Many businesses start small, but with big dreams. Whether you’re cracking your head figuring out how to minimize your costs, or busy doing almost everything alone; one of the things you’d likely find yourself doing is handling in-house fulfillment on your own— meaning that you’re responsible for packing and shipping your products off to customers. Of course, this does come with certain benefits such as a touch of personalization and flexibility. However, with limited resources and manpower, this process may be tricky and cause far more inefficiencies or hidden costs than you could have imagined.
In this article, let us explore the concept behind in-house fulfillment, along with some of its challenges and recommendations from fulfillment professionals.
So, what is in-house fulfillment?
In-house fulfillment or self-fulfillment is when an e-commerce business handles the entire process of order fulfillment which includes inventory management, producing, packing and shipping orders themselves instead of outsourcing fulfillment to an external fulfillment company. A fulfillment company, or 3PL has state-of-the-art inventory management systems in their facilities that are manned by trained personnel. Hence, when a business decides to do in-house fulfillment, they are essentially missing out on these lifesaving technologies provided by fulfillment companies.
Now, since there are still many e-commerce businesses that do in-house order fulfillment, let’s look at some of the common challenges faced by them.
5 Common Challenges of in-house order fulfillment
1. Slow delivery times
When fulfilling orders in-house, it is likely that you would opt for the lowest shipping costs you can find. This process may take time, and although this may seem like the best option for you, it is not for customers who expect fast delivery from you. Now, you’ve heard of unhappy reviews, and surely you don’t want your own customers to give your products bad ratings just because of slow delivery times, right? In addition, think of all the time and resources you could have spent on managing other aspects of your e-commerce business. Certainty, it is much better for your business if you partnered with a trusted fulfillment company to help you out.
2. Lack of Expertise
When you’re just starting out as an e-commerce business, the lack of manpower remains a main concern for many. Often, you or your own staff would have to handle in-house fulfillment regardless of skill and knowledge in this area. Although learning is part of the process, one small mistake such as undervaluing your inventory may lead to far bigger problems that could be detrimental to your business. If you were to spend time managing in-house fulfillment problems, your resources would be wasted in areas that could potentially be more important for your business. As a solution, consider employing qualified staff who are trained in handling in-house fulfillment, just for the sake of it.
3. Lack of storage space
As an e-commerce business, chances are your workspace is limited. Keep in mind as your business grows, will you have enough space to store all your inventory when there are increased orders? While renting or leasing a warehouse is an option, do note the high rental costs and utilities that incur along with acquiring additional storage space. Moreover, warehouse management means you would have to purchase equipment, insurance, and even hire labor to manage and safeguard your inventory. Don’t underestimate the costs that will eventually add up!
4. High overall and hidden costs
Indeed, handling orders yourself may seem like a cost-saving benefit for many e-commerce businesses in the long run. While this decision may seem appealing, in reality, there is much more to it! Implementing your own inventory management systems is a huge investment, not to mention the additional costs such as maintenance and hiring/training of skilled personnel. Overall, these contribute to high hidden costs; and with limited funding, many e-commerce businesses opt to outsource their fulfillment to 3PLs—which is not as evil as many think. Aside from access to cutting-edge technology and infrastructure that can improve efficiency, your e-commerce business would have more resources available for more important areas like handling customer inquiries.
5. Poor inventory management
A proper inventory management system is comprised of various technologies allowing you to track and manage your orders efficiently. Sure, having such a complex system in place sounds inviting. But don’t forget the huge investment (think money and wages) you’ll have to incur. Without a proper inventory management system however, your supply chain may be disrupted as you are faced with a variety of issues. From backorders, overselling, and stockouts—don’t forget your customers wouldn’t be happy if they are unable to get what they want from your online store! To avoid these issues, partnering with a fulfillment company would help unload your burden
We get it, the appeal of handling everything in-house is there—but don’t let the temptation get to you like too many inefficiencies and hidden costs exist. As we discussed above, you might be faced with more difficulties and problems than enjoy any benefits when doing in-house fulfillment in the long run.
If you want your e-commerce business to grow, consider letting professionals such as iStore iSend handle your order fulfillment. We want to see your business thrive, and we strongly believe in our capabilities and expertise in empowering you and your e-commerce business, beyond boundaries.