This article shares insights from ShipStation’s Innovation Delivered summit. Ecommerce experts shared tips for building strong businesses that focus on customers. Learn more about Innovation Delivered and watch all event sessions <\/em>here<\/em><\/a>.<\/em><\/p>\n\n\n\n Some ecommerce leaders only consider order volume when choosing their fulfillment approach. But order volume is only part of the equation.<\/p>\n\n\n\n “It used to be, if you\u2019re small, it made more sense to run your own warehouse, because the companies that were serving the small brands were not good. That\u2019s changed,” said Aaron Rubin, CEO of ShipHero. “Today, you can be a company shipping $1,000 a month and get a 3PL that\u2019s going to do an amazing job for you.”<\/p>\n\n\n\n As 3PL partners continue to improve, the barrier to entry for outsourcing gets lower and lower. It\u2019s no longer just for Fortune 1000 companies. It\u2019s now a viable strategy for companies of all sizes\u2014even micro-merchants\u2014which is why order volume alone shouldn\u2019t drive your decision.<\/p>\n\n\n\n For many ecommerce brands, self-fulfillment is a deliberate choice that reflects their preferences for control, agility, and improved margins. Brands opt for self-fulfillment in the long term for multiple reasons, but here are some of the most common.<\/p>\n\n\n\n Product category matters<\/strong><\/p>\n\n\n\n Some products are better for self-fulfillment than others. Lightweight, low-complexity items like makeup brushes, socks, and accessories are relatively easy to store and ship. That makes them a natural fit for self-fulfillment, as there are fewer steps and obstacles throughout the ordering and shipping process.<\/p>\n\n\n\n Outsourcing is typically the better option for heavy, oversized products. They require special storage, packaging, and shipping solutions that smaller brands may struggle to deliver directly to consumers.<\/p>\n\n\n\n Cost considerations<\/strong><\/p>\n\n\n\n Finally, you might also choose self-fulfillment to optimize costs. For example, if margins are thin and order volume is manageable, in-house fulfillment may be cheaper than outsourcing. Keep in mind that outsourcing too early creates new overhead without necessarily improving the customer experience.<\/p>\n\n\n\n The business model advantage<\/strong><\/p>\n\n\n\n Keeping fulfillment internal offers some other benefits, such as:<\/p>\n\n\n\n These advantages may or may not be important to your brand but are worth taking into account during your decision-making process.<\/p>\n\n\n\n As order volume grows and complexity increases, fulfillment tasks can pull leaders away from more strategic work. When that happens, it may be time to outsource. Here are four other signs it might be the right move for your business.<\/p>\n\n\n\n 1. The time trigger<\/strong><\/p>\n\n\n\n When fulfillment consistently takes two or more hours daily, you\u2019ve hit an inflection point\u2014it\u2019s time to either outsource or invest in new solutions.<\/p>\n\n\n\n “Oftentimes, emerging brands can fulfill 10, 15, 20 orders a day because it\u2019s not taking them a lot of time. And then over time, they will get frustrated with the amount of time, effort, and resources they have to spend,” said Aaron Hodes from DaVinci Micro-Fulfillment.<\/p>\n\n\n\n So, consider how much time your leaders are spending on order fulfillment. If it\u2019s more than you think is wise for your brand, it\u2019s time to make a change.<\/p>\n\n\n\n 2. Operational overwhelm<\/strong><\/p>\n\n\n\n Growth is what every business owner wants, but it also brings new problems. It can create issues like:<\/p>\n\n\n\n If your business has been having issues like these, outsourcing could solve them. It would take the responsibility off of your logistics employees, so they can focus on driving value back to your business in other ways.<\/p>\n\n\n\n 3. Geographic expansion<\/strong><\/p>\n\n\n\n It may also be time to outsource if you\u2019re looking to expand your logistics footprint geographically. Shipping everything from a single warehouse inflates costs and slows delivery timelines.<\/p>\n\n\n\n Instead, you can distribute your inventory across the U.S. with a strategic network of 3PL warehouses. These help every customer get their order faster, which reflects positively on your brand and leads to increased loyalty and higher customer lifetime value.<\/p>\n\n\n\n “A more distributed fulfillment strategy allows businesses to have their inventory placed closer to the end consumer, which is a byproduct of the experience they\u2019re looking to achieve,” said Hodes.