Why you’re NOT ready to outsource fulfilment [.blue](yet)[.blue]

July 31, 2023

min read

According to a 2019 report from DHL, 34% of eCommerce businesses expect to continue fulfilling orders in-house in the next three to five years, whilst 18% plan to outsource this element of their supply chain entirely.

Outsourcing fulfilment to a third-party logistics (3PL) provider can be a game-changer for many eCommerce businesses, helping them to streamline their operations, save costs, and enhance the customer experience. However, that doesn’t mean it is always the right solution for every business – at least, not to begin with. Although there is no right or wrong time to partner with a 3PL provider, you want to ensure you are gaining maximum return on investment for a fulfilment solution that delivers on your real-world business needs. Outsourcing becomes most cost-effective for businesses receiving 300–1,000 orders per month, but let's assess this in a little more depth.

The benefit of in-house fulfilment in the early stages

If you are just starting out in eCommerce and new to the world of order fulfilment, you may feel overwhelmed by the amount of time, energy and cost it takes to make sure orders end up at your customers’ doorstep on time and in perfect condition. There are certainly many moving parts to consider – especially as your order volumes start to increase with your continued business success – but there are a few reasons why it might be best to keep your eCommerce fulfilment in-house… for now.  

1. Unprecedented control & visibility

Launching an eCommerce business is an exciting venture but often fraught with unknowns. You’re at the start of your growth journey and still getting to know your customers – what they do and don’t like, how they shop, and their motivations for choosing you over a competitor, for instance. Self-fulfilling orders grants you the opportunity to closely monitor and control picking, packing, and shipping at a granular level, so you can adapt the processes according to what you learn works best for your business and your customers, which maintains the personal touch that’s vital to developing a strong brand.  

2. Capitalise on the learning curve

Amongst other things, you are likely to be recording everything manually on spreadsheets, printing shipping labels yourself, and dropping parcels off to your chosen courier. This is completely normal in the start-up business stages and although not the most efficient, these steps work for a manageable volume of orders. Again, take this as an opportunity to learn what you can about the fulfilment process and gain a better understanding of your unique logistical challenges, so that when you do eventually reach a stage where outsourcing becomes more advantageous to maintain a seamless operation, you know exactly what to look for in your ideal fulfilment provider.  

3. Steady sales balanced by manageable costs

Your sales are consistently and steadily increasing but not yet to the point that it is becoming overwhelming. It may just be taking you a little more time each week to get orders out to customers, but it’s nothing you can’t handle. This makes in-house fulfilment cost-effective right now, enabling you to manage your expenses efficiently and allocate resources strategically, whilst maintaining maximum control and visibility over the fulfilment process. During this phase, having extra hands and contingency plans for managing surges in demand can keep operations running smoothly.

4. Save by maximising storage

In-house fulfilment relies heavily on the availability of storage space to accommodate inventory levels. As long as your storage capacity meets the current demand, there’s no need to consider outsourcing yet. Naturally, as demand increases and you need more products on hand ready to ship, additional storage space will be required. Investing in your own warehouse and associated infrastructure may be beyond your time, energy, and investment capabilities, in which case partnering with a 3PL provider to take care of your warehousing may be more beneficial.

Here's what you can look forward to (when it’s time to outsource)

As your business crosses the tipping point of needing to fulfil over 300 orders per month, fulfilling in-house may start to pose significant challenges. For instance, the increased order volumes can lead to operational inefficiencies and processing delays, resulting in rising logistics costs and reduced customer satisfaction from a subpar fulfilment experience. This is a pivotal moment for you to consider outsourcing the stress and hassle of order fulfilment to an experienced 3PL partner like Zendbox, enabling you to reap a wide range of benefits.  

