This is our Shipping Methods Explained blog series. We’ll go deep on fulfillment methods in this series, which refers to how companies get items to their clients and fill online orders.
In theory, it should be straightforward. Isn’t it possible to transport your product yourself on a tiny Itty-Bitty bike? When you have hundreds or thousands of orders each day, as well as rising shipping expenses that may drive you out of business, consider how difficult things have gotten.
It’s a difficult job to track inventory, navigate each carrier’s specific conditions, and determine the lowest cost from hundreds of shipping alternatives. That’s why more and more companies are outsourcing their fulfillment operations.
Are you ready to outsource your fulfillment? Let’s look at your alternatives so you can choose the best solution for your company. What is Fulfillment-as-a-Service (FaaS)? What are the benefits and drawbacks? When should it be used? Let’s get started.
What is FaaS?
Simply defined, Fulfillment-as-a Service (FaaS) is a type of fulfillment in which your firm engages a third party company or warehouse to prepare and ship purchases for you. This allows you to use fulfillment services without having to make an upfront investment of money, and only for the services you require.
Consider it like a Netflix membership. You have access to the material and services as long as you pay the subscription fee. FaaS is similar. You can utilize a third-party logistics (3PL) provider to pick, pack, and ship your merchandise provided you partner with them.
Consider the alternative: in-house fulfillment, which requires businesses to devote a significant amount of money to warehouse space, labor, management, and software in order for things to run smoothly. With FaaS, all of this is included within one recurring fee, allowing you to pick and choose exactly what you want.
We addressed previously how to pick the best fulfillment method for you. Take a look at this post to learn more.
How to Start Shipping With FaaS
Getting started with a fulfillment provider has never been easier thanks to seamless integration between your company’s systems and their cloud-based distribution platforms. It takes just three simple actions to get started delivering products.
Step 1: Find your Fulfillment Partner
To outsource your fulfillment, you must establish contact with the appropriate FaaS provider. There are a plethora of fulfillment firms competing for your business. So, when evaluating each one, ask questions like these:
- Does the 3PL provider have the capabilities to fit your business needs?
- Can the 3PL provider integrate with your business systems?
- Does the 3PL provider have a proven track record offering reliable services?
- What are the costs? Do they charge per hour, per unit or packet? Are there transactional fees or recurring costs?
Some 3PLs prioritize customization above speed, while others strive to be the most cost-effective alternative at the expense of quality. Select a fulfillment partner that fits with your specific strategic priorities.
Step 2: Integrate
After you’ve chosen a fulfillment provider, it’s time to connect them.
You can use cloud-based software as a FaaS provider offers cloud-based software solutions so that your company may utilize their warehouse management tools to manage the flow of its items. These solutions provide significant benefits to your organization because they allow for highly personalized fulfillment options – custom packing, custom unboxing, and custom bundle creation, you name it.
In addition to that, smart fulfillment companies like Launch Fulfillment allow you to establish automated processes and a simple return process by collaborating with firms such as Alloy and Returnly.
Step 3: Send Your Inventory
The final stage is to send your inventory to the 3PL’s facilities and get your items moving.
Once the goods have been received, the warehouse will pick, package, and transport them for you. The 3PL will distribute inventory across their network of warehouses, bringing your items closer to where the orders are being placed.
Due to cutting-edge artificial intelligence (AI) algorithms, Launch Fulfillment can now deliver 2-day freight throughout the United States. We deliver the items to where your clients are, rather than a central fulfillment center. This lowers our shipping costs and carbon emissions by concentrating on ground transportation.
Fulfillment-as-a-Service Pros and Cons
Is FaaS the right solution for your company? Alternatively, do you want to dropship or utilize another delivery strategy? Let’s look at the benefits and drawbacks of fulfillment-as-a-service so you can make an informed decision.
The FaaS approach is beneficial for any firm with ambitious goals, changing sales, and too little time. Beyond the obvious advantage of having a third party fulfill your order for you, FaaS provides benefits in terms of skill specialization, agility, and scalability.
As your company expands, 3PLs are able to change as needed and adjust expenses accordingly. On the other hand, when your business slows down (hopefully not), costs can also rise for various reasons, leaving you less weighed down with high overhead. You can avoid the high expenses, risk, and commitment of leasing and running your own warehouse with FaaS.
You get more than a fulfillment service when you pick FaaS; you get a business partner. Most 3PLs rely on teams of logistics professionals and support staff to assist you with your shipping requirements, as well as years of expertise in fulfillment best practices and software solutions.
Not only do they have experience with shipping, but they’ll also take care of the unpleasant side of returns. The number of returned products is increasing as online shopping expands. 3PLs can assist you manage the agony of returns while also providing a simple return experience for your clients.
The FaaS providers I’ve seen move at warp speed. Whether it’s a shipping time or software development, 3PLs embody the spirit of mobility. Many fulfillment providers, such as Launch Fulfillment, provide 2-day delivery to all 50 states; as a result, more and more companies are collaborating with 3PLs to acquire the sort of agility they could only dream of.
Third-party logistics providers and fulfillment specialists are increasingly partnering with more and more merchants, for the same reasons as those listed above. Despite its benefits, FaaS is not appropriate for every company.
Need Consistent Orders
When it comes to fulfillment-as-a-service, there are additional costs involved if you’re a startup or a small firm just getting their feet wet. However, 3PLs are available to assist you as needed when customers are pounding on your door and you can’t handle the increasing number of orders.
Lose Full Customization and Control
You may be surprised at the range of customization that 3PLs can provide, but there is a limit when compared to complete control over fulfillment enjoyed by in-house stocking. So, if you have very particular and highly specialized fulfillment needs, handling your fulfillment in-house may be a smarter choice.
Is FaaS the best answer for your company? If you’re not sure, stay tuned for our next article, which will cover Fulfillment by Amazon (FBA). Learn more about Launch Fulfillment’s industry-leading warehouse management software.