Processing your own orders allows you more control over fulfillment and it keeps all steps of the process close to home.
Outsourcing usually works best for businesses that have higher volumes of orders and/or a bigger catalog of products.
A DIY order fulfillment method may be better for eCommerce businesses that are just starting out and with limited funds.
As your business expands, outsourcing order fulfillment is a better option because it will allow you to focus on other important aspects of the business.
When online customers buy products, they expect to receive their orders as quickly as possible and without error. As a result, slow shipping and eCommerce fulfillment mistakes are some of the most common causes of eCommerce customer dissatisfaction. How you handle order eCommerce fulfillment can be the difference between having happy, repeat customers and struggling to keep up with refund and return requests.
So what’s the best way to fulfill orders that will create long lasting customers? Essentially, you have two options: (1) you can either handle order eCommerce fulfillment yourself or (2) you can outsource it. Here’s a look at the pros and cons of each method.
The do-it-yourself route requires that you complete the fulfillment and shipping processes in-house. For some retailers, DIY order fulfillment is the right option; but for others, the disadvantages outweigh the benefits.
Processing your own orders allows you more control over fulfillment and it keeps all steps of the process close to home. Order entry, inventory procurement, and order fulfillment are all in your hands.
Picking and packing can be closely monitored to ensure that the right products are shipped in good order.
Incoming stock can be inspected for damage and accuracy. It’ll make it easier to get the right products and quantities in each shipment.
You can handle product returns, shipping mistakes, and customer service faster.
You have control over how quickly orders are fulfilled and shipped.
Read more: How fast is fast enough for online shipping?
Retailers may need additional staff and warehouse space to process and store inventory, which can be expensive.
DIY order fulfillment means that you will have to purchase shipping materials like boxes, bubble wrap, shipping peanuts, pallets, crates, tape, etc.
Overhead expenses may be higher because heavy duty shelving, storage containers, and pick and pack systems can be pricey.
Scalability is challenging because warehouse space requirements will increase, which adds to overhead expenses.
Some shipping carriers require retailers to have specialized software installed for shipping, as well as barcode printers and readers.
Businesses that do their own shipping may have to negotiate freight rates with each carrier they use, typically on an annual basis. Small businesses that are just starting out may have little or no negotiating power because they don’t have an established shipping history to leverage for better rates.
Read more: What is product sourcing?
Like the DIY order fulfillment method, outsourcing fulfillment to a third-party provider has advantages and drawbacks. Usually, outsourcing works best for businesses that have higher volumes of orders and/or a bigger catalog of products.
You don’t have to maintain a warehouse or pay for space in one. Businesses with larger sales volumes would likely have to hire staff to maintain efficient order fulfillment. If you outsource the process, you may save money on payroll.
Outsourcing fulfillment allows you to spend more time on growing your business. For example,marketing your brand and products to increase sales and revenue.
The third-party fulfillment provider you use will have valuable expertise and knowledge in the process of fulfillment that you may not have, especially if you’re new to eCommerce. By hiring an expert to take care of those duties, you’ll have more time to focus on growing your business and acquiring more customers.
If you sell to customers in other countries, or you’re taking your business global, outsourcing order fulfillment will significantly simplify the process. Third-party providers will handle customs, duties, documentation, and other international issues that would otherwise delay your shipments and increase your costs.
You will have no control of the entire order fulfillment process. That means that you have to become comfortable with another company being fully responsible for this huge part of your business. However, when mistakes are made, customers will hold you responsible, not the order fulfillment company. This is a concern if you hire a company with a bad reputation and poor customer service.
Though it will usually pay off over time, it costs more to get started with a third-party order fulfillment strategy than DIY methods. Typically, charges will include fees for storing, picking, packaging, and shipping items to customers. This may not be a huge drawback if you have a lot of products that sell well. However, if you have inventory that sits on the shelves, it can get expensive.
Your inventory may be far away, depending on the order fulfillment provider you work with. This can be a hassle if there are ever any quality control issues, or you need to physically inspect your stock.
Customers have high standards when it comes to their online orders. This means that the method you choose for order fulfillment must be the one that’s best for your customers, as well as your business. The pros and cons above provide you with some realistic expectations of DIY order fulfillment versus outsourcing the process.
Our conclusion about order fulfillment is that the DIY method may be better for eCommerce businesses that are just starting out and with limited funds. As your business expands, outsourcing order fulfillment is often the better option because it will allow you to focus on other important aspects of the business.
Whatever you decide, you should look for an inventory and order management software solution to help you stay on top of stock levels and order fulfillment. Accurate orders and quick delivery is what all eCommerce customers want.