In-House Versus Outsourced Fulfillment for Start-Ups

As you begin your journey as a start-up, you have plenty of important decisions to make. From branding to customer experience strategy, you need to ensure that the decisions you make not only serve you in the short-term but the long-term as well.

Deciding between in-house or outsourced fulfillment is one of the most important decisions for your start-up, as it dramatically affects your end results as they relate to customer satisfaction. Explore key aspects to consider when weighing your options to make the best decision that will supercharge your start-up's growth in the long run.

Key Aspects to Consider When Deciding Between In-House and Outsourced Fulfillment

Flexibility

The market is volatile, and it's crucial to have measures in place so you can grow and change as the market does. The need to be adaptable and agile is especially applicable to start-ups as you grow your business and brand. The demand you face when just getting started can be drastically different than mid- and late-stage growth.

​When it comes to the ability to adjust to changes in the market, outsourced fulfillment beats out in-house due to its range of capabilities. An outsourced provider has the experience, expertise, and resources to alter operations on short notice. To put it simply, 3PL partners have the processes in place to support changing demands. 

Expertise

When outsourcing to a 3PL partner, they've likely been there, done that. With tailored expertise gained over time, 3PL partners are able to drive overall efficiency and scalability that is incomparable to in-house fulfillment operations handled by start-ups. Start-ups don't just have to worry about fulfillment in the same way 3PL partners do. To measure up to the capabilities of a 3PL partner, in-house fulfillment would have to greatly invest in resources and training. If you want to get the job done right the first time around and spend resources where they're most needed, let the experts handle fulfillment.

Control

If your priority is to have complete control of your start-up's business processes from end to end, then it's a good idea to invest in in-house fulfillment. While a 3PL partner can make things easier, some start-ups may desire a self-made image. If you're looking to adhere to a ground-up mindset and not have to rely on external resources, in-house fulfillment may be right for you.

Cost

When it comes to upfront costs, the difference between the two fulfillment options is vast.  The costs associated with in-house fulfillment entail leasing or buying a warehouse, investing in equipment and staff, and learning from beginner mistakes. As a 3PL partner already has the necessary components in place, you can completely circumvent such hefty initial costs by outsourcing. With a 3PL partner, you'd be doing things right the first time around with tried and true best practices, avoiding any costly pitfalls that come from inexperience.

Customer Experience Priorities

When deciding between in-house and outsourced fulfillment, it's important to take the time and thoroughly understand your priorities when it comes to the customer experience. The importance of a good first impression when it comes to fulfillment cannot be understated. Data shows that a positive fulfillment experience can be one of the most important aspects of a customer experience with 45% of consumers saying they won't shop with a seller again after receiving an item late.

While there's no right or wrong answer, you need to define what values you want to convey to end users, especially as it relates to resource allocation. If you want to send a message to customers that your start-up is independent, then in-house is for you. If you want to free up your time to focus on brand recognition, marketing, and general scalability, then it's best to work with a 3PL partner that can take fulfillment responsibilities off your plate while also acting as an extension to your business. 

The Final Takeaway

At the end of the day, the decision between in-house and outsourced fulfillment will depend on a variety of unique factors, such as the company industry, business goals, and resource availability. As you define your initiatives, desired outcomes, and values as a start-up, you need all the time and resources you can get. However, the advantages of outsourcing aren't only seen by start-ups with a DHL report stating the top 10 e-commerce players are leveraging outsourced fulfillment to an extent. According to that same report, nearly half (48%) of surveyed companies are using a hybrid model of in-house and outsourced fulfillment with 18% of them looking to completely outsource in the next five years.

By handing off the tedious responsibilities of fulfillment to an experienced 3PL partner, you get more time in your day to focus on your growth — and most importantly — customer delight.

​Let a 3PL partner like Materialogic manage your fulfillment from the get-go so we can lead you to success with best practices and unmatched support. Don't take on the burden of figuring out everything as you go. Get it right the first time, every time by letting the experts do what they do best — providing a seamless customer experience throughout each growth stage.