There comes a time when ecommerce start-ups must decide whether to expand their internal fulfillment capabilities, or outsource to a third-party logistics and fulfillment provider. However, making that decision requires more consideration than a simple cost-analysis. While an internal fulfillment department comes with flexibility advantages, a partnership with a 3PL company also has perks that can benefit an ecommerce company as a whole.
Cost per order: It's not always true for every internal fulfillment vs. 3PL comparison, but a 3PL partner is often able to leverage their specialized focus and industry relationships to get a lower cost per order.
Specialization: When an ecommerce company reaches the point where it needs to expand its fulfillment capabilities, the reasons for that successful growth tend to come from the efforts put into marketing, merchandizing, customer service, etc. Outsourcing to a 3PL provider allows the ecommerce company to keep its focus on those areas.
Operating capacity: With their capabilities and capacity, good 3PL companies can handle your peak season without straining your budget or internal team.
Capital savings: if you want to open a new distribution center on your own, you need to account for the expenses of facility equipment, order and warehouse management systems, website platforms, staff, etc. Money saved through a 3PL provider can be invested in other areas.
Customer reach: Since 3PL providers already have established distribution networks, they can usually get orders to your customers faster and cheaper.
When choosing whether to manage fulfillment on your own or outsource to a 3PL provider, there’s no “right answer” that works for every business. However it's worth considering the cost-effective benefits that 3PL companies provide.