As a business owner, order fulfillment is the primary task you must focus on. Timely delivery of products to customers is the key to satisfying them and reducing the churn rate. Order fulfillment can be a challenging and expensive task for many business owners. Therefore, they opt for 3PL fulfillment. They hire a group of professionals to take care of the order fulfillment.
Now the main point is whether 3PL fulfillment is a relatively affordable option or not. To figure out the answer to this question, we need to go through the strategic financial benefits you can get by opting for 3PL fulfillment. Before exploring financial benefits, you must understand the expenditures of 3PL fulfillment.
Understanding Cost of 3PL Fulfillment
When it comes to the cost of 3PL fulfillment, you need to consider direct and indirect expenditures. Direct expenses usually involve the costs of logistic operations. The costs directly associated with warehousing, shipping, and handling processes are referred to as direct expenses. These expenses can vary based on the number of products, the size of the business, and other factors.
Indirect costs are basically the additional charges you have to pay when opting for 3PL fulfillment. Costs of maintaining the supply chain, introducing the latest technology, and quality control measures are considered indirect expenditures. Understanding both direct and indirect expenses will help you evaluate the total cost of 3PL fulfillment.
Financial Benefits of 3PL Fulfillment
Now, you are all set to unveil the exciting financial benefits of 3PL fulfillment. The following section is all about the strategic monetary benefits you will get by opting for 3PL fulfillment. Let’s delve into the details of these benefits.
Immediate Cost Reduction
The first and the most exciting financial benefit of 3PL fulfillment is immediate cost reduction. To fulfill orders by yourself, you have to bear considerable upfront costs as you have to spend on warehousing and technology. By outsourcing the fulfillment process, you can reduce these upfront costs. It results in an immediate reduction of costs.
Similarly, many other minor expenses that become a big amount over time are also reduced. In short, opting for 3PL fulfillment immediately saves a considerable amount that you otherwise would spend as upfront costs.
Flexibility
The financial benefits of 3PL fulfillment offer flexibility as well. After opting for it, you have to pay only for the services you get. It allows you to quickly change your business along with the trends. You don’t need to stick to the current systems just because you have spent a lot on them.
3PL providers offer flexibility to change your business according to modern trends. As a result, you can target the right audience and generate good revenue due to a rise in sales.
Labor Cost Reduction
Order fulfillment is not about picking products from the warehouse and sending them to the customers. It’s a complex process that involves several steps. Picking, packing, loading, delivering, and several other tasks are involved in it. All these tasks are performed by workers and laborers. You have to pay a considerable amount to these laborers for their services.
However, by opting for 3PL fulfillment, you have to simply pay the 3PL providers only. You don’t need a lot of workers as you no longer have to pick, pack, or load the products. As a result, labor cost is reduced saving you a considerable amount that you have to pay to laborers every month.
Focus on Core Competencies
By outsourcing the order fulfillment process, you can save a lot of time and money. You can spend this time and expenses on some other processes involved in your business. You can focus on core competencies. Similarly, you can conduct new marketing campaigns that can boost your sales. So, this will also be a financial benefit as it leads to the generation of more revenues.
Reduced Capital Expenditures
To fulfill orders by yourself, you have to spend a considerable amount in terms of capital expenditures. These expenses are reduced to almost zero when you outsource them to 3PL providers.
Final Words
3PL Fulfillment offers numerous strategic financial benefits by reducing upfront and capital expenses. It also enables you to focus on core competencies and generate more revenue. If you want to get these exciting benefits, immediately look for trusted 3PL providers and outsource the order fulfillment process.
