E-commerce Fulfillment Options: Which One is Right for your Business

Starting an e-commerce business involves many steps and decision that need to come together at the right time to ensure success. You will need to build a strong customer base and deliver products and services on time. Many company owners choose to outsource their fulfillment operations so they are free to concentrate on other business necessities while customer requirements and satisfaction are carefully managed by experienced fulfillment professionals.

The fulfillment process refers to all of the steps involved in getting a product to the customer – from order processing, to picking, packing, shipping and delivery.

At least fifty percent of our business is fulfillment, we can do everything right upfront but if they open that box and things are not right it messes up the entire experience. You gotta get that part right.
- John LawsonCEO, 3rd Power Outlet and ColderICE Media

Let’s look the variety of fulfillment options that are available for e-commerce businesses:

Self-fulfillment – Businesses that rely on self-fulfillment assume the responsibility for picking, packing and shipping orders and managing inventory themselves.

  • There are pros and cons when you choose self-fulfillment.
  • Primarily, the self-fulfillment option typically costs less than outsourcing. If you are a small start-up, this may be a viable option.
  • With self-fulfillment, business owners have control and clear knowledge of all the processes and transactions.
  • On the other hand, self-fulfillment is time-consuming and requires dedicated resources. Once your business begins to expand, it can become difficult (sometimes impossible) to perform every activity with precision while maintaining timelines.
  • The physical space requirements of your fulfillment operation may also be a constraint that could hinder the expansion of your business.

Outsourced Fulfillment – Many e-commerce companies look for an outside company that specializes in fulfillment to handle their fulfillment needs. Because these companies focus only on fulfillment, they often offer efficiencies and advanced technologies that will benefit your business.

  • Outsourcing your fulfillment requirements can save time and free up resources that will allow you to focus on the growth of your business.
  • Fulfillment companies typically enjoy volume discounts on shipping that they pass on to their clients which can help offset the cost of outsourcing to 3PL.
  • Establishing the service metrics and expectations upfront with your outsourced fulfillment partner is key to a successful relationship.
  • One of the biggest fears business owners face when outsourcing fulfillment is a loss of control over an important business function. Partnering with a company that offers real-time reporting and inventory management will help mitigate this issue.

Drop shipping – This unique shipping method involves having products delivered/shipped direct to customers by the manufacturer or wholesaler.

  • Drop shipping can potentially enable your company to explore avenues that would normally be beyond your reach.
  • This option is wallet-friendly to great extent as you only pay for what you sell, not for what you hold in inventory.
  • Drop shipping may require a narrower profit margin since drop shippers generally expect higher profit cuts.
  • If you do not have the right sources and contacts, this method might be tedious and time consuming. You are also placing your reputation as a company in the hands of the manufacturer or wholesaler.

E-commerce fulfillment options are not one-size-fits all. Evaluate the pros and cons of each method and make your decision based on your business requirements. There is always the option of ‘Mixed Fulfillment’ which is a combination of the above mentioned options. At the end of the day, you need satisfied customers who will help attract new customers to your business.

It is equally important to identify and continuously evaluate the right shipping mix for your business. Many businesses think it’s easiest to select one carrier for everything, but each offers distinct advantages and pricing options.
- Amine Khechf´e

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