<\/p>\n\n\n\n 4. Complexity factors<\/strong><\/p>\n\n\n\n Finally, it may be time to outsource if you\u2019re noticing fulfillment becoming more complex as your business evolves<\/a>. For example, you may have new multi-channel requirements, subscription models, or seasonal spikes that impact your order fulfillment processes.<\/p>\n\n\n\n If logistics is overwhelming your team, outsourcing is the natural solution. An external team can help your employees get back to what they do best.<\/p>\n\n\n\n Fulfillment maturity doesn\u2019t always move in a straight line. Some brands leapfrog phases with rapid growth, while others take a step back when orders slow down seasonally. In general, the timeline looks like this:<\/p>\n\n\n\n Phase 1: Founder-led fulfillment<\/strong><\/p>\n\n\n\n Founders of ecommerce start-ups are typically involved directly with filling orders<\/a>. They may pack orders themselves in a garage or spare bedroom, and every shipment at this point is very personal.<\/p>\n\n\n\n Phase 2: Small in-house team<\/strong><\/p>\n\n\n\n As orders pick up and the business grows, founders hire employees. This frees them from managing fulfillment, letting them focus on strategy and driving the business forward. At this point, dedicated staff members handle and pack with basic tools, but the founder themself is less involved.<\/p>\n\n\n\n Phase 3: Hybrid model<\/strong><\/p>\n\n\n\n Next, the business grows further, and leaders adopt a hybrid fulfillment model. This involves outsourcing some SKUs and regions, while keeping others in-house. For instance, you may process local orders internally and outsource those being shipped abroad.<\/p>\n\n\n\n It\u2019s smart to try a hybrid model before fully outsourcing. It gives you the chance to test new 3PL partnerships, find the right carriers, and helps your team adapt to outsourcing. In fact, the hybrid approach is becoming more popular for businesses of all sizes and stages of development.<\/p>\n\n\n\n “Today, the model has shifted pretty considerably towards a need for both, fast delivery and finding a fulfillment provider that can actually scale with them today, tomorrow, and over the next couple years,” said Hodes.<\/p>\n\n\n\n Phase 4: Fully outsourced fulfillment<\/strong><\/p>\n\n\n\n Finally, as the business continues to expand, it often makes sense to fully outsource any remaining orders and tasks. At this point, 3PL partners manage everything from warehousing and carrier negotiations to fulfillment.<\/p>\n\n\n\n At the end of the day, there\u2019s no wrong way or right way for all businesses. It\u2019s ultimately about the challenges you\u2019re facing and the goals you\u2019ve established. Now that you know the key factors to consider, it\u2019s time to make the self-fulfillment vs. 3PL decision. Here\u2019s a framework you can follow that will help you align your fulfillment strategy with the broader goals of your business.<\/p>\n\n\n\n 1. Complete a product profile assessment<\/strong><\/p>\n\n\n\n The first step is conducting an assessment of your products. Physical attributes<\/strong> can influence how practical self-fulfillment is for your business.<\/p>\n\n\n\n For example, small and lightweight items can often be shipped cost-effectively from a single warehouse or garage. But larger products, like furniture and fitness equipment, often require specialized equipment and carrier relationships. Developing these on your own is typically cost-prohibitive, so companies with large products typically choose to outsource sooner.<\/p>\n\n\n\n Fragility<\/strong> can also impact your decision. Delicate items like glassware, cosmetics, and electronics may demand custom packaging that\u2019s easier to scale with a 3PL. Employees of these companies also have specialized training with logistics and tools that can speed up your timelines with fragile goods.<\/p>\n\n\n\n Seasonality<\/strong> is the next factor. For example, brands selling Halloween costumes have extreme peaks and valleys in demand. 3PLs can help you absorb these order volume fluctuations with flexible services that scale with your business.<\/p>\n\n\n\n Finally, consider your SKU count. Brands with limited product lineups tend to have an easier time with self-fulfillment. If you have more than a handful of SKUs, outsourcing can save you significant time and money with more tailored logistics solutions.<\/p>\n\n\n\n 2. Consider business priorities<\/strong><\/p>\n\n\n\n Now that you understand which fulfillment option is best based on your products, you\u2019ll want to look at how your decision can impact your goals in these areas:<\/p>\n\n\n\n For example, Veiled Collection keeps a majority of its fulfillment in-house for more control. The founders of the women\u2019s wear brand pride themselves on the delivery experience and wanted to maintain a closed loop between its team and its customers. Rather than outsourcing, Veiled Collection uses ShipStation\u2019s high-volume customization, automation tools, and carrier integrations<\/a> to optimize and scale its own fulfillment even as the company grows rapidly.