This isn’t a trick question, but it is a harder one than it looks: what are you in business for? If you sell online, are you a brand or are you a warehouse operator?
If, like many of our customers, you started the business as a side hustle or you’re bootstrapping as you grow, then in the early days it probably makes sense to fulfill orders from a room in your own house or maybe a small garage or office space nearby. But how scalable is that, realistically?
Now let’s suppose your business has already been running for some time, and you’ve got an existing warehouse to stock and fulfill products. Is the available space limiting your ability to grow the business? And it’s worth asking, is it the most cost-effective approach to run your own warehouse anyway?
Room to improve
Think about that: you need warehouse staff (either that, or you and your business partners are working all the hours and that’s not a healthy long-term plan). You need storage space (with enough room to grow). And, you need to manage the challenges that go with running a part of the business that isn’t part of what you do.
If you’re going to operate a warehouse, you need to find a suitable location for it, and then you have HR responsibility to the people who’ll be working there. You need to sort out contracts, so it’s off to the solicitors and you can add legal costs to the bill. You need to make sure it’s compliant with health and safety rules. That’s a lot to think about.
The do-it-yourself approach will only get you so far: there are only a certain number of hours in the day. None of what we’ve just described is helping you to reach new customers or scale. Even though fulfillment is an important part of any eCommerce business, it’s not your core activity.
Got the time?
That’s exactly the dilemma our customer The Smooth Company faced. It was so time-consuming just to sort and pack orders, and post them by hand, that there was less and less time to focus on marketing and growing the brand. And if the brand isn’t growing, especially at that all-important early stage of the business, then how is that affecting the chances of taking the business to the next level.
If you’ve got a bulky product, you’ll quickly run out of space if you’re handling orders from home. And even if you hire someone to help you, how comfortable would you be with giving them access to your house while you’re away for work or on holidays?
When your business takes off and you start getting lots of orders, working with a 3PL can save you money. But the real reason to think about working with a 3PL is not to do with cash: your biggest saving isn’t necessarily financial but it’s the opportunity cost.
A 3PL provider can do pick, pack and storage for cheaper than any one product seller can pay for postage only. But most importantly, you get your time back to work on the things that will add value to your business.
You need to ask yourself a question: are you a brand or a logistics company? If you’re a brand, be a brand. Lean in to connecting with customers, creating great content, building sales pipelines and innovating with new products. Leave the rest to a specialist, so you can stay focused on what you do best.