The goal of outsourcing fulfillment should not be one of short-term cost reduction, but rather speed to market. That is because in the long run, outsourcing usually costs more than an in-house system. The benefits of using a FSP is that it provides a reliable method of getting the product to the customer while keeping in-house control of important data such as inventory, reorder levels, and delivery confirmations. The other advantage of outsourcing fulfillment is that it allows a web-based business to focus its energy and resources on marketing, product development, sales, and building its customer base.

We ve discussed outsourcing throughout this chapter; this section is where we really dig into the subject. While outsourcing can make fulfillment and distribution simpler and more efficient it does have limitations and drawbacks.

• Outsourcing is not cheap.

• Many FSPs will not service a website unless it has reached a decent shipping volume.

• An inventory that consists of a large variety of products can affect service and price. For example, it s more costly and time-consuming to prepare packages that contain different combinations of items than it is single-product packages.

• Some FSPs will only respond to inquiries regarding the status of an order while others will provide full product support.

• The level of services in warehousing and inventory management also may vary from company to company. In some cases, the FSP will order stock directly from the manufacturers while others will expect the website to ship the products to the FSP s main warehouse for...