Thinking of taking on a larger warehouse?
As a startup business, you’ll face many difficult challenges; from where to sell your product, and how to market your product to how to grow your business. As the proprietor of the business, it will be your responsibility to determine the best option to get your product to your customer. As your business grows, you’ll face the decision whether or not to get a larger warehouse of your own or outsource.
When making the decision, there are a few key factors that you should take into consideration:
- Do you want the ongoing expense of the facility?
- Do you have the capital to invest in storage, material handling, etc.?
- Is it a seasonal product where your sales will fluctuate?
- Will you have the time to ship out the orders while still managing the rest of the business?
- Is the variable cost of running your own warehouse worth it versus the fixed cost of outsourcing?
As a product manufacturer, if you work with an outside retailer, they typically will place their purchase order in batches throughout the year. Every 3-6 months, based on their ordering schedule – your retailers will place an order that could require you to need more space. For example, when a retailer places their holiday order – they’ll place a larger order than normal. So you’ll need the warehousing space to keep the inventory but it will be for a short amount of time. Is the overall investment worth it? Or would it be better to outsource your storage and inventory needs? It can be challenging having enough inventory storage for the seasonal influx of sales and orders from retailers. By outsourcing, you can manage your business without worrying about the operational processes – focus on sales.
There’s another solution, and that’s to let someone else worry about it. Hiring an e-commerce order fulfillment and distribution company for brands and manufacturers means you can put the responsibility for order management onto an outside company. Not only do you get e-commerce order fulfillment and global multi-channel fulfillment, you also get a comprehensive returns management program.
When you outsource those shipping and distribution responsibilities that have been holding you back, you are better able to maintain high levels of customer satisfaction. With your own product storage on site, you probably experience some disorganization, right? Without some sort of internal system of controls, it’s easy to lose track of products, run low on inventory without realizing it and fall behind on scheduling. All of these setbacks impact the customers, and when the customer isn’t happy, well, you can figure out the rest.
When you start to reach more buyers with your products, you’ll start to get good reviews and more frequent word of mouth referrals. Plus, outsourcing means you can keep your on-site operational costs low and avoid having to lease out costly storage space. If you have the type of business that experiences highs and lows with product demand throughout the year, you can outsource to keep your fixed costs low, such as heating and cooling, warehouse rent, and labor all year long.
If you’re running out of inventory storage, you’re probably finding it hard to efficiently receive, count, inspect, label, and add products to your own warehouse management software, let alone find space on the shelves for it all.