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Challenges of in-house fulfilment

Versha Kamwal
August 21, 2021
6
mins read

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Online business owners are now realising that seamless ecommerce order fulfilment is their best chance of success. Without it, the customer experience and the business’s overall profitability can suffer significantly.

Many online business owners like doing everything on their own, a.k.a DIY-ing, and it may seem like the best way to cut costs but ecommerce order fulfilment can be tricky and expensive if you don't have experience or a proper system in place.

In this blog, you’ll learn what is in-house fulfilment, what are the challenges of in-house fulfilment that ecommerce sellers face, how to solve those challenges by outsourcing fulfilment, and when should ecommerce sellers stick to in-house fulfillment.

What is in-house fulfilment?

In-house fulfilment (also known as self-fulfilment) is when ecommerce businesses handle inventory storage and order management (picking, packing and shipping) on their own. Usually, new ecommerce businesses carry out order fulfilment at their residence, workplace, or a temporary storage facility.

In-house fulfilment includes the following operations:

While it can tempting to run every operation and process of your online business on your own but do you really want to invest so much of your time and energy into order fulfilment rather than focusing on your core business?

Let's take an in-depth look at a few of the common challenges faced by ecommerce sellers who opt for in-house fulfilment. Most importantly, why they should outsource it to a 3PL (Third-Party Logistics) provider.

What are the challenges of in-house fulfilment?

1. Slow order delivery

When you rely on just yourself and your team to fulfil orders without a proper fulfilment process or infrastructure, delays are bound to happen. However, customers expect fast delivery as a standard service from ecommerce brands. If you don’t ensure a quick and streamlined pick and pack process, you cannot ensure on-time order processing.

Additionally, if you're selling on multiple marketplaces (Amazon, Flipkart, and more), you have to meet their stringent fulfilment guidelines consistently—making sure that your orders are ready to be shipped on time. For that, you need to ensure that orders are processed and ready to be shipped, without a miss. Else, it can result in slow order deliveries. Moreover, you need multi-location warehouses as by fulfilling your orders from multiple locations you can increase the order delivery speed.

As a solution, you can partner up with a 3PL provider like Eshopbox to ensure on-time order processing. You can also enable you to set priority pick and pack for orders that require faster turnarounds. Moreover, Eshopbox is compliant with the guidelines of every marketplace to ensure that orders are processed within the required turnaround time (TAT) while complying with their strict Service Level Agreement (SLAs). Most importantly, Eshopbox has a distributed network of fulfilment centres spread across India to reduce transit time and shipping cost.‍

Eshopbox's streamlined pick and pack process
Eshopbox's streamlined pick and pack process

2. Inferior order accuracy

When it comes to online orders, customers have very little or no tolerance for errors. Let's take an example, a customer ordered white trousers and got black trousers instead. Such errors occur more often if you are fulfiling your orders in-house. These mistakes ruin the entire shopping experience of your customers, tarnish your brand image, increase return, and you may lose your customer.

To improve your order accuracy, it's best to outsource your order fulfilment to a 3PL provider like Eshopbox. As an experienced 3PL provider will:

  • Incorporate smart automation in the order fulfilment process to eliminate human errors with barcode scanners, conveyor belts, fixed standard operating procedures (SOPs), and more.
  • Optimise the picking process with barcodes and descriptive picking lists to reduce errors in the picking process as well as use warehouse slotting (storing inventory by type, size, weight, location).
  • Ensure appropriate and secure packaging to protect orders in transit.
  • Perform quality checks at the time of order processing to ensure wrong items or damaged products are not shipped to the customer and place the correct shipping labels on orders so that your customer doesn't receive an order which was meant for another customer.

3. Poor inventory management

An inventory management system (IMS) is a tool that allows you to track products across your ecommerce business’s supply chain. If you want to track your inventory effectively while you are fulfiling your orders in-house, you need to make sure you have enough inventory to fulfil orders on time. For that, you have to invest in a robust IMS with the key features that can simplify your ecommerce operations and prove vital to your success.

Without such IMS, you can increase the risk of:

  • Overselling which can result in tarnished brand image and disappointed customers.
  • Not maintaining a standard inventory level which can lead to stock-outs or excess stock. Stock-out can result in unhappy customers and loss of potential sales. Whereas, having excess stock can take up valuable warehouse space and incur unnecessary costs.
  • Not ensuring timely inventory replenishment that can interrupt your order fulfilment.

With a 3PL provider, you get access to a powerful IMS that can help you streamline your inventory management and get accurate inventory reporting. This way you can prevent stockouts, overselling, and other inventory issues. You also get valuable sales data that can help you make more data-driven business decisions— your sell-through rate, best-selling products, slow-moving products, and more.

4. Lack of storage space

As your ecommerce business grows, you will need to consider if you have enough space to store your inventory and carry out order fulfilment. You can rent more storage space but that comes with a lot of warehousing management and operational responsibilities, such as hiring more staff, purchase more storage and security equipment, and insurances. Additionally, if you are considering creating your own fulfilment infrastructure—it requires a lot of capital investment and professional expertise.

Even after getting more storage, your inventory levels will fluctuate based on seasons, flash sales, promotional events, discounts, and more. This means your manpower and storage needs will change drastically which can add up to your costs significantly.

