At some point, it’s enevitable, you’re going to need scale your online store. You’re going to need to expand your in-house fulfillment, the question is; how are you going to do it?
We hear it all the time, you started your online store at home or in a garage. You’ve been wildly successful and your ecommerce order fulfillment has become a challenge. At some point, you’re going to run out warehouse space and will need to expand.
While we always admire the entrepreneur spirit for taking on challenge after challenge, if you want to scale your online ecommerce store, you’re going to need help.
We get it, this is your baby and you don’t want to let go of your ecommerce store. If you’re doing it all, it gives you a sense of control and power of each scenario. You also do it because it saves you money, right? For many things in your business, that can be true. However, when it comes to order fulfillment and logistics, it’ll be difficult to say the least without the proper help.
What Is In-House Fulfillment
In-house fulfillment refers to when an ecommerce business manages their own order fulfillment process; which would include inventory management, picking, packing, and shipping orders. The alternative to doing your own self-fulfillment would be outsourcing fulfillment to a third party.
For in-house order fulfillment to work correctly, there’s a lot you have to consider. For starters, you’ll need to consider renting or purchasing warehouse space, you’ll need to decide if you’ll be employing and training staff, you also have to consider what insurance you’ll need. Once you have all of those covered, you’ll need to buy equipment, you’re going to all need the right software and technology. How much do you think that will cost?
Even if you have all the big costs figured out, in-house order fulfillment won’t work for every type of business. It just won’t. This is why it may be more efficient and cheaper to outsource this process of an ecommerce order fulfillment expert. Now, if you’re just getting started and you have little capital, fulfilling in-house is likely the best option.
Problems With In-House Fulfillment
We all know that in-house fulfillment gets the tasks crossed off the sheet, even so, there will come a time and place when you need to grow.
Most ecommerce businesses start out taking care of their own fulfillment in-house. While self-fulfillment is fine when you’re starting out, this once simple process will in complexity, it will become a time consuming process. It will eat up your time and energy, especially when you start getting into high volumes of orders.
Again, if your ecommerce business is going to grow, you’re going to need to make some changes to these new fulfillment challenges.
Let’s look at several other problems with in-house fulfillment.
(1) Higher Total Costs
One common belief we see among new ecommerce brands is that they think in-house fulfillment is a cheaper solution, something that saves money in the long-term. The truth of the matter, there’s a lot of “hidden costs” tied into self-fulfillment. If you don’t have a proper order fulfillment system in place, your business is going to be strained once the orders begin to pile up. If you want to keep up with orders, shipping them out, and keeping customer service prestige, you need the “right” order fulfillment system to keep up.
Many ecommerce businesses want to be fast, secure, efficient, and accurate. It’s true, Amazon Prime changed the game, but it can make you go broke if you try to mirror their fulfillment infrastructure. If you’re just starting to transition to a 3PL or a bigger in-house space, you don’t need same day delivery. Likely, you don’t have the infrastructure in place to pull that off anyway; and know, that’s completely fine. You need to take it one step at a time.
We’re not downplaying the obvious, of course you want to grow and scale your business. Here’s the thing though, if you’re going to manage your own warehouse and implement your own technology, those costs can add up fast. In fact, most logistics warehouse tenants are expecting a 10% rate hike starting in the year 2021. That’s why many brands outsource fulfillment to a 3PL, which allows them to utilize an established fulfillment infrastructure and fulfillment technology to get it done right, allowing you to bypass fulfillment in-house.
(2) Late And Slow Shipments
If you’re seeing growing orders, it’s exciting! Naturally, if you’re seeing orders spike, you may feel it’s a great time to speed up your fulfillment process. After all, the quicker your customers receive their orders, the happier they will be. Yes, customer experience is very important. While there’s no question fast in-house order fulfillment is great, if orders are rushed and mistakes are made,
When you rush to keep up with orders, mistakes are going to be made, so make sure you’re giving yourself additional time to get shipments out efficiently and accurately.
Mistakes are not the only thing that can cause you problems, don’t forget about packaging as well. Bad packaging can lead to unexpected damage, unhappy customers, and all of it could add up to a loss of customers. Don’t underestimate the damage one bad review can burden you with. Customer experience is vital to your growth. Plus, you don’t want to have to replace damaged items or issue refunds. Best to get it right the first time around.
