Most start-ups handle all aspects of their business in-house. From marketing to finance to fulfillment to distribution, it often makes the most financial sense to keep these processes in-house rather than outsource them. However as your start-up grows that might no longer be the case. In the words of Anthea Turner, “The first rule of management is delegation. Don’t try and do everything yourself because you can’t.” Your small business can’t meaningfully handle every aspect of the business, so it is important to outsource some components. Here are the top 3 reasons small businesses should outsource distribution.
One of the first reasons you should consider outsourcing distribution is that this can help reduce costs. Since distribution companies focus solely on distribution they are able to purchase necessary products and services in bulk. The ability to purchase in bulk means lower prices which often offset the cost of hiring a distribution company. With distribution locations spread out across the country, and possibly even overseas, there are often reduced costs since shipping costs can be reduced. While these discounts and reductions may only be 10% to 15%, these savings really start to add up. Additionally, a business focused on distribution is able to upgrade specialty technology and systems more often. Your business may not be able to afford these upgrades, but for a business focused on distribution, these upgrades make sense. The distribution center generally has streamlined and updated systems that often allow for savings to be passed on to you.
Another reason small businesses should outsource distribution is that this can allow you to expand your business. As your business grows you likely won’t be able to keep up with distribution needs, while also maintaining high levels of quality marketing, excellent customer service, up-to-date product design, and more. When you outsource distribution it allows you to focus your time, which is a finite resource, on other areas of the business. This in turn allows you to grow and expand your business.
A third reason to outsource distribution is it allows you to better meet the needs and expectations of your customers. More and more, people expect products to arrive quickly after the time of purchase and a distribution center can assist in making that happen. When you meet customers expectations you increase customer satisfaction and ultimately, customer retention.
As you are looking to grow your business, or focus on different aspects of the business, outsourcing distribution is often a prudent decision. Outsourcing distribution can reduce costs, provide expansion opportunities, and improve customer service, making it something all small businesses should consider.