Should you outsource it or keep it in-house?
- 1 Should you outsource it or keep it in-house?
- 1.1 What are the order fulfillment options for small businesses?
- 1.2 3 factors to consider when choosing your execution strategy
- 1.3 Should you invest in a warehouse or outsource?
Should you outsource it or keep it in-house?
It’s hard enough to run a successful business on your own, but coordinating the fulfillment aspect – receiving, packing, and shipping the product – is a demanding activity that will only grow as your business grows. Trying to decide how to best manage fulfillment for your specific needs can be stressful.
In this article, we’ll look at the questions and options you should consider when choosing an execution strategy for your ecommerce business.
What are the order fulfillment options for small businesses?
If you’re struggling to decide between fulfilling orders in-house or using a 3PL to manage fulfillment for your business, we’re here to help you make an informed decision. Let’s break down the fulfillment options available to your business.
The first option for order fulfillment for your business is to complete the process in-house and without the help of a third party (also known as self-fulfillment or merchant fulfillment). The imaging doesn’t need to be outsourced, and you’ll have full control over the process – including how your products are stored, packaged, and shipped.
However, if you expect or experience rapid growth, your needs and costs can become overwhelming without the help of a third-party logistics provider (3PL). Because 3PLs will have the infrastructure and tools to operate faster and more cost-effectively than you can do on your own, working with them will save you both time and money – that’s why Why do so many businesses choose to outsource?
An alternative to a whole done in house and 3PL outsourcing is dropshipping. With dropshipping, a manufacturer produces and stores inventory, then ships it directly to the end customer. It is especially useful for SMBs that sell oversized items or fulfill large orders.
While barriers to entry are low, it’s important to consider that because manufacturers are often located overseas, shipments can take longer and potentially be more expensive.
When inventory management and shipping start to take up the time of running your business, it’s time to seek outside help. ONE third party logistics provider can handle larger shipment volumes to help you scale your business.
When you take advantage of the help of 3PLs like ShipBob, They’ll pack and ship orders, manage your inventory, and even handle customer returns, giving you more time for the day-to-day needs of your growing business. friend. Outsourcing costs will be offset by the time savings, as well as reduced volume shipping and faster transit times.
3 factors to consider when choosing your execution strategy
Every business is different and will have its own requirements and limitations. There are three main factors to consider when deciding between outsourcing or keeping it in-house: the products you sell, the size of your business, and the location of your business (and customers).
1. Product of your SMB
The type of product you sell, as well as the way you package it, will influence your decision to choose an outsourced finishing service or an in-house warehouse and fulfillment center. Here are some questions to consider:
Product type and packaging
Is your product packaging relatively complicated? Is your product custom made or very fragile? If the answer to either of these questions is yes, you may want to consider fulfilling orders in-house.
Most third-party logistics providers are not capable of handling a high degree of customization. Having the ability to package fragile or custom items yourself will give you peace of mind that the order is correct and that your customers will receive exactly what they expect.
On the other hand, if your product uses basic packaging without further customization, or if the product can be packed quickly in bulk, then choosing to outsource to a 3PL can be more cost-effective.
2. Business size and order volume
If your business has low order volumes, the most affordable and affordable option is to keep your fulfillment on-site, rather than outsourcing.
However, if you are expecting an increase in order volume, then outsourcing execution is a better option to scale your business. Just make sure your 3PL is large and advanced enough to accommodate your expected growth.
3. Location of your business
Your location plays an important role in your business fulfillment strategy. Because customers live in a shopping culture dominated by Amazon, they expect to receive their products as quickly as possible – many will even cancel orders if shipping takes too long. . To ensure that your business can meet these expectations and stay in line with competitors, consider fulfilling orders from warehouses closer to the customer to limit the number of regions. shipping that your typical product will take. This can reduce both shipping time and costs, which will keep your customers happy.
Should you invest in a warehouse or outsource?
Whether you’re considering opening your own warehouse or outsourcing it to a 3PL, unprecedented growth requires an up-to-date fulfillment strategy.
Managing your own inventory means you’ll have full control over your inventory and operations. This means you decide how to store, pack, and ship your products to your customers, and how your team and facility will be run.
If you choose to do it internally for your growing business, start with a well-researched strategy. Create a scalable budget for investing in warehouse infrastructure, including staffing, security, and purchasing all equipment and supplies.
When you outsource your implementation, you can reduce your shipping and operating costs. This means faster delivery times, leaving customers feeling happier. Partnering with a 3PL like ShipBob also helps you better manage your inventory, so you can focus on selling your products. With so many benefits to outsourcing, deciding for your business can be an easy one.