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How To Cut Your Shipping Costs By Outsourcing Your Fulfillment

Posted On March 19, 2015 by Charles Hsieh

Shipping costs can be a major expenditure for businesses that ship a high volume of products to their customers, especially when transportation costs are on the rise. Savvy business owners looking for ways to reduce costs in these areas can find resourceful ways to do so while still offering quality service to their customers. One viable option is to outsource to a third party fulfillment provider who can help to better manage these costs.

Change Where You Store Your Products

Many fulfillment companies have a warehouse network across several regions. Using a facility located close to your customers will save you on transportation costs. A great example: Let’s say you have a core of customers located in Toronto but your company is located in the U.S., you may be able to find a fulfillment service that has a network of warehouses to store your inventory in Canada. In addition to saving on transportation, you can avoid international shipping duties, customs brokerage fees and other shipping costs.

Change Shipping Accounts

A fulfillment company can use your shipping accounts or use their own accounts with couriers, in most cases it’s your choice. In many instances, it is most cost effective to discontinue your own accounts and use theirs due to their combined buying power and volume discounts. These fulfillment providers can take advantage of economies of scale by negotiating better shipping rates with courier services and get bulk pricing on supplies like boxes and tape. The fulfillment company may even save costs by using the free boxes supplied by each courier service.

Automate To Save

Business owners know the time and effort that it takes to fulfill and ship orders to their customers. Third party fulfillment providers have the order management software that will help expedite the process and in the end not only save you a lot of trouble but also help you save money. The efficiency that automated systems can provide allow you the ability to grow your business to the next level through a seamless transition.

Lending An Extra Hand

Working with a fulfillment house comes with the perks of providing a whole expert staff to your company. This team can handle all the warehousing, packaging and shipment of your orders. If you calculate the time spent on shipping yourself and where you can reallocate your efforts into another area of your business, you might find that it would be worth making up the difference by focusing your energy on increased revenues and product development.


You’ll find that fulfillment providers do charge a monthly processing fee to cover their cost of doing business, but the time and money saved through using these services are priceless to retailers who would rather focus on mainstream areas of their business. For more information on outsourcing, John Lindenberg’s article Fulfillment: Guidelines for Outsourcing at PracticalEcommerce.com shares a step by step process to help you determine how to find the best outsourcing solution for your company.