What You Need to Know About Outsourcing Delivery Services

The genius of business savvy doesn’t lie in menial tasks like who ordered office supplies last. As a business owner, you want customers to experience your company’s core strengths.

Avoid spreading your workforce too thin by outsourcing delivery. Outsourcing delivery is a great way to keep your team focused on tasks that help your business grow.

Companies outsource deliveries for a variety of reasons depending on their size and annual budget. Check out this guide to everything you need to know about outsourcing delivery.

Why Outsource?

Growing businesses are looking for more ways to plan for success. Outsourcing shipping is one of the first ways to take your business from the kitchen to the conference table.

If you’ve been doing deliveries out of your garage, this strategy can save you tons of money in overhead expenses. But once you expand your delivery radius or grow your customer base, self-delivery seems less feasible.

Larger companies might experience similar woes as the need for an expanded fleet could undercut investment in product development. Most companies aren’t looking to become a logistics company.

By outsourcing delivery, businesses can redirect their attention to keeping customers happy by focusing on creating better products and services. 

Expect to Save Money

Good businesses grow. Plan for this growth by re-purposing or downsizing delivery employees.

Employee salaries take up 40 to 80 percent of gross revenues. You can cut back tremendously on overheads by allowing your delivery team to focus on sales-driven activities.

Keeping a small, lean team is possible when you outsource delivery. 

How to Start Outsourcing Delivery

Outsourcing delivery isn’t limited to hiring a company to take packages to customers. Delivery needs are varied.

Here’s a list of options on how to outsource your entire delivery division.

Leasing a Warehouse

Online retailers depend on warehouse space to store goods. Business owners rent space near busy cities to keep delivery fast and simple. 

Shipping from your own warehouse is possible but might require more fuel and longer turnaround times. 

Use a Drop Shipper

Some companies don’t store inventory at all. Instead, they use drop shipping to fulfill customer orders.

Dropshipping allows you to ship orders directly from the drop shipper.

When a customer buys a product from your online store, only then do you buy the item from the drop shipping company. The dropshipping company sends the product to the customer.

3PL

The term 3PL means third party logistics. 3PL includes everything to run the supply chain side of your business.

Services offered by 3PL companies vary but most can help with the entire shipping process including inventory control, warehousing, and reporting. A good 3PL company provides you with reports on how well your supply chain is going. 

3PL services aren’t cheap but they do help medium to large companies profit in the long run. Smaller businesses and sole proprietorships should wait until their inventory can’t be managed a la carte before signing up with a 3PL company.

Choosing a Provider

Start by taking a hard look at your business needs before making the decision to outsource delivery. Businesses experiencing gradual growth might hesitate to make a long term commitment to a warehouse lease or get contracted with a 3PL provider.

The tipping point varies by business but should ultimately be decided by customer experience. Examine the experience your customers currently have with your delivery services.

If they can get better service from a competitor, it’s time to outsource delivery. 

Get Pricing

Shop around to find a variety of local 3PL providers. Ask for proposals or sample invoices to get an idea of what your bill will look like.

Find out the contract terms for warehouse leasing to make sure you can make sudden changes if you experience a setback in your business. The key is making sure the relationship you create works in the long term.

Endure the Tour

No one likes a sales tour, but learning how your logistics provider works can be beneficial. You always hear “ask plenty of questions” when price shopping.

Asking questions is nearly impossible when you have no understanding of what to expect. A tour of the 3PL facility helps you see how other companies work with the provider so you can compare what your business might need. 

There might be services competitors are using through the same provider that gives you insight into how to gain a competitive advantage. 

Find Out About Returns

One of the biggest factors in your customer’s delivery experience is how returns are handled. Before outsourcing delivery, find out how the provider handles returns. 

Processes that make the experience simple for the customer are best. You want a provider who can easily provide a return label when needed and who uses the cheapest return shipping.

This also helps you understand the return cost to you. 

Delivering Expectations

Major online retailers like Amazon set the tone for customer expectations. To keep up in the world of e-commerce, your shipping process must be well organized.

During the holiday season, shipping expectations rise drastically. Business owners who aren’t quite ready to outsource delivery must rely on flat rate shipping services to remain competitive.

But going directly to the post office or UPS will cost more in the future. Shippers increase costs during peak seasons to account for demand.

Using too many carriers means inconsistent customer experiences. Rising prices will soon make it more economical to outsource delivery and create a steady expectation of when packages will arrive.  

The Future of E-Commerce

Business owners are always looking for ways to cut costs. But it’s impossible to make an investment by simply cutting costs.

Investments bring valuable business returns that last year after year. Outsourcing delivery is an investment that will keep gaining returns by building customer trust.

For more information on e-commerce shipping options, check our blog for updates.