Order Fulfilment: Do it Yourself or Outsource?

Do you have a fulfilment strategy in place for your e-commerce business to manage your increasing order volumes? If you don’t, you probably should…

According to the Inside Australian Online Shopping Report, there was an 18.7 percent growth in online shopping spending in 2017. As e-commerce businesses grow, many experience pain in managing the rapid increase in demand.

You’re likely to end up disappointing your customer with errors in order fulfilment and delays in standard shipping time. You will have blown out labour costs because you’re constantly needing your staff to work overtime, or you burn yourself out by doing it all yourself! If this sounds like you, then you’re really only left with two options.

You could do it all yourself, or you could outsource fulfilment to a third party logistics provider (3PL). Here’s a quick snapshot of the main pros and cons of each option – to help you decide which one might be the better option for you as your business grows.

Run it Yourself

If you are leaning towards doing it yourself, there are two possible scenarios:

  1. Owning and operating your own warehouse.
  2. Renting space in a warehouse

Warehouses provide the storage for your products before they’re picked, packed, sold and distributed. If you have the financial capability and people power to manage your own warehouse, then it’s a good option. Especially for keeping all eyes on your business.

Pros?

  • Keeping the process in-house gives you the feeling of full control and security. Outsourcing could lead to a loss of brand identity if your fulfilment provider doesn’t offer custom packaging.
  • You have the autonomy to choose how to run the warehouse (or your section of the warehouse).

Cons?

  • You’ll have to manage the process of hiring, training and retaining staff.
  • You’ll also need to make a significant upfront investment in the technology and infrastructure required to run an efficient warehouse and fulfilment centre.
  • You could end up spending a lot of your time focusing on the day-to-day operations rather than bigger picture thinking.

Who’s this best for?

This is a great option for anyone looking to keep full control of their logistics, but also has the time and resources to make this possible.

Outsource Fulfilment to a Third Party Logistics (3PL) Provider

In addition to holding stock, a fulfilment centre, or in a traditional B2B space known as a 3PL, provides a pick and pack service and ships your product to customers in a timely matter.

Skills that are mastered and already in process for a well-run 3PL:

  • Inventory management
  • Efficient operations
  • Receiving inbound inventory
  • Labelling shipments
  • Handling returns

Pros?

  • You can start to compete with larger players in your category
  • You open up the opportunity for same-day delivery because you can have your product located in more than just one city
  • Your orders are managed for you regardless of any emergencies or personal time off (now you can take that vacation you’ve been putting off!)
  • You save time and reduce unnecessary overheads so you can focus your attention on growing your business
  • You can continue to scale your business without the challenge of responding to surges in volume
  • You get immediate access to best practice systems and processes at lower costs.

Cons?

  • Setting up your inventory and shopping cart to be integrated with a 3PL platform can be a slow and sometimes painful process – but taking the time to do this right the first time will be so worth it in the long run!

Who’s this best for?

Fulfilment centres are a great option for merchants that are held back by their business growth. If you don’t have the capacity to store, pick, pack, and ship orders while managing the demands of a growing business, outsourcing fulfilment can give you back the time you need.

Choosing Your Partner

So you’ve decided you want to outsource your fulfilment. How do you decide which partner to go with? We’ve compiled a list of the key features to look out for!

Custom Pick and Pack Capabilities

Look for someone who will pick, pack, fold, scrunch, tie and mould your packaging exactly the same way you would. Often businesses are anxious about letting go of their order fulfilment operations due to quality control of the parcel delivery experience. A good partner takes the time to understand your brand and will deliver just as you would.

Australian sisters Jess and Stef Dadon were looking for someone to take over their fulfilment after a rapid increase in orders for their eCommerce business, TWOOBS. They realised they were not going to be able to handle the orders on their own and started looking into outsourcing.

“We looked into a lot of other third-party logistics and it was just a nightmare,” says Jess, “it was getting to the point where we felt we wanted to do it ourselves, until we met with Fulfilio”.

TWOOBS partnered with Fulfilio for their pick and pack operations which allowed them to free up their time and attention to focus on growing their business.

Location Matters

Your customers are unlikely to all live in one area, so neither should your product. Having a fulfilment centre with a national network of warehouses guarantees that every time a customer places an order online, it will automatically be fulfilled from the warehouse closest to the customer. This significantly reduces delivery times which will help in retaining repeat customers and ensure growing sales.

Split Shipping

A fulfilment partner that has a split shipping capability will help if you run out of stock in a particular warehouse. Split shipping allows your orders to be automatically fulfilled and shipped from multiple warehouses across Australia in the event that a single warehouse is unable to fulfil the complete order. This ensures your shipping costs are optimised and that customers receive their order as quickly as possible.

A lack of inventory means longer waiting times for stock to be replenished. 53 percent of consumers said that speed of delivery is an important factor when it comes to finalising a purchase online, so no stock can almost always guarantee a loss in sales.

Shopping Cart Integration and Inventory Management

Make sure your partner has the capability to easily and quickly integrate with your shopping cart. This will make inventory control so much easier, and give you key data such as when and what your customers are buying, and how to increase cart size. A great 3PL partner enables you to make informed business decisions quickly and confidently!

Support

You want to be able to talk to a person quickly and easily and within your own time zone. Make sure your fulfilment centre offers you a dedicated support channel to help you grow your business and to answer your fulfilment specific questions.

Get Back to Business

So you’ve decided on your partner, what’s next? There will be a small amount of work in transporting your stock to their warehouse and making sure your shopping cart is all linked up correctly.

Once you’ve done that, you’ll be able to get back to focusing on what motivated to start your business in the first place. You can focus on growing your business – without having to worry about whether the stress of the sales influx is even worth it in the first place!

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One thought on “Order Fulfilment: Do it Yourself or Outsource?

  1. Good overall tips. One thing to keep in mind though, it is great to have a 3PL with warehouses nationally, although, you will then have to stock the same item in multiple warehouses. If you’re not careful, this can lead you to carrying far more inventory then you did when your products were all in 1 warehouse. Of course this means more working capital tied up etc. So even if you outsource your warehousing, it pays to still pay close attention to stock levels, order demand by region and so on.

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