Should you do your own order fulfilment?
When starting out, many entrepreneurs decide it’s more efficient to fulfil customers’ orders themselves. But if your business is successful, it won’t take long before your living room starts to resemble a factory floor. There’ll be boxes, packing tape and address labels everywhere and you won’t be able to see the TV for overflowing boxes, but that won’t be a problem because you won’t have time to watch TV anyway.
At this point, you’ll be searching for real-world solutions to your fulfilment problems. Options include renting a small industrial unit and employing warehouse staff, arranging for your supplier to ship direct to the customer, or making use of third-party eCommerce order fulfilment services. The question is, should you carry out your own order fulfilment or contract it out to a third party vendor?
Why should you consider outsourcing in the first place? One of the biggest hurdles for many new eCommerce store owners is how to handle inventory. Outsourcing fulfilment solves this problem by passing order fulfilment off to a third party vendor, enabling you to focus on what you do best - driving traffic and making sales without risking too much capital.
Outsourcing also allows your business to grow at a controlled pace without having to invest in expensive warehouse space and staff. This is particularly important today as commercial property rents are becoming more and more inaccessible for new businesses and employment costs are going through the roof.
Benefits of outsourcing
Businesses large and small can benefit from outsourcing fulfilment to a third party. In fact, some of the largest retailers in the world, including wayfair.com and zappos.com, built their businesses by using outsourcing to keep costs down. But reduced costs and increased efficiency aren’t the only advantages of outsourcing - it also allows you to:
Make use of the latest technology – as a small business, you won’t be able to afford the latest shipping technology which allows you to monitor shipments, update customers and obtain proof of delivery. Outsourcing allows you to make the most of these technical enhancements to improve your service without any upfront investment.
Remain flexible in a fast moving market – with outsourcing, flexibility is the key. You can expand and contract the amount of space and facilities you need as your business grows. This is particularly useful if you operate in a seasonal market which ebbs and flows throughout the year.
Benefits of keeping it in-house
Of course, outsourcing isn’t always the answer. Some businesses may benefit from keeping order fulfilment in-house. This is especially true if you operate a speciality business or sell perishable goods such as cupcakes. The benefits of keeping fulfilment in-house include:
More control over inventory – having inventory on hand allows you to find more creative ways of selling it. For example, you could arrange a trade sale or exhibition to showcase your products to potential customers.
Allows you to personalise products – personalisation is big business and can allow you to differentiate your product or service from the competition. However, this is very difficult to achieve using a third party fulfilment service so you may be forced to fulfil orders in-house.
Tailor your merchandise and packaging – Apple is one company that likes to tailor its packaging to reinforce its brand values. However, most third-party fulfilment services don’t allow you to tailor packaging in this way to help keep their costs and complexity down.
To answer the question of whether you should do your own order fulfilment, you need to answer the following three questions honestly:
Do you have time to fulfil orders yourself?
Do you have enough space to fulfil orders properly?
Do you have enough capital to create and staff a fulfilment centre if required?
If the answer to any of these questions is no, you should seriously consider using the services of a third party order fulfilment provider. This will allow you time to focus on growing your business and providing exceptional service to your customers. It will also free up capital to spend on marketing and product creation, which after all, is why you went into business for yourself in the first place.