Order management is a crucial part of every business. A business needs to attract more customers, which is why it is vitally important that it efficiently fulfills and processes existing client orders quickly. Order management is the very heart of every enterprise resource planning (ERP) system. You have to decide whether to handle e-commerce order management on your own or through a third party.
Order management business process outsourcing (BPO) ensures that many of your daily tasks can be handled through a third party, giving you a competitive edge in today's demanding market.
Table of Contents
Lower Cost and Higher Efficiency: The Strategic Shift
Manage Your Inventory and Technology Access
Best Time to Outsource Order Management
Frequently Asked Questions (FAQ)
Lower Cost and Higher Efficiency: The Strategic Shift
Outsourcing order management can help your business grow for a lower cost and in a more efficient manner. Third parties can be entrusted with the task of performing functions that your business would otherwise spend its valuable time on.
The strategic choice to pursue order management BPO allows you to convert fixed costs (like warehouse rent, full-time employee salaries, and software licenses) into variable costs (pay-per-order). This improves cash flow and operational flexibility, especially crucial for scaling businesses.
Lower Freight Rates
By pursuing order management outsourcing to a Third-Party Logistics (3PL) provider, your business enjoys many benefits including lower freight costs. Remember that shipping costs are a huge expense for every business. The greater the volume, the lower the freight rates. Through outsourced order fulfillment, your business can take advantage of the 3PL's high volumes and secure significantly lower bulk shipping rates that an individual e-commerce store cannot match.
Also, shipping your products from an in-house location does not ensure optimal costs or lesser transit times. Outsourcing order management gives your business a big advantage in the form of Multi-Node Fulfillment (shipping from multiple strategic warehouse locations), which reduces delivery times and cuts expensive air freight costs.
Share the Costs
If your business runs its own warehouse, it must bear all the associated costs. However, when you contract out the running of your warehouse operations, you can share the costs with your partner. This means that expenses like labor and rent, as well as the cost of equipment and utilities, plus miscellaneous costs will be shared. This also includes shared access to expensive Warehouse Management Systems (WMS) and automation tools. The result is significant savings in terms of money and time.
Manage Your Inventory and Technology Access
By choosing order management team outsourcing, your partner will bear all the shipping costs, and in addition, your business gets access to the latest technology without massive capital investment.
- Real-Time SaaS OMS: Your partner utilizes cloud-based Order Management Systems (OMS) that offer a single, centralized dashboard providing real-time stock levels and order status.
- AI-Driven Forecasting: Modern providers use AI and machine learning to analyze historical data and trends to predict demand more accurately. This helps optimize stock levels, preventing costly stockouts and over-stocking.
- Enhanced Customer Service and Reverse Logistics: Providing high-quality customer service is another very important part of every business. When you outsource order process support, your partner can handle the entire returns process (known as Reverse Logistics) more efficiently. This includes quality checking and re-stocking returned items, which is critical as e-commerce return rates can be high.
- Order Tracking and Support: Various functions like managing inventory space can safely be entrusted to an outsourcing partner. They are going to ensure that your shipments reach your customers on time, and seamless order tracking support outsourcing will also be taken care of in a more efficient manner, reducing customer inquiries to your core team.
This frees up your time to spend on other tasks, like marketing and product development, that will help your business run more efficiently.
Best Time to Outsource Order Management
The original recommendation to outsource order management after your e-commerce website goes live is now better defined by scalability thresholds and strategic need.
The ideal time to outsource order management is when you find that the cost of each order is greater than that of your provider, or when your business is hindered by any of the following:
- Order Volume Thresholds: You consistently ship over 10-15 orders per day. At this volume, your time is better spent focusing on sales and marketing, not packing and shipping.
- Scalability for Peak Season: Your infrastructure is not geared to promoting e-commerce growth, especially during holiday spikes. Outsource order management allows you to instantly scale staff and space up and down without hiring/firing temporary labor.
- International Ambitions: If your business is ready to get national or international attention, your outsourcing partner can instantly provide localized fulfillment centers abroad and multilingual support, making global expansion feasible.
Volatile Order Volumes:
It is normal for order volume to fluctuate. If you outsource order process fulfillment, your business won't have to deal with fixed costs. In fact, processing orders through a third party ensures more accurate, more cost-effective, and elastic outsourced order fulfillment.
The shift toward outsourcing for strategic and technological advantages is documented in major industry reports. According to the Deloitte Global Outsourcing Survey, organizations are increasingly turning to outsourcing not just for cost reduction, but to leverage vendor capabilities in highly specialized areas such as cloud technology, automation, and AI, all key components of modern order management outsourcing.
Frequently Asked Questions (FAQ) on Outsourced Order Management
1: What is the main difference between outsourced vs. in-house order management?
In-house is a fixed cost (salary, rent, software license) with limited capacity. Order management BPO is a variable cost (pay-per-order) that provides instant access to expertise, lower shipping rates, and scalable capacity.
2: Does outsourcing mean I lose control over my inventory?
No. A reputable partner uses a cloud-based OMS that integrates with your platform, giving you real-time visibility into stock levels and order status 24/7
3: How does a 3PL partner offer lower shipping costs?
They achieve economies of scale. By shipping massive volumes for many clients, they negotiate significantly lower bulk rates with carriers, a benefit passed directly to your business
4: What is the single best time for an e-commerce business to start outsourcing?
When you are consistently shipping over 10-15 orders per day. This is when your time is better spent on growing your business rather than on physical outsourced order fulfillment tasks.