<\/p>\n\n\n\n 3. Navigate the forecasting challenge<\/strong><\/p>\n\n\n\n The unpredictability of ecommerce growth is one of the biggest barriers to outsourcing. The reality is that your growth won\u2019t be a straight line up. There\u2019s going to be some ebbs and flows that are difficult to predict.<\/p>\n\n\n\n This uncertainty makes it hard to invest in warehouses or long-term leases until you reach a certain order threshold. Outsourcing solves this by providing flexibility. The 3PL you choose can pool demand across hundreds of customers to absorb spikes and slumps more easily.<\/p>\n\n\n\n 4. Run financial analyses<\/strong><\/p>\n\n\n\n Finally, you\u2019ll want to compare the financial aspects of outsourcing vs. in-house order fulfillment before finalizing the choice. That means going beyond surface-level costs to also consider:<\/p>\n\n\n\n “You really cannot get any of those economies of scale if you are doing your own fulfillment in-house,” said Hodes. For example, 3PLs can often negotiate for lower shipping costs through carrier diversification, which isn\u2019t always available to small and growing companies.<\/p>\n\n\n\n Are you ready to shift fulfillment from in-house to a 3PL? If so, the first step will be documenting your processes. You\u2019ll want to write down how you package, label, and handle returns so your partner can replicate and deliver a consistent experience to customers.<\/p>\n\n\n\n Timing also plays a crucial role in making the transition. It\u2019s best to start in your slow season and leave some overlap. That way, if you run into any issues with your new partner, it shouldn\u2019t impact the end customer.<\/p>\n\n\n\n Finally, treat your 3PL as a true partner. That means completing regular check-ins, sharing forecasts, and signing clear service level agreements.<\/p>\n\n\n\n “Good 3PLs don\u2019t actually make money in the first year of a partnership,” said Rubin. “They make significant money in year two or three.” So, both sides can win if the relationship is built with a long-term vision in mind.<\/p>\n\n\n\n Outsourcing fulfillment can help your ecommerce business offer faster deliveries, lower shipping costs, and enhance your customers\u2019 experience\u2014but only if you choose the partner, technology, and strategies best suited for your unique business and products.<\/p>\n\n\n\n With solutions like ShipStation, you can integrate multiple carriers, automate order routing, and gain the visibility needed to manage fulfillment more effectively. And when the time is right to start outsourcing, tools like Fulfilled by ShipStation (see demo<\/a>) can eliminate the hassle of logistics and carrier relationships by connecting you directly to a curated network of 3PL carriers, all managed by ShipStation.<\/p>\n\n\n\n Watch the full session with Aaron Rubin and Aaron Hodes on “Next-Mile Mastery: Rethinking Fulfillment for Speed & Scale<\/a>” for more guidance on choosing the right fulfillment option.<\/p>\n\n\n\n No two ecommerce brands are exactly alike. Businesses selling similar products can have very different fulfillment needs based on their location, growth trajectory, and customer expectations. In short, there\u2019s no one-size-fits-all approach to fulfillment. But the decision matters. Your choice to outsource or not will impact margins, customer experience, and other areas of your ecommerce […]<\/p>\n","protected":false},"author":184,"featured_media":70413,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13116],"tags":[13107,13112],"class_list":["post-70407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ecommerce-growth","tag-business-scaling","tag-order-fulfillment"],"acf":[],"yoast_head":"\nWhy order volume alone doesn\u2019t tell the story<\/h2>\n\n\n\n
When direct fulfillment still makes sense<\/h2>\n\n\n\n
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4 clear signals it\u2019s time to outsource ecommerce fulfillment<\/h3>\n\n\n\n
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The ecommerce fulfillment evolution timeline: What to expect<\/h2>\n\n\n\n
<\/p>\n\n\n\nThe decision framework: Self-Fulfillment vs. 3PL<\/h2>\n\n\n\n
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How to successfully transition to ecommerce fulfillment outsourcing<\/h2>\n\n\n\n
Next steps in your ecommerce fulfillment journey<\/h2>\n\n\n\n
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