Make sure packages are packed properly and that you meet customers’ expectations. If your in-house order fulfillment process is struggling in these areas, you may want to consider outsourcing to an experienced 3PL fulfillment team.
(3) Bad Inventory Management
It cost money to manage inventory, those costs far exceed just renting a warehouse. There’s a lot of different factors you have to consider;
- Employee salaries
- Admin costs
When operating in-house order fulfillment, bad inventory management is going to lead to higher costs. Higher costs means smaller profit margins, period. If you don’t have the proper inventory management in place with a capable team, mistakes are going to plague your business. Bad packaging, damaged goods, mislabeling packages, stockouts, it’s going to happen.
Enough with the negativity, what about successful self-fulfillment? What does that look like? Well, it starts good inventory management and you can’t have good inventory management without the right tools, software, and system. The right inventory management system means everything.
(4) Inaccurate Orders
Sure, late orders are terrible – but it doesn’t get worse than opening up an order that isn’t yours. Ouch! While customers can live with an inaccurate order, they can’t live with the wrong product.
The only thing worse than a late delivery is a delivery that arrives with the wrong item(s). Unfortunately, an order accuracy rate can decline quickly when a business is struggling to keep up with orders and fulfillment operations become disorganized.
Taking small steps to continuously improve your order accuracy rate can yield massive benefits for your business that are absolutely worth the extra effort. But in many cases, optimizing the fulfillment process on your own takes a lot of support and time, and sometimes an investment in technology is necessary.
(5) No More Warehouse Space
Warehouse space is not cheap. We discussed this in our retail warehousing guide, talking about renting and paying for warehouse space, converting retail spaces into warehouses and fulfillment centers. If you’re considering buying a warehouse, that’s a big investment, not to mention all the other costs you’re going to have; equipment, staff, insurance, etc. Even if your warehouse is big enough now, will it be when you start growing?
If you’re running out of storage space for your ecommerce business, another option is outsourcing warehouse operations.
Think about this; rather than a big investment up front and all the challenges, you can outsource for warehousing services versus all the other hard costs if you were renting or paying for a warehouse yourself. Of course, you want a warehousing partner that has multiple warehouses across the country, like we do here at Thill Inc. Strategically placed warehouses allow us to help you get your products out faster, which is always a good thing.
(6) Branding Matters
A lot of ecommerce business owners don’t put fulfillment and branding together, but there’s some huge advantages when you build branding into your ecommerce order fulfillment.
Custom boxes and custom packaging is going to help you brand stand out versus the competition.
In fact, we know how important branding is to your order fulfillment as we offer subscription box fulfillment services. We work with dozens of companies that have subscription boxes, and as many of you know, the unboxing experience matters to customers. If you want your product to make an immediate impact, it should share the personality and persona of your business.
If you’re using in-house order fulfillment, take the opportunity to create custom packaging that showcases your brand and creates a deeper connection with your customers.
Another option you may want to consider is the branded post-purchase experience – this refers to the experience after your product has been ordered. For example, this could include an email that allows the customer to track their package. You may want to send them some additional content about the product they ordered so they can become familiar it prior to receiving the shipment.
This is a great opportunity for you to get creative and add “perceived” value to the customer.
(7) Ecommerce Fulfillment Services
The right order fulfillment software and technology is vital to your success and growth. It needs to be powerful, but easy to use, easy to read, analyze, and take action.
When it comes to order fulfillment, ecommerce merchants need a reliable order fulfillment software. After over 5 decades of fulfillment experience, we’re super proud of the order management software we have to help our customers.
Again, you don’t need complicated software. You need software that’s helpful and easy to use. We’d love to show you a demo if you’re interested in seeing it, just let us know.
You also want easy ecommerce integrations, and we have them. Our software integrates with a wide range of ecommerce platforms, those include;
- Shopify Fulfillment Software
- Magento Fulfillment Software
- Ebay Fulfillment Software
- Amazon Fulfillment Software
- WooCommerce Fulfillment Software
- Cratejoy Fulfillment Software
- And many, many more
Thill Inc. is a great choice for any ecommerce business owner because we have seamless ecommerce integrations, automated rules, and affordable shipping carrier options.
