Most etailers crave a flexible fulfillment solution – one where space and labor costs increase and decrease in sync with demand. Luckily, there’s an app for that. It’s called third party fulfillment. These specialists serve multiple clients out of the same location, sharing space, labor and equipment across clients to drive efficiency.
Despite the advantages of this flexible fulfillment solution, well-funded start-ups continue to invest to build their own logistics infrastructure, instead of preserving this capital or investing it in product development or marketing.
Here’s the problem with that approach: You have no idea what the future business will look like. Sure, you’ve got your five-year plans (yours and the one you show to your bankers), but the market has a way of throwing wrenches into these plans.
Build it and hope they will come
You can build a large fulfillment warehouse to support the most optimistic trajectory (build it and hope they will come). But would you want to build a huge auditorium for your band’s first gig? You may need it someday, but until then it’s a complete waste of money – not to mention a little pathetic.
The right fulfillment partner can scale your operation through every stage of your growth cycle, from traction to maturity. Through it all, your fulfillment costs are variable and parallel your revenue stream.
Not only are future volumes hard to predict, but the future product and order mix is, as well. That has major implications for warehouse design. Today, you may ship 1,000 orders a month with 20 SKUs and one unit per order, but in 3 years it could be 50,000 orders a month with 1000 SKUs and 6 units per order. That change would require a completely different layout with different equipment and automation. But if you’ve already designed the “future state” warehouse, you’re likely looking at a costly, and embarrassing, equipment write-off.
A third-party fulfillment partner can offer a modular solution, deploying the right systems and automation only when the business dictates.
Flexible fulfillment is a core competency of fulfillment providers
In life, predictability can be boring. In fulfillment, predictability is a godsend, allowing managers to plan for the exact amount of space, labor and packaging equipment they will require, with no wasted expense.
Unfortunately, that’s not reality. The reality for most etailers is persistent variability. Third-party fulfillment providers, like Amware Logistics, are flexible fulfillment specialists that can:
- deploy trained temporary labor at a moment’s notice
- offer flexible space contracts where you pay only for the space you require
- leverage systems to manage new processes, with no custom coding or added expense
Can your fulfillment operation scale? Read our Viewpoint paper to find out.