7 Ways Poorly Run Fulfillment Centers Can Cost You Revenue

forklift and driver unloading packages

forklift and driver moving cargo

Your sales team successfully got a sale. Now, your company’s logistics, order processing, and fulfillment process need to deliver quality products quickly. A poorly-run fulfillment center will lead to poor customer service, shipping delays, and lost or damaged items. These will eventually cost your business precious revenue through lost sales, product replacements, and process inefficiencies.

Here are seven ways an inadequate fulfillment center can cost your business revenue:

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Poor Customer Service

At the heart of efficient logistics is customer service. Your customers expect to get what they purchased in a reasonable amount of time. A poorly-run fulfillment center is likely to deliver the wrong products, deliver damaged items, and have delivery delays. These problems lower your business’s customer service, corrode your company’s reputation, and reduce customers and revenue.

Customer care and putting your customers’ needs and satisfaction first will improve your business’s logistics and order fulfillment process.

Lost or Damaged Shipments

When customers purchase products from your business, they expect to get what they paid for. If they receive the wrong products or items that are damaged, they will return the products and ask for an exchange or refund. These exchanges and refunds can cost your business money, especially if you don’t have a fulfillment center that can efficiently handle returns. If a customer repeatedly receives damaged goods or wrong orders, they will take their business elsewhere.

Similarly, your customers expect to receive their orders on a timely basis. Depending on the industry and the cost of the items purchased, your customers may not tolerate a lengthy delivery. If their orders are lost or delayed, you risk losing customers and your business’s good reputation.

Too Many Returns

Returns are expected for any company. There isn’t a perfect order fulfillment process and there will be logistical and communication mishaps. If your return rate is unusually high, there is cause for concern. Too many returns indicate poor customer service and unhappy customers.

There are many reasons why customers are not pleased. Their order could be regularly lost or delayed. The products are damaged or they received the wrong items. You must diagnose the root of your business’s high return rate.

Returns will cost your business time and money restocking inventory and replacing damaged or lost products. Return problems can happen at any stage of the supply chain. Even if your logistics center isn’t the source of your company’s return issues, an efficient reverse logistics process is crucial in handling returns in a timely and cost-saving manner.

Long Fulfillment Times

In the fast-paced world we live in, we don’t like to wait to receive what we’ve ordered. Your customers expect their orders to be promptly delivered. Depending on the customer and their need, they will go to great lengths to find the company with the quickest fulfillment time. Companies who promise fast order processing risk losing customers and business if they don’t follow through.

Companies may try to cut corners to compensate for a long order fulfillment process. This, however, will also threaten a business’s reputation and bottom line with unhappy customers. If your customers experience long fulfillment times, it is important to investigate why.

Old Technology

With the rise of e-commerce, anyone can make a purchase anywhere, at any time. The rise of e-commerce has added more outlets through which customers can make purchases. The ease of online shopping means fulfillment centers need to be quick, nimble, powerful, and efficient. With modern logistic technology, shipments can be tracked, inventory forecasted, the software is integrated, orders automatically managed, and items packaged, labeled, and routed seamlessly.

Order fulfillment processes that use old technology risk slow order processing, delivery delays, and compromised products. When this happens, your business’s customer service and reputation decrease, and you’ll lose revenue.

They’re Too Small

As your business grows, you will need a fulfillment center that can be scaled up to accommodate your businesses’ growing logistical needs and capabilities. If your fulfillment center is too small, your order fulfillment process will be unable to meet the increased demands. The order fulfillment process will be inefficient and incur more costs from delivery delays and lost or damaged products.

Unexpected Price Increase

You will need to be in regular communication with your order fulfillment partner regardless of whether they are a 2PL, 3PL, or 4PL. With the latter two, open communication is more important as they manage and handle a larger portion of your logistics and order processing.

Unexpected price increases are an indication that your fulfillment center partner isn’t communicating with you. When there are increased costs due to technology upgrades, an increase in scale, or process inefficiencies, you may have no choice but to pass on the additional costs to your customers. When this occurs regularly, your customers will notice and look for cheaper alternatives.

While expected, infrequent price increases are a part of doing business, when the increases are constant and unexpected, they are indicators that you should be looking for another fulfillment center partner.

Increase Revenue by Choosing a Fulfillment Center That Won’t Disappoint

A poorly-run fulfillment center will cost a business its reputation and reduce revenue from unsatisfied customers. Many logistics issues stem from poor customer service. Lost or damaged shipments, outdated technology, too many returns, long fulfillment times, and unexpected costs are ways that can cost a company business. They are also signs that you need to get a new fulfillment center partner.

Ship My Orders offers businesses looking for an “all-in-one” solution to their logistics and order processing needs. Whether you’re looking to scale up your fulfillment center to meet your growing demand or you’re tired of losing revenue from a poorly-run fulfillment center, contact a Ship My Orders specialist today.

Download the Ship My Orders Guide to Scaling Order Fulfillment