Ecommerce businesses: should you fulfil your orders yourself or outsource them to an external provider? That is the question.
Here, we’ll take you through the pros and cons of each so that you can make the most well-informed and best decision for your personal and professional circumstances…
What is self-fulfillment?
It’s what it says on the tin, really. Self-fulfilment is when businesses independently manage their fulfilment process and handle each part of the operation from beginning to end in-house.
Typically, this involves storing inventory, order processing, picking and packing, shipping and customer care.
When brands opt to take care of everything themselves, it also means they have to deal with all things administrative, too. From hiring and managing employees to sourcing packaging materials and locating efficient warehouse space, the in-house option means you must always be fully on the ball.
Advantages of self-fulfillment
Let’s take a look at the pros of this ecommerce option:
- Easy to get started
As a new business, self-fulfillment is the most obvious and easy option to go for. Why? Because at this level, it’s likely that order volumes will be lower, and therefore pretty straightforward to handle. Not to mention being a cost-effective way to save funds as you get your company up and running.
To begin with, young businesses only really need one location to store their inventory, and these spaces are often offices or small units. Some may even operate out of their own home during the early days.
- Lots of customisation opportunities
In terms of an online store, in-house fulfillment provides businesses with the opportunity to have full creative control over their orders and the way they package them.
For example, if you’ve ever ordered from a small shop from the likes of Etsy, chances are, you’ve received a sweet thank you note for your purchase or a bespoke business card.
These are all ways you can add a touch of personality and personalisation to your brand, and for many customers, it’s the little things that turn them into returning shoppers.
Whereas with an outsourced provider, you don’t always have the options to completely customise the customer experience, not to mention have the flexibility and freedom to make such personal decisions.
- Complete control over the end-to-end fulfilment process
If you value your brand’s uniqueness and it’s one of your USPs, it can be hard to hand over such important aspects to an external team and trust them to deliver it to your standards.
You also may not have the time to brief and prep an outsider, and should things deviate from your original plan, it can be a lot harder to rectify and make changes. Especially when it comes to responding to customer feedback.
Depending on your self-fulfilment experience, it may be wiser for your business to handle all this yourself.
Disadvantages of self-fulfilment
Every pro comes with cons. Here are some challenges you could face with in-house fulfilment:
- Hidden costs
Like we said earlier, it’s wise for small businesses to opt for self-fulfilment at the start for cost purposes. However, when your store begins to grow, the in-house option can sometimes be restrictive in terms of expansion.
As your orders increase, it means you’ll need more inventory, more storage space, plus a larger team to pick and pack your orders if you’re going to meet these new demands.
You also need to think about software and everything required to properly run a warehouse operation, which includes things like a storage system, i.e pallet racks, shelving, specialty racks, etc. and even material handling equipment like forklifts, pallet jacks, or hand trucks if your business requires it.
These non-negotiable costs can quickly grow as you receive more orders (which of course, is what you want), but you need to make sure that you have the means to keep up.
So in summary, it may not be the most cost-effective option in the long term if your business goal is to grow your company.
- Shipping costs
On top of this, you also need to think about shipping costs. Unless you ship a huge number of packages on a daily basis, there’s no way you will receive the same shipping rates from delivery companies that fulfillment centres receive. Because of this, it will impact the shipping rate you will need to charge your customers.
You also need to think about shipping across borders. If you’re sending packages overseas, consider whether this is worth it in terms of your overall revenue. I.e, will the price differences in shipping internally within your country or externally make or break your business?
- Time-consuming
Regardless of whether you’re a control freak (in the nicest way possible) and want to oversee every part of the fulfilment process, there’s no denying that it’s very time-consuming. Especially when you’re dealing with more orders.
It’s important that you don’t let other areas of your business slide while trying to flawlessly execute this aspect. For example, spending too much time on in-house fulfilment instead of your marketing strategies for generating sales and revenue could end up halting your business growth anyway.
What is outsourced-fulfilment?
Outsourcing is basically the opposite of the in-house option. In short, it sees businesses hiring third-party companies who specialise in outsourced-fulfillment to manage their orders on their behalf.
They’re responsible for every part of the process, and often offer additional services should you require them. All with the promise of delivering expert customer service and meeting expectations constantly.
Advantages of outsourced-fulfilment
So, why should you go for this choice?
- Shipping rates
Third-party logistics companies can save you money when it comes to shipping. Most importantly, an organisation may have warehouses both across the country and overseas, which increase the chances of your goods being closer to your buyers.
So, by spreading your inventory across multiple warehouses, you can actually reduce shipping costs.
- Flexibility and scalability
If your company is expanding internationally, it’s typically a wise idea to open another warehouse location. Various 3pls such as Salesupply offer an extended global network that provides clients to ‘switch’ on a new warehouse without difficulties, which in turn increases both your flexibility and scalability.
- You can focus on selling and growing your business
Struggling to find time to focus on other crucial aspects of your business like CX management, growing your social media presence and actually generating more sales? Freeing up your calendar and outsourcing your fulfilment process can be a great way for you to do this.
When you’ve delegated this time-consuming business feature, you’ll be able to effectively scale your business and focus on the customer and front-facing side of things.
- Access to state-of-the-art technology
When you independently deal with order fulfilment, you may not have access to the best ecommerce technology available. The beauty of hiring a third-party team is that your orders are being fulfilled by some of the best software that connects with your online store.
This allows more efficient fulfilment in terms of customers receiving their orders on time, plus internally providing you with up-to-date inventory management and order tracking data in real-time.
Using an outsourced company guarantees that all of these crucial details are met, while simultaneously allowing you to increase your sales conversions.
Your customers will always be kept up-to-date through tracking information, which also results in dealing with fewer delivery complaints.
Disadvantages of outsourced-fulfilment
Let’s find out why this option may not be for you:
- Communication issues
This would only be a problem if you don’t choose the right 3PL company. At Salesupply, we give customers the option to remain in control, which can be a make-or-break aspect when deciphering whether or not to outsource your fulfillment.
We actually wrote all about the loss of control in a blog post, detailing how we understand that for many ecommerce stores, one of the major uncertainties of outsourcing is whether or not you’ll lose control or insight.
However, many 3PL services like us ensure that clients are constantly in the loop and feel in control. This is done by using a dashboard application that provides them with real-time insight into their fulfillment process.
From which orders have been picked and packed to whether or not tracking codes have been activated, every part of the process must be documented in order for effective communication.
- It can be hard finding the right company
This can be true if you’re outsourcing for the first time, because finding a third-party source which meets all of your fulfillment needs can be quite challenging, especially in such a condensed marketplace.
Not only do you need them to operate across the right sales channels for you, but you also need to ensure that their fulfilment centre locations, shipping speeds and extra services are compatible with your store.
In terms of time, it can take a lot of it searching for the right fulfillment service. While this may feel like it takes up a huge portion of crucial work time, it should be noted that the selection process is an important aspect of the future success of your business.
For example, finding the right third-party company will have a direct effect on the shipping of your products, which is one of the most major aspects of the whole operation.
- Costs
Obviously, it costs money. There’s the picking, packing, storage and shipping you’ll need to pay for – which will inevitably increase as your business grows – not to mention on top of what you already shell out in terms of staff, warehousing, inventory management, security, etc.
If you do want to outsource, make sure you look into companies that work with businesses of your size, as their prices will more likely cater to your budget.
Which is best for you?
Depending on your business size and your fulfilment wants and needs, hopefully, the pros and cons of each have helped you to paint a clearer picture as to what’s best for you.
