Before you decide to outsource fulfillment to a distribution center, there are several factors to consider. The cost of outsourcing fulfillment will almost always be higher than managing the database and logistics within your own company. The deciding factor for your business will be the number of orders you receive per day. You'll also have to consider the timeliness and track record of the outsourcer, geographic location, handling of returns, and the outsourcer's ability to generate reports. While outsourcing fulfillment is not a simple decision, consider that the most successful retail Web sites do not outsource their customer service or fulfillment.
Many organizations consider serving their customers to be a core issue of the business.
That said, closely monitored fulfillment outsourcing can still be a viable option if the Web merchant chooses a partner carefully and continues to closely watch all the details of the service. Companies that have between 5,000 and 10,000 orders per day should keep fulfillment in-house to maintain control over the operation, leverage economies of scale between existing and online channels, and provide a higher level of customer service. Although there is no single software solution that provides all the elements required to manage the complete fulfillment cycle, the most reliable fulfillment services are delivered by vendors that supply their own. Companies using an outsourced distribution service should assign their own fulfillment manager to oversee all operations, orders, returns, and customer service activity, and to monitor the service agreement between the vendor and the company. We're operating a B2B e-market site within our industry and are finding that transaction fees alone aren't providing a sufficient revenue stream.