With a 3PL provider, you get access to scalable storage space and only pay for what you use. You will also leverage the 3PL's established fulfilment infrastructure which they can allocate according to your current order volume. It will enable you to effectively manage fluctuations during sales without incurring unnecessary costs.

5. High shipping costs and hidden costs

When you are shipping your orders yourself, you have to rely on shipping providers for giving cost-efficient shipping services across the country. However, it is unlikely for you to get discounts and negotiated shipping rates because of low order volumes. This makes speedy delivery expensive.

Moreover, fulfilling your orders from multiple locations is not only a great way to increase the shipping speed but also to reduce shipping costs. For that, you need fulfilment centres across the country covering all the zones, i.e. North, East, South and West. This way you can take advantage of ground shipping— the most cost-efficient way of shipping orders. Thus, you have to make a huge investment in multiple warehouses.

Furthermore, it’s not uncommon for new ecommerce brands to think that sticking with in-house fulfilment saves money in the long run. There are hidden costs to self-fulfilment, such as the cost of maintaining adequate infrastructure, packing materials and supplies, shipping insurance, delayed order processing, prime badges, poor returns management, and more.

3PL providers such as Eshopbox handle high order volumes and have strong tie-ups with shipping providers. This means you get access to negotiated shipping rates. Additionally, many 3PL providers like Eshopbox have a distributed network of fulfilment centres spread across India. You can split your inventory in multiple fulfilment centres and cut down your shipping costs and provide fast delivery without worrying about your customer's location. Additionally, outsourcing fulfilment to a 3PL provider can help you save all the hidden costs of in-house fulfilment.

Eshopbox's distributed network of fulfilment centres
Eshopbox's distributed network of fulfilment centres

6. Manual processes and lack of technology

When you're fulfiling your orders on your own, you mostly have manual processes rather than automated processes. Thus, your workforce takes care of every fulfilment operation—picking, packing and shipping orders. Since humans are directly involved in the fulfilment process, delays are most likely to occur. Moreover, you have to compromise on efficiency and cost-cutting.

With a 3PL provider, you can automate your traditional fulfilment operations by leveraging their powerful technology—barcode scanners, conveyor belts, intelligent robots, and more. This can help you reduce the workload and the time spent picking, packing and shipping orders while ensuring better order accuracy. A tech-enabled 3PL provider like Eshopbox can provide you with an advanced way to sell on multiple ecommerce sales channels, manage your inventory, and fulfil your orders. Moreover, by following a standard operating procedure (SOP) a 3PL provider can streamline your routine operations and help you achieve desired shipping speed.

Conveyor belt and robots being used in a fulfilment centre
Conveyor belt and robots being used in a fulfilment centre

7. Lack of expertise

In in-house fulfilment, you simply pick, pack, and ship the orders. You may learn a thing or two that can help you achieve better fulfilment efficiency. But you can't fulfil your orders in the most efficient and cost-effective way like an experienced 3PL provider. Moreover, as your online business grows, you will most likely want to spend less time on order fulfilment and more time on business development.

Experienced 3PL providers like eshopbox, cultivate knowledge and best practices that benefit online businesses of all sizes, from startups to established brands. By working with a fulfilment expert, you to find ways to optimise the supply chain, save money, and improve efficiencies by streamlining complex processes across multiple sales channels.

When you should stick to in-house fulfilment?

Not all online businesses can manage a successful partnership with a 3PL provider. Here are a few things you should consider before outsourcing your order fulfilment:

1. Limited daily order volume

If you deal with a limited order volume on a daily basis, it may not be the right time for you to outsource your order fulfilment to a 3PL provider. Most of the fulfilment companies either work on a pay-as-you-go model or subscription plans. With a low order volume, it won't be economical for you to store your inventory at a 3PL provider's warehouse as you will end up paying more than what you're making from your online business. Thus, it will be better to fulfil your orders in-house.

2. Custom orders

Some online businesses, especially carried out by artists and creators, have custom products, and even curated packaging for each order. For instance, a few clothing brands give their customers the freedom to design their own T-shirts. In such cases, it's not possible to keep the inventory ready to be shipped out. However, many 3PL providers provide custom packaging and other ways to create a branded experience. But it can be a challenge if your brand’s image is based on personalised products that are unique for every customer.

3. Highly specialised online business

If you are dealing with highly specialised products, that means your products often require custom storage, packaging and shipping conditions. On the contrary, most of the fulfilment companies usually provide standard solutions. Even if some fulfilment company agrees to offer on-demand warehousing and fulfilment solutions, it might be more costly due to tailor-made services, custom infrastructure, and bespoke procedures. Thus, it's best to choose in-house fulfilment.

Wrapping up

Running an ecommerce business completely by yourself is surely tempting. It can make you feel that you’re maintaining complete control and cutting costs. For many operations, this can be true. But when it comes to order fulfilment— it's hard to scale, requires expertise, needs access to abundant resources, and major investments. So, it’s important for ecommerce sellers to understand how to rise above common pain points of in-house fulfilment and achieve successful fulfilment by partnering up with a 3PL provider.

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