A good business is built on operational efficiency and customer satisfaction. Choosing the right kind of order fulfillment strategy plays a pivotal role in ensuring both. In fact, it’s a critical decision for any business’s long-term survival. But which order fulfillment strategy will drive growth in the best possible way?
Choosing the Right Order Fulfillment Strategy for Your Business
The order fulfillment process doesn’t have to be overwhelming anymore. We’re going to explore four of the most popular order fulfillment strategies to give you insights that you can rely on for making an informed decision to maximize your business’s success.
In-House Fulfillment
In-house fulfillment gives you direct control over the entire fulfillment process. This means you’ll be responsible for everything from receiving and inventory management to picking, packing, and shipping. The flexibility to tailor operations to your requirements might be something ideal for you – or something that will just increase the time and effort.
Pros
- Good control and flexibility.
- Maintain direct control over the brand and customer experience.
- At scale, in-house fulfillment provides excellent cost-efficiency.
Cons
- Infrastructure and resources can require a big investment.
- Managing the entire pipeline can be operationally complex.
In-house fulfillment is ideal for businesses that prioritize control, have stable order volumes, well-established operations, and a desire to maintain a strong brand experience throughout the fulfillment journey.
Outsourced Fulfillment
Outsourcing your order fulfillment to a third-party provider offers scalability and expertise. Order fulfillment services are also significantly more cost-effective in the majority of cases. However, there’s also the question of how much you can leverage their infrastructure and technology.
Pros
- Outsourced fulfillment providers have the infrastructure and resources to handle large order volumes, seasonal fluctuations, and sudden spikes in sales.
- For small businesses, third-party fulfillment is very cost-effective as it saves them the trouble of renting warehouse space, buying equipment, and hiring personnel.
- Outsourced fulfillment is often handled by specialists in logistics and supply chain management. The established processes and technology make sure the orders are delivered faster and reliably to meet customer expectations.
Cons
- Businesses lose control of some aspects of the fulfillment process. If communication between the third party and your business is not up to the mark, your customers will suffer unnecessarily.
- At scale, maintaining outsourced fulfillment is often more expensive, relatively speaking.
- There’s always a risk of inconsistency in packaging, labeling, and customer service. This can lead to numerous brand experience challenges that might end up costing more time and money from your side anyway.
Outsourced fulfillment is recommended for businesses that want to leverage the expertise and infrastructure of specialized providers, especially when facing unpredictable order volumes, rapid growth, or limited in-house fulfillment capabilities.
Dropshipping
Dropshipping is one of the most popular order fulfillment options where you partner directly with a supplier who will handle product storage and shipping end-to-end. All you need to do is display the products on your ecommerce business website. This offers the least flexibility and control but at the same time, eliminates the entire hassle of warehousing, packing, shipping, and returns. On the other hand, if customers have complaints, it’s you who bears the brunt (sometimes, without having made any mistake).
Pros
- Dropshipping requires a relatively low initial investment. In fact, it’s possible to begin a dropshipping store by just buying a domain and hosting (or launching on a platform like Shopify).
- A wide product selection combined with the lack of warehousing and inventory management processes makes it a lucrative option for many.
- Operational complexity is generally very low.
Cons
- Profit margins are typically lower.
- There’s little to no flexibility in what you sell and how you sell it. You’re 100% reliant on the supplier and their support, packaging, and considerations. Stockouts, shipping delays, and poor product quality can negatively impact your reputation and revenue.
Dropshipping is great for entrepreneurs with limited capital who are seeking to test a new idea or product line to enter a market quickly. It suits businesses that prioritize product variety, low upfront costs, and are willing to accept lower profit margins in exchange for simplified logistics and inventory management.
Hybrid Fulfillment
Many businesses have excelled in creating a hybrid order fulfillment model where they combine in-house fulfillment, outsourced fulfillment, and dropshipping. This customized approach takes the best of all worlds and offers flexibility, scalability, and control over your fulfillment operations. Nevertheless, it can take a while to set up the right kind of hybrid fulfillment method and iron out all the details.
Hybrid fulfillment can provide better flexibility, control, and cost optimization but at the same time, be very operationally complex, resource-intensive, and heavily reliant on communication with multiple third-party vendors.
What is the best order fulfillment strategy for your business