E-commerce success is about how well and quickly products can be delivered to customers. Every seller wants to create an amazing impression on consumers. But before a seller starts his e-commerce journey, he needs to decide on the mode of order fulfillment. This is a significant step, as it will determine the rest of the journey! Sellers are often stuck with the thought of Outsourced vs In-House Fulfillment. Hence, in this blog, we will try to understand all the factors so you can make an informed decision.
What is In-House Fulfillment?
Order fulfillment is not just about sending the product to the customer. This is a misconception among many new sellers. They are unaware it has many milestones to cover like inventory management, order processing, transportation, shipping, and customer support. When you choose In-House Fulfillment, it is like building a home all by yourself. Hence, it is also called self-fulfillment because the seller is entirely responsible for carrying out all the steps in the order fulfillment. It is not just about the procedure; he has to invest in proper infrastructure, machinery, and IT systems.
What is Outsourced Fulfillment?
In-House Fulfillment is not for everyone. It requires huge investment and management. However, if a seller does not have enough resources and still wants to continue his e-commerce venture, Outsourced Fulfillment is a good choice. In Outsourced Fulfillment, the seller does not have to take care of any resource. This is because the merchant can partner with a logistics company that manages the whole order processing. This is why Outsourced Fulfillment is often called 3PL or third-party logistics. Hence, it is a good option for someone who wants to begin an e-commerce store with less investment.
Outsourced vs In-House Fulfillment: The Differences
Now that we understand the basics of the two types of fulfillment let's compare Outsourced vs. In-House Fulfillment. Here is a detailed comparison of outsourced and in-house fulfillment based on different factors.
The Financial Comparison:
It is easy to understand that In-House Fulfillment has a high initial cost. The seller must initially invest heavily in infrastructure and resources. However, the initial cost is quite low for outsourced fulfillment, as the sellers only have to pay the 3PL. They manage the entire order process on their behalf. Though the initial costs may differ, here is a catch. The overall cost depends on what type of seller it is. If the seller makes low sales, then he certainly would not need 3PL, and in-house fulfillment would be enough.
What is Better for Scaling Up the Business?
The In-House Fulfillment is good only till the sales are low. However, once the sales spike, it becomes difficult to scale as per the rising demand. This is where 3PL fulfillment shines. It is much easier to scale as you just have to pay for the increased resources to the 3PL. However, when scaling a business with self-fulfillment, a seller has to purchase additional storage space, hire an additional workforce, order required equipment, and invest in IT tools. Also, even if the seller scales up resources to meet the rising demand, it is difficult to scale down when the demand lowers.
Who Gives Expert Advice?
Well, any new seller cannot run the entire business independently. They need expert advice at every step. In this case, 3PL for e-commerce sellers is a better option. They provide better knowledge of the logistics challenges and keep them updated with the latest innovations. Expert advice is more accessible in 3PL fulfillment, and e-commerce management is becoming much easier. However, if you are already an expert in e-commerce, this factor can be skipped for comparison.
Infrastructure and Resources Requirements:
As discussed above, In-House Fulfillment needs infrastructure and resources instantly. So, a seller has to invest in them immediately, which increases the initial cost of operations. However, no infrastructure or resources are required if 3PL fulfillment is used. Just pay them, and that’s it. Plus, scaling up or down resources is always an option based on the needs
What Offers a Better Customer Experience?
There is no doubt that the sellers can give a better user experience through 3PL fulfillment. This is because 3PL fulfillment providers have better technologies and thus provide better services. The consumers can be provided with efficient order tracking and inventory status in real-time. Most importantly, you can speed up the shipping process. All these attributes enhance the customer experience.
Use-Cases for Outsourced and In-House Fulfillment
So, by now, the differences must have been clear, and now let us see some use cases where each of the fulfillment types suits you better.
In-house fulfillment is mostly chosen by sellers that:
- Cater small order volume.
- Require consistency and better operational control.
- Are experts in logistics.
- Have enough resources to invest in resources and infrastructure.
Outsourced fulfillment is often the choice of sellers that:
- Have large volume fluctuations.
- Do not hold the expertise to set up fulfillment themselves.
- Need better scalable options and want to expand to new markets.
After learning all the differences, it is up to the sellers and their requirements what they choose! 3PL fulfillment has many benefits, and this is why sellers choose 3PL for their online businesses. They manage inventories, order tracking, and all order processing very easily. There are many 3PL integrations available, but it is always difficult to choose the best 3PL integration for sellers. Amazon MCF is a quite popular choice for e-commerce shipping. It has all the important 3PL fulfillment and automation features required for a successful selling journey.
How to use 3PL Plugin for E-commerce Store?
Shopify store is a great platform for e-commerce sellers. However, if you want to maximize sales, 3PL must be integrated with Shopify.
Now, let us see how to connect 3PL with Shopify.
- Select a 3PL provider
- Connect your Shopify store
- Set up inventory sync
- Configure order routing
- Test the integration
If you have multiple online stores, other than Shopify to fulfill orders - Amazon MCF can be a good option.
Scale up with Outsourced Fulfillment - 3PL
Now, after reading the blog, you can make an informed decision about outsourced vs in-house fulfillment. Third-party integration is a must to have if you want to begin an e-commerce journey with outsourced fulfillment. WebBee Global is here to ease the selling journey for e-commerce sellers. You may reach out anytime for any 3PL fulfillment issues and clarification.
"Happy Selling! with WebBee Global "
