For any early-stage startup, sustaining for the long-term becomes difficult if the fulfillment costs exceed 15% of total expenditure. There comes a point when every emerging eCommerce business is at crossroads about whether to opt for in-house fulfillment or outsource the entire logistics to a trusted partner. There are upsides and downsides to both, and startups often find themselves in a soup by choosing the wrong option.

Having a proper, organized order fulfillment process is extremely crucial, as it can make or break your business in the long run. From fast delivery times to shipping charges, customer retention is majorly driven by the flexibility of fulfillment options.

According to data from the Baymard Institute, more than 55% of potential buyers are deterred from placing an order due to hidden high shipping costs. Meanwhile, over 16% of customers stop short in their eCommerce shopping if they find the delivery time “too slow”. These are some of the factors that make the ultimate difference between in-house and outsource fulfillment. Let’s take a deeper look into the pros and cons of both to help your brand make an informed decision.

What is Integrated Fulfillment

Integrated fulfillment defines the complete end-to-end fulfillment process — from the checkout stage to picking, packing, shipping and even managing COD (Cash on delivery) & returns (RTOs). It is a kind of logistics backend that assures positive customer experience both during and after the order delivery.

Ideally, integrated fulfillment is a holistic collective of the various processes. It may be under complete control of one company, or multiple partners may join hands to exercise collective control over the fulfillment process. At Blowhorn, integrated fulfillment is a full stack platform from which sellers can manage their order to cash cycle as well as their inventory, with the help of our end to end operations.

When it comes to logistics for startups as well as established brands, there are 2 main types of fulfillment:

1. In-House fulfillment

2. Outsourced fulfillment

In-House fulfillment

When brands choose to manage the entire fulfillment process independently, as opposed to outsourcing order fulfillment to a third-party logistics provider, it is referred to as in-house fulfillment. It is a retailer’s choice to fulfill orders using their own logistics and resources, so that one can have total control over all orders.

Pros of in-house fulfillment:

• Operations can be closely controlled and monitored firsthand.

• Inventory is stored and processed in a known location owned or leased by the company.

• Complete visibility and transparency over end-to-end fulfillment, from pickups to delivery.

While there are advantages of doing your fulfillment by yourself, there are certain negative factors that might end up hurting the viability of your business.

Cons of in-house fulfillment:

• Order processing requires a lot of time—it can consume up to several hours per day leaving you little time to focus on fine-tuning your products.

• Enormous attention required on managing the entire supply chain with only partial responsibility sharing with transporters/warehousing facilities.

• Shipping costs are market-rate. In fact, some brands are often prompted to keep hidden shipping charges to make up for their heavy capital expenses, thereby driving away potential customers.

• Without a large fleet of vehicles at your disposal, it gets difficult to managing seasonal peaks with in-house fulfillment.

Outsourced fulfillment

The other choice is to outsource the order fulfillment process to a trustworthy and reputed 3PL provider. Choosing this option means relying on a third party to handle every phase of the fulfillment process.

So whilst your brand can focus more on their products and marketing, your logistics partner will take care of your inventory, order management, deliveries as well as returns, if any. Dedicated fulfillment companies like Blowhorn will typically provide their own storage and fulfillment centers, as well as the necessary labor, materials, and technological framework required to ship orders effectively and meet customer expectations.

The upsides to outsourcing your fulfillment are aplenty.

• There are less chances of delivery delays due to transportation hiccups, as 3PL companies always have a contingency plan in place.

• An internal survey at Blowhorn, one of India’s fastest fulfillment companies, has revealed that outsourcing your fulfillment can reduce RTOs by nearly 50%.

• Outsourced fulfillment also guarantees a better experience for the customer who enjoys fast delivery, better packaging and real-time tracking of the orders.

• It also takes away the troubles of manual inventory management, as reputed fulfillment companies have an automated warehouse management system in place.

• Expanding your business becomes easier with a fulfillment partner by your side. For instance, many of Blowhorn’s partner brands have expanded across India with the help of Blowhorn’s intricate network in 160+ cities.

There are a handful of drawbacks to outsourcing your fulfillment though, which include:

• Some new eCommerce businesses might find it difficult to hand over the entire control over fulfillment to a logistics partner.

• When doing 3PL fulfillment, brands often miss out on personalizing their packaging to improve their brand value. That is why, Blowhorn offers white-label logistics, allowing partner brands to showcase their brand identity on every package.

• Sometimes, outsourcing your fulfillment can prove to be a bit expensive. In the long run, the high quality and speed of services can help you improve your sales more than 5 times. The benefits provided far outweigh the little extra you might have to spend on a 3PL partner.

Managing in-house order fulfillment is extremely time-consuming and capital-intensive, not to mention the meticulous attention needed at every stage of the fulfillment process, from pickups to deliveries. Yet, many startups choose to pursue in-house fulfillment to make sure the entire process of moving goods is under their control, which might prove to be a sore point later.

Outsourcing your fulfillment can take away the entire headache for logistics and boost your sales with a more seamless and faster delivery process. After all, it is best to leave the fulfillment to the experts in that area while you focus on outshining your competitors with a stellar product line.

To learn more about outsourcing your fulfillment process, schedule a free call with our logistics experts anytime.