(8) Bad Packaging
Most businesses respond to a sharp increase in orders by speeding up the fulfillment process. But, while your customers may appreciate your swift in-house order fulfillment, they’ll be less happy if these orders contain the wrong items.
So, as you’re rushing to deliver the orders, you should take an extra few minutes to ensure that the right products are included in each order and that each one is packaged properly.
Poor packaging can lead to unexpected damage, unsatisfied customers, and eventually, a loss of business. This is especially true if you have to incur additional costs by replacing damaged goods or issue a refund.
So, you should always ensure that your packages are packed properly and meet customers’ expectations. If your in-house order fulfillment process is struggling with this, you might need to consider outsourcing order fulfillment to the experts.
(9) No Industry Expertise
Experience matters, and we’ve been around for more than 50+ years – doing order fulfillment. Sure, the times have changed, a lot has changed actually. However, when it comes to real-world experience in order fulfillment and shipping, Thill Inc. is one of the most experienced experts in the world.
You want logistics operation experts to help you, sharing their knowledge, processes, and best practices to help you grow, that goes for everyone; from startup businesses to established brands.
While you’re going to learn on your own through trial and error as your fulfilling orders in-house, you stand to learn a lot from fulfillment experts as your ecommerce business grows. You’ll likely spend less time on logistics and more time on growing your business, such as marketing or product development.
3PLs are highly trained, they’re skilled logistical experts and many of them work with direct-to-consumer (DTC) brands. Here at Thill, we specialize in;
Partnering with a 3PL logistics expert can help you find ways to save money, decrease inaccuracies, improve efficiencies, and optimize your supply chain.
(10) Can’t Optimize The Order Fulfillment Process
If you can make the effort to continously improve one step at a time, that’s going to account for a lot when the end goal gets near. You want to achieve scalable growth, right? Small little optimizations and improvements can help you reduce inefficiencies and save on overall fulfillment costs.
When your in-house fulfillment processes are at max capacity, you have little time assess the current process or find more efficient ways to fulfill orders. This leaves your business at a disadvantage, and the recurring costs of poorly strategized fulfillment systems can make it hard for your business to scale
How Can You Improve Your In-House Fulfillment?
Fair question, simple question but it can be a challenge.
If your ignoring the mistakes and inefficiencies of your in-house order fulfillment process, it can have grave cost on your business. This is why it’s so important to identify these problems in your process so you can improve your self-fulfillment. If you want to be successful with in-house order fulfillment, you better make sure:
- Your staff and team is properly trained
- Your using the right (WMS) warehouse management software
- You’re using the right software and technology
- Your always working to optimize the fulfillment process
Having these core pillars in place allows you to properly manage your self-fulfillment. Despite that, as your business grows and so does demand, problems are going to rear their head. You’re going to discover those issues and errors. This is why so many growing ecommerce businesses consider services of a third-party fulfillment company.
3PL fulfillment centers can handle all fulfillment needs;
- Inventory receiving
- Inventory management
- Picking and packing
Some 3PLs like Thill Inc. also offer returns management, value add-on services, customer services, and more.
Most fulfillment centers have good shipping solutions, we work with a number of different shipping carriers to help you find the best possible shipping rates.
Plus, there’s a wide range of benefits when you outsource fulfillment:
- Saves you time, money, and effort
- Allows you to focus your energy on the business
- Help you save money on shipping costs through bulk shipping
- Efficient inventory storage and distribution process
- Strategic warehouses and fulfillment centers reach customers faster
- Flexibility and ability to scale your ecommerce business at will
- Great infrastructure for handling goods
- Controlled storage options
Do I Fulfill In-House or Not?
In-house order fulfillment can be a challenge. You know if you’re in the position to outsource your fulfillment or not.
If you can’t outsource fulfillment, you need to make sure you’re optimizing your fulfillment processes, checking for inconsistencies, and solving problems. In order to solve problems, you have to identifying those problems first.
On the other side, you can outsource your order fulfillment. You can step away from your in-house ecommerce fulfillment and take your ecommerce business to the next level.
Plus, working with a reliable shipping provider can eliminate a lot of the problems you have in your ecommerce fulfillment process.
Yeah, a lot to take in – we get it.
We’re always here to help, if you have any questions about oursourcing your ecommerce fulfillment, don’t hesitate to reach out.