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If you are using an in-house fulfillment operation to store, pick, pack, and ship out your orders for your online store, you’re hardly alone. Over 60% of online retailers use their own warehouses and operations teams to ship out their products. After all, it’s convenient, and you are able to maintain careful control over the entire process. But there are many reasons why outsourcing your order fulfillment has strong advantages over doing it yourself.
Here are three of them.
You Don’t Ship As Many Orders
If you’re doing fulfillment in-house, chances are you are doing a few hundred to a few thousand orders a month. In comparison, a top order fulfillment service will be shipping out hundreds of thousands or even millions of orders a month. You might think that shipping out a smaller number of orders a month is a good thing. After all, it gives you the ability to spend more time and attention on each order. To an extent, that’s true, and this is the reason why most fulfillment services will limit the amount of customization towards the process. But there is something to be said for shipping large numbers of orders. It gives you a financially sound reason to create an extremely optimized fulfillment operation.
In other words, hiring more workers, buying better equipment, investing in better training and spending more for a better location. The more you are shipping per month, the more sense it makes to spend more money on a better operation. This difference isn’t trivial. The advantage in equipment and personnel means that, in general, the speed and accuracy of an outsourced fulfillment service is far higher than in-house operations.
In fact, most good fulfillment services boast accuracy rates exceeding 99.95% and same-day shipping.
You Don’t Have As Many Warehouses
What’s the advantage of having multiple fulfillment centers spread out across the United States? For one thing, it means that each order has to travel a shorter distance to reach your customers. That means that every delivery costs less, a difference of about $2.04 per order when you compare shipping with one facility versus with shipping with two. When you multiply that by the numbers of orders you ship per month, it can quickly add up to thousands, or tens of thousands of dollars of savings per month. Of course, it also means your shipments get there faster, sometimes by 2-3 days, depending on where the facilities are based and how many of them there are. This is a huge advantage of fulfillment services, as one of the biggest reasons people avoid buying online is due to cost of shipping and speed of delivery. Minimizing these costs means minimizing shopping cart abandonment.
You Have To Micromanage The Entire Process
The biggest difference between outsourcing and in-house fulfillment is self-explanatory. When you’re managing the fulfillment operation yourself, you must divert your time and resources to order fulfillment instead of sales and marketing. For most business owners, fulfillment is not the most exciting part of the business. Spending less time on in-house fulfillment and more parts on other parts of the business can be a great relief. Unlike other parts of the business like product development and marketing, fulfillment is a constant, ongoing process. Your online store can very likely run on its own for a time generating sales and business without your direct management.
But orders must always delivered, in some manner, to your customers, and that means constant supervision. There are many complications that can pop up during the process. Having someone else handle it for you can mean the difference between another stressful week and a vacation.
This is not to say outsourced fulfillment is for everyone. The larger your operation is, the less these benefits help. After all, if you can afford your own network of warehouses, your own specialized fulfillment team, your own dedicated warehouse managers, it can make sense to do it yourself. But only the very largest of online retailers can do so, there are probably only a hundred worldwide that can match the best fulfillment services.
If you’re in-house fulfillment isn’t hitting the quality threshold you need to be competitive, consider taking advantage of fulfillment services from a third party and outsourcing your shipping.
