In-house fulfillment is almost always first-base for e-retailers when they launch their online businesses. Why? Well, it’s the simplest, it’s DIY, and you can literally begin fulfilling in your very own house (or apartment, of course).
It’s a model that takes the fulfillment process -- getting products from inventory to the customer’s door -- and puts the reins in your hands. That’s the chief benefit of in-house fulfillment: complete control.
As orders flow in, you’ll pick, package, and select the carriers to ship your products out. And that second word, package, is where your power of control shines.
Here are some operational options in-house provides:
Quality control -- Because it’s DIY, you won’t be relying on any third-party to ensure that your package above par. Every package that goes out has your seal of approval.
Branded unboxing experience -- Rather than using standard, cardboard boxes that a 3PL or supplier uses, you have the ability to use your own branded materials, like brand-colored tissue paper and branded boxes.
Add some personalization -- Because you’re handling orders, you can apply a personal touch, like a handwritten note of thanks, a second-purchase discount, or returns information.
As you grow, in-house fulfillment scales alongside you, as it’s still (you guessed it) in your control. Once your living room or garage gets too packed, renting out warehouse or storage space is a possibility. And if you find your order volume getting too high to manage alone (a great problem), it’s always possible to hire some part time employees that help pick, pack, and ship.
Do keep in mind, though, that these are also risks. The more space, the more inventory you have, and that means more tied-up cash. And the more people you hire, the greater the legal and compliance risk.
With in-house, you’re able to react quickly to changes in demand. You’re constantly aware of stock quantities, and if something’s selling fast, it’s easy to restock. If a product’s sitting on a shelf, throw a promotion up. Similar products selling in the same cart? Bundle them together as a single product for sale.
Whenever you’re fulfilling with a 3PL via outsourced, they must always be kept in the loop. It’s not as simple as “wow, this product’s flying off the shelves -- let’s buy more.” You must alert them, involve them, and be sure they’re prepared for changes in your demand.
That said, regardless of how much control you want, you are reliant on suppliers. If they don’t have product, it doesn’t matter how quick you react.
So far, in-house probably looks amazing compared to the former two models. But there’s a big reason merchants select outsourced fulfillment and dropshipping. They would prefer not to have to control fulfillment.
It can get overwhelming at high order volumes when you’re spending much of the day going through the motions of getting products out. And if you aren’t doing it yourself, you’re likely renting space and hiring employees, which can get just as expensive as outsourced fulfillment at a point.
Essentially, each of these fulfillment models lies on a spectrum of control, with in-house having the most control over fulfillment, and dropshipping the least, with pros and cons dispersed throughout each. Merchants will always end up picking one that meets their needs when it comes to cost and control.
It also should be said that none of these models is exclusive; you can fulfill different products in different ways. Large products with sizable margins may be great for outsourced or dropshipping. Items easily fulfilled in small parcels or that require some personalization may be good for in-house. It’s all up to you!
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