You’ve probably heard the phrase, “If you want something done correctly, do it yourself.” As E-commerce business owners, we’re all big believers in that sentiment. That’s why we start E-businesses in the first place! Speaking of doing things yourself: we’re also pretty big fans of in-house fulfillment. While in-house fulfillment has its perks, keeping fulfillment in-house might not be the best choice for your business. At the end of the day, it’s about what you need. We’ve been there ourselves, so we’re fairly knowledgeable about the benefits of in-house fulfillment—and its drawbacks. If you’re ready to follow us down the rabbit hole, let’s take a look!
What is Fulfillment?
As we defined in our article Outsourcing Fulfillment: The Pros and Cons, fulfillment describes the operation of warehousing, kitting, and shipping your products out to your customers. Someone has to get your product out to your customers, and in the case of most new E-commerce business, fulfillment is typically done in-house. That means it’s done by YOU, the business owner! There are two main styles of E-commerce fulfillment that we’ll be talking about: kitting, and pick and pack.
Kitting is the process of grouping individually separate items into one unit, like a subscription box. This style of fulfillment occurs when every order you’re receiving is the exact same. As a result, each package is outfitted with the same contents. Since it’s a relatively easy process, in-house fulfillment works great with kitting.
Pick and Pack
On the other side, the pick and pack process describes the process of tailoring each package to fit every individual order you receive. Since you might—and probably will—receive a wide variety of orders, you can’t exactly kit or pre-pack orders in advance. Therefore, your best bet is a pick and pack program. As each individual order comes in, you (or your team) gather the requested items from various batches (picking) and then package and label the order for shipment (packing).
The pick and pack process might sound simple, but don’t be fooled. It requires a high degree of coordination, organization, attention to detail, and time. Therefore, we don’t really recommend keeping your fulfillment in-house if your business runs on a pick and pack model.
Pros of In-House Fulfillment
Keeping your fulfillment in-house has a slew of benefits. We’ve laid some of the biggest pros out for you below.
You Have More Control
This one is fairly self-explanatory. When your fulfillment is in-house, you’re in charge of everything from packaging each order to making sure each parcel is shipped out correctly. In-house fulfillment lives alongside your business, so you typically know exactly how much staff and resources you’ll need to fulfill orders. You can also set your own pace and pore over quality control to your heart’s desire. All of this autonomy can be nice when you’re bootstrapping your business, since it gives you intimate knowledge of what your business needs to succeed.
You Can Use Custom Packaging
Here’s a fun fact: when you outsource fulfillment, some third-party logistics providers won’t let you use your own custom packaging. Therefore, another big perk of keeping fulfillment under your roof is that you can use your own custom packaging! The fact of the matter is, customers have come to expect memorable unboxing experiences from ordering products online. Using custom packaging ensures your customers receive those experiences, and it keeps them coming back for more.
You Gain Experience
One of the best things about keeping fulfillment in-house is that you gain invaluable hands-on experience. Not only does this grow your skill base, but if you ever decide to outsource to a 3PL, you’ll have an intimate knowledge of what your business needs to succeed.
Pro Tip: As a rule of thumb, we generally don’t recommend outsourcing fulfillment until you’re receiving upwards of 500 orders per month. In our experience, we’ve found that orders under that threshold can be fulfilled in-house, and it’s more valuable for you to take care of it yourself.
Cons of In-House Fulfillment
On the other side of the argument, in-house fulfillment has some pretty big drawbacks that can hurt you as your E-commerce business gets bigger. Let’s take a look.
It Takes Time…A LOT of Time
You heard it here first, people. Keeping your fulfillment in-house is a time suck, and a BIG one at that. You’re in charge of tracking all your inventory, packaging, and shipping every single order. As you can probably imagine, keeping up with all of those responsibilities is a daunting task. As the saying goes, you have only have so many hands…and hours in the day.
Since in-house fulfillment takes up so much time, it will inevitably distract you from other core aspects of your business like growing sales, marketing, and customer service.
This is both a pro AND con of in-house fulfillment! When you’re responsible for fulfilling all your orders, the praise falls on you when things go correctly. However, the burden also falls on you when problems arise and things don’t go as planned. This can be tough to deal with, especially considering you have to run your business on top of keeping track of fulfillment.
The Alternative: Outsourcing Fulfillment
Sometimes E-commerce business grow at a pace where it’s hard to keep up with fulfillment. If that’s the case for you, it may be time to start outsourcing fulfillment to a third-party logistics provider.