up to us and you will see a significant increase in customer satisfaction.