News and Insights
E-commerce, Logistics, and Small Business Management
The Pros and Cons of In-House Order Fulfillment
In-house order fulfillment is a popular method for new eCommerce sellers. Most business owners begin by storing inventory in their garage and packing orders at the kitchen table with the help of friends and family. If there is a sudden surge in orders or a seller is preparing to scale, however, in-house order fulfillment may continue to work for some but be unsustainable for others. This article covers the benefits, challenges, and likely candidates for in-house fulfillment in-depth.
What is In-House Fulfillment?
While there are many advantages to in-house fulfillment, it comes with a number of responsibilities. These include:
- Receiving and storing inventory
- Monitoring inventory levels
- Determining buffer stock and reorder points
- Picking and packing orders accurately
- Procuring and storing packaging materials
- Staying organized
- Shipping orders and keeping customers updated
What Are the Pros of In-House Order Fulfillment?
In-house fulfillment is less expensive than outsourcing. eCommerce sellers who pick and pack often save on costs associated with third-party fulfillment providers. They usually do not pay costs associated with inventory receiving, storage, or management since they’re doing all of this themselves.
Business owners have complete control. eCommerce business owners who fulfill their own orders can manage the entire pick and pack process from beginning to end. This allows sellers to perform quality control measures, pack orders how they see fit, and ship their own products.
Customization is easy and less expensive. When you pack your own orders, you are able to select the packaging, void fill, and inserts that you feel best represent your brand. You can include things like gift wrapping, gift messaging, and other forms of personalization that will make your products appear unique.
What are the Cons of In-House Order Fulfillment?
Business owners can quickly become overwhelmed. While doing your own order fulfillment allows for high levels of control and customization, periods of unexpected or rapid growth can quickly overwhelm your operations. When a few orders a day turns into several hundred, you may find that keeping up with demand is almost impossible.
You may become distracted. Many eCommerce sellers report that in-house order fulfillment can become a full-time job. If the majority of your time is spent packaging orders on the kitchen table or in the garage, this leaves little availability for taking care of your core business functions like sales and marketing. This will be difficult to sustain long-term unless you have capital to invest in a fulfillment team and necessary overhead.
Human error is common. Because business owners who fulfill orders in-house rely on manual processes to order, count, pick, and pack products, some level of human error is unavoidable and easily compoundable. Many businesses eventually turn to outsourced order fulfillment simply for the high levels of automation and accuracy that their professional infrastructure can provide.
Shipping is expensive. Fulfilling orders in-house requires business owners to buy packaging material and ship products on their own. These costs can quickly add up, especially if sellers are not earning volume discounts for bulk packaging purchases and bulk shipping. This is another reason many eCommerce sellers turn to third-party fulfillment providers — packaging materials are provided in bulk at low cost, and many fulfillment providers pass volume discounts from shipping onto their customers.
Does In-House Order Fulfillment Make Sense for Your Business?
In-house order fulfillment certainly has a place in the eCommerce supply chain landscape, but it’s not for everyone. Keeping fulfillment in-house often works well for businesses that:
- Have limited capital
- Sell luxury items
- Sell highly-customized items
- Need strict control over the order fulfillment and post-purchase processes
- Have the capital to build out a robust in-house fulfillment arm
- Do not wish to scale
Conversely, outsourcing fulfillment may make sense for any business that:
- Fulfill more than 50 orders each day
- Are overwhelmed by recent growth
- Plan to scale in the near future
- Need employees to focus on core business instead of fulfillment
- Are growing in complexity
- Follow regulatory compliance or routing guides
In-house fulfillment is a great option for businesses that are just starting out, customize orders regularly, or need control of the order fulfillment and post-purchase processes — if this sounds like your business, here is everything you need to get started. Companies who experience rapid growth or plan to scale, however, may benefit from working with a third-party fulfillment provider like IronLinx. Contact us today to see if we can help.