Unlock cost savings

One of the most compelling reasons to outsource eCommerce fulfilment is the potential to earn significant cost savings. For instance, your chosen 3PL provider can secure more competitive packaging rates from manufacturers and offer a wider range of packaging solutions to create the ultimate unboxing experience for your customers. A track record of sending high volumes of parcels, combined with their longstanding relationships with major carriers, also mean your fulfilment partner can negotiate preferential shipping rates that eCommerce businesses simply couldn’t access alone. These cost savings are then passed on to you and your customers, enhancing the value proposition of your brand.  

Streamline order & inventory management

Tracking stock on spreadsheets may have sufficed for your business when you were fulfilling a smaller number of orders. However, this may become more challenge as order volumes surge and it becomes more important than ever to maintain accurate inventory levels – 3PL providers like Zendbox offer access to order and inventory management technology like Zendportal, which leverages real-time data and analytics to help eCommerce businesses like yours make more informed supply chain decisions. This enhanced control and visibility over orders and inventory can reduce carrying costs and minimise the risk of stockouts.

Backed by an experienced team

Outsourcing fulfilment to a 3PL provider means you gain access to the breadth and depth of their resources, which typically encompasses an experienced and dedicated team, who will take the time to understand your business, your customers, and how best to meet your fulfilment needs. They will act as an extension of your brand, picking, packing, and shipping your orders according to your exact specifications to ensure a 5-star experience with every unboxing. This leaves you free to focus on core competencies like sales, marketing, and product development, knowing order fulfilment is being taken care of by the experts.  

“Ultimately, the biggest advantage of working with Zendbox is that I no longer have to think about fulfilment because I know it’s being handled properly. My time has been liberated to grow the business and focus on selling higher-value products.”

- Charlie Munton, CEO of Skinspace

Scalability & flexibility

With your product range expanding and hundreds more orders going out the door, you’re likely to need a more flexible storage solution. Some 3PL providers like Zendbox charge storage based on the cubic metre space stock takes up in real-time, which is the most cost-effective storage model and ensures businesses only ever pay for actual usage – no matter how much stock they have on hand. The scalability of this model also accommodates peaks in demand and eliminates the need to invest in additional warehousing space during slower trade periods when you may have more product in stock.  

Clear, transparent pricing

Some 3PLs provide an “off-the-shelf” fulfilment solution that suits many businesses but to get maximum value out of outsourcing, it’s important to partner with a 3PL company like Zendbox, who offers a custom proposal based on various factors unique to your business. These include your order volumes, the type of products you sell, and specific fulfilment services you require. This clarity in pricing fosters trust and ensures you have a clear understanding of the fulfilment costs associated with your operations.  

“One of the hardest things as an entrepreneur and a business owner is to hand over responsibility. I didn’t want to hand over a business that I’ve built from the ground up and it was incredibly difficult to delegate but since making the move to Zendbox, I’ve been nothing but impressed with the service.”

- Rob Whitfield, Owner of Complete Strength

Don’t run before you can walk

Understanding when to outsource order fulfilment is a major strategic decision that can make or break an eCommerce business. The early stages of a brand’s growth journey provide the ideal opportunity to retain control and visibility over fulfilment operations whilst gaining valuable insights into what works and what could be improved upon to deliver the best shopping experience to your customers. However, as order volumes increase and you enjoy more business success, outsourcing to a reliable 3PL provider will make all the difference in maintaining a seamless, cost-efficient service.  

Ultimately, the key to fulfilment success lies in having an in-depth understanding of your business needs, weighing the advances of in-house fulfilment against the benefits of outsourcing, and finding the optimal time to make the switch. By leveraging the insights shared in this blog, ambitious, fast-growing brands can strategically evolve their fulfilment processes and best position themselves for long-term success in the highly competitive eCommerce landscape.  

Want to know more about how Zendbox empowers businesses like yours with a reliable eCommerce fulfilment service? Request a demo today!

Gilson Pereira
Head of Customer Experience at Zendbox

Resilient and forward-thinking, Gilson is responsible for leading the strategy, planning and execution of our customer experience (CX) goals, liaising with department heads to ensure every team at Zendbox works cohesively to provide our clients a positive and seamless experience across all touchpoints.

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