Outsourced vs. In-House Fulfillment: Which One is Better?

Time to read: 5 minutes

To outsource or not to outsource that is the question. Both options have their pros and cons, but which one is better for your business? You can learn the answer in this article—read on to learn everything you need about in-house vs. outsourced fulfillment.

In-House vs. Outsourced Fulfillment: General Overview

Let’s start by looking at 3PL vs. self-fulfillment in general. This way, we’ll establish the main differences between delving into more details.

In-House Fulfillment

In-house fulfillment (or self-fulfillment) involves you taking care of the whole process. This means that you need to invest in proper infrastructure, IT systems, and machinery to carry out your operations. At the same time, you are in the driver’s seat—you’ve got full control over your fulfillment.

Outsourced Fulfillment

Outsourced fulfillment (or 3PL) involves partnering with a logistics company that will take over all the order-fulfillment-related activities. It gives you less flexibility but does not require you to create a whole system from scratch or to own the infrastructure, which makes 3PL a popular option for new e-commerce sellers and smaller businesses.

The Real Difference Between 3PL and Self-Fulfillment

Outsourced fulfillment has its benefits, and so does self-fulfillment. What are the key, slightly less obvious differences between them? Which ones do you need to know about to make a conscious choice?

Expertise

For starters, outsourced fulfillment usually comes with much more expertise. This is because it is planned by experts in logistics, who can regularly attend industry events and exchange knowledge with other specialists. If you decide to hire an expert and work on self-fulfillment, you likely won’t have the resources to attend as many events as a logistics-oriented company; hence, you won’t be able to keep up with all the innovations at the same pace.

However, suppose you hire a highly skilled individual who already has good knowledge and is innovative. In that case, you might still build a much better logistics chain than with any outsourced service provider.

Costs

Self-fulfillment is often seen as much more expensive (at least at the start) and requires more expertise… usually. The truth is that it all depends on the volumes we are talking about.

If you send small quantities of products each month, you don’t need a large fulfillment center or many employees, so self-fulfilling your orders might actually be the least expensive option. Additionally, with 3PL, you often pay additional fees, so it might cost you more to fulfill a given order than if you did it yourself.

On the other hand, outsourced fulfillment services, such as Amazon FBA, often include the option to choose between multiple carriers. You can select the best offer based on dynamic rates. This gives you more flexibility and the opportunity to cut down costs, which you wouldn’t have when fulfilling your orders in-house.

Scalability

This is an area where 3PL triumphs vs. self-fulfillment significantly. The former enables you to simply… send more products whenever the demand rises. The latter, on the other hand, requires much more preparation to scale, for instance:

• purchasing additional storage space,
• hiring additional workforce,
• ordering required equipment,
• investing in IT tools (WMS, WCS, WES).

Additionally, even if you manage to scale up, you won’t be able to scale down—it’s impossible to sell your equipment overnight, right? Thus, if you want to scale dynamically, you should stick to third-party logistics.

Who Usually Uses Outsourced vs. In-House Fulfillment?

Who usually uses outsourced fulfillment, and who prefers it in-house? In general, we could say that:

In-house fulfillment is chosen by:

• Businesses that have a relatively small order volume.
• Businesses that prioritize consistency and operational control.
• Businesses that have sufficient logistics expertise in their ranks.
• Businesses that have the resources to invest in people and infrastructure.
• Businesses that operate on relatively stable order volumes.

Outsourced fulfillment is chosen by:

• Businesses that experience large volume fluctuations.
• Businesses that don’t have sufficient knowledge and expertise to set up their own fulfillment centers in their ranks.
• Businesses that prioritize scalability and/or often expand to new markets.

Outsourced Fulfillment for Amazon and Shopify with Fulfilled by Amazon and ByteStand MCF

Having read our discussion on outsourced vs. in-house fulfillment, did you decide to choose the former? Are you looking for a solution that will help you build a multi-channel e-commerce and fulfill your orders efficiently? Then, we have an app for you: our Amazon MCF Shipping!

How does it work? It lets you use Fulfillment by Amazon across other platforms, for instance, Shopify. This means that even if you sell your products via several channels, you can invest only in one reliable third-party fulfillment option.

Amazon MCF shipping not only lets you use the perks of Amazon FBA on different platforms—it can also integrate data for you. This way, you can keep the same prices in different channels, manage your inventory levels effectively, and even select the best, least expensive carrier for each order.

The Takeaway

We’ve explained the pros and cons of in-house vs. outsourced fulfillment. Now it’s time to choose. Which one is better? The answer depends purely on your store’s characteristics, goals, and plans for the future, so think about them and select your fulfillment type accordingly!

You may also read: The Impact of Fast and Reliable Fulfillment on Customer Satisfaction

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