As the internet becomes more and more ubiquitous in our daily lives, so too does online shopping. The pandemic brought this into focus as e-commerce sales grew 43% in a single year.
Unsurprisingly, many business owners added online purchasing options to their existing business models. Entrepreneurs started new e-commerce businesses from scratch. Most would discover that online order fulfillment isn’t as easy as it seems, especially as a business grows.
This is where third-party fulfillment comes into play. Imagine a world where you could focus on your branding and the quality of your products while someone else took care of warehousing, packing, shipping, and more. A third-party fulfillment partner can make that happen.
Ready to learn everything you need to know about third-party fulfillment services and how they can change the way you do business? Read on for our complete guide.
What Is Third-Party Fulfillment?
Third-party fulfillment refers to a business that stores, inventories, and ships products on behalf of another business. In other words, they don’t own the products they’re handling and shipping. They do, however, own the warehousing space, equipment, and technology used to handle these products, and they pay the employees who complete the job.
Third-party fulfillment falls under the category of third-party logistics or 3PL. We’re seeing a growing trend of e-commerce companies handing over complete or near-complete control of their inventory to 3PL providers. Companies like Phase V are making it easier to grow the online shopping industry while giving individual e-commerce companies a competitive edge.
Third-Party Fulfillment Services
If you’re new to e-commerce, you may not realize how complex order fulfillment really is or why you’d want to outsource this element of your company. A breakdown of third-party fulfillment services reveals just how involved order fulfillment is and why an entire industry is growing around it. Take a look at the services Phase V can offer.
The first step in third-party fulfillment is connecting with the company we’re partnering with. This isn’t as simple as learning about your business model, the products you sell, or your current sales volume.
To truly connect with your online store, we integrate:
- Your shopping cart software
- B2B order fulfillment with suppliers
- Omnichannel marketplace ordering
In other words, we evaluate all of your points of contact with both customers and suppliers and streamline that communication in our direction. This speeds up fulfillment time, reduces the possibility of miscommunication, and allows you to stay focused on internal operations. We then connect you to our proprietary software to grant you increased oversight and access to the data that will keep your business trending toward growth.
Inventory and Warehousing
Once the first steps are complete, we will begin to receive your inventory in our East Coast and West Coast warehouses. We immediately perform quantity and quality checks to account for:
- all existing inventory
- discrepancies in supplier order fulfillment
- damaged inventory
By performing these tasks immediately, we ensure that you have a clear sense of your actual inventory. This will also allow you to address any issues with suppliers (e.g., a drop in quality) right away.
After quantity and quality checks are complete, we sort your inventory and store it in an assigned space that is designated for your business. Each item is given a universal SKU so that they’re well organized and easy to locate.
Improved Pick and Pack Services
It’s no secret that how you pack your items before sending them to a customer is an important part of branding. While connecting with your business, we also record all order packing specifications, including:
- custom invoices
- shipping labels
- branded packing materials
- special packaging requirements
Although you are outsourcing your order packing, your customers will have the same unboxing experience they’ve come to expect from your products.
Thanks to our high level of warehousing organization and proprietary software, we are able to monitor the picking and packing process to reduce errors. This speeds up the timeline from purchase to delivery and ensures that customers receive exactly what they ordered.
An estimated 87% of customers are more likely to order from an e-commerce business again if the delivery goes according to plan. That means no unexpected delays or products that arrive damaged.
Our software allows you to track your current inventory in real-time so that you can make appropriate changes to your website and prevent customers from purchasing items that are temporarily out of stock. This can cut down on shipping delays and refunds while ensuring a smooth order fulfillment process from the start.
At Phase V, we are always searching for carriers that can provide the best pricing, the most efficient delivery services, and the highest shipping quality. We manage both domestic and international shipping solutions to account for the rapid expansion of the global economy, meaning that you won’t be limited to national sales.
Why Invest in Third-Party Fulfillment?
Perhaps you’re still thinking that these services seem easy enough to complete in-house. After all, if your business is in its fledgling stages, you may not have experienced the full scope of order fulfillment. Take a look at the benefits of partnering with third-party fulfillment services.
Focus on the Business
From the outside looking in, it’s easy to assume that most of what an e-commerce business does is order fulfillment. As an online business owner, you know the truth. Before you can even dream of fulfilling a high volume of orders, you need to focus on:
- funding and financial projections
- creating a line of products customers want
- sourcing high-quality suppliers and manufacturers
- online branding
- reputation management
- employee retention
- customer service
All of these tasks are ongoing, whether your e-commerce business is brand new or years old. Staying on top of order fulfillment while also managing supplier relations, employee performance, and customer satisfaction is next to impossible. Third-party fulfillment allows you to focus on the day-to-day needs that keep your business in operation.
Naturally, the goal of any e-commerce business is to grow. However, there are a lot of signs that your business is growing too fast, and a lot of that comes down to order fulfillment.
When you’re taking care of all operations in-house, a sudden increase in sales is going to put a crunch on your resources. You may not have enough employees to pick and pack all of your products and get them into the mail. You may discover that your current carrier is charging rates that don’t support growth in profit margins.
Your third-party fulfillment partner will have built-in tools and resources to accommodate your expansion. You can focus on growing your business without worrying that it’s too soon or that your current system can’t sustain it.
Maximized Space Usage
E-commerce has made starting a business a more accessible prospect thanks to the potential for low start-up costs. A big example of this is not needing to rent or buy a commercial space before getting your business off the ground. Many people are starting e-commerce businesses out of their own homes because they don’t need a brick-and-mortar location to connect with customers.
The problem is that once the demand for your products grows, so does the need to maintain a larger inventory, especially if you don’t want order fulfillment to slow. Pretty quickly, business owners realize that using their own home or office as a warehousing space isn’t going to work.
Third-party fulfillment provides the space you need to grow your inventory alongside demand. Partnering with a 3PL provider is significantly more cost-effective than renting out a commercial space to store your products, particularly when the warehousing costs are bundled with additional order fulfillment costs.
As we mentioned earlier, customers expect their online orders to arrive at their doorstep in a matter of days. If you can’t deliver on fast shipping, you may lose customers before they’ve even placed an order.
How about after that order has been placed? There are a few elements of customer satisfaction that e-commerce businesses need to meet, including:
- making high-quality products
- delivering products that meet expectations
- ensuring order accuracy
Third-party fulfillment services can improve this third element. Quality checks prevent customers from receiving defective or broken products. Warehouse organization and automated pick-and-pack services ensure that customers receive the products they’ve ordered, rather than something else from your product line.
By getting orders right the first time, you can build trust and secure repeat customers that allow your e-commerce business to thrive.
A recent study found that 60% of inventory records in the retail industry are inaccurate. This is often due to a failure to account for missing or damaged inventory or record inventory lost in the order fulfillment process. Inaccurate inventory can lead to thousands of dollars in lost revenue.
By partnering with inventory experts, you can improve inventory accuracy. In fact, Phase V has a 99.9% accuracy rate in fulfillment and distribution. As we mentioned earlier, we’ll also catch and report discrepancies in the supply chain right away.
Improving accuracy has a ripple effect. It leads to revenue growth, higher customer satisfaction, and less time lost to audits.
Who Can Benefit from Third-Party Fulfillment?
At Phase V, we partner with a wide variety of e-commerce businesses across industries. An easy way to sum up the industries we serve is to lump them under the category of nonperishable products. Take a look at what that looks like in practice so you can determine if we’re the right fit for your business.
Phase V serves a wide range of e-commerce industries, including:
- apparel and clothing
- baby products
- pet products
- toys and puzzles
- household items
- dining and cookware
- CBD products
- healthy and beauty products
- jewelry and accessories
We frequently partner with businesses that have a 100% online business model. However, we also handle online sales for businesses that also manage brick-and-mortar stores. If you do a high volume of online sales, Phase V is the right partner for you.
Subscription boxes are becoming an increasingly popular way for consumers to try new products. This includes items like clothing and accessories, health and beauty products, early learning toys, and pet products.
Subscription boxes also present unique challenges, particularly when it comes to packing them. Many subscription companies allow consumers to customize their subscriptions to receive a unique, specific combination of items. Phase V ensures that all boxes are packed to customer specifications and that automated orders are fulfilled.
Selling your products through established online marketplaces like Amazon is a great way to tap into an existing customer base. However, this also means that your order fulfillment needs to meet Amazon standards, especially if you want to take advantage of Amazon Prime memberships.
Phase V ensures that all of your Amazon orders meet Amazon standards and arrive in a timely manner. We also have experience with other popular online marketplaces, including:
In other words, you don’t have to sell products from your own website in order to secure a third-party fulfillment partner.
Improve Your Order Fulfillment with Phase V
E-commerce is changing the global industry, making start-up opportunities more accessible, and changing the way consumers shop. However, high consumer expectations aren’t always easy to meet. Third-party fulfillment is one of the best ways to improve your online business and scale it up without sacrificing speed and quality.
Are you ready to partner with Phase V and revamp the way you run your online business? Sign up today and let us know about your business and the current rate of shipments per month you fulfill. A Phase V representative will get in contact with you to develop a third-party fulfillment plan catered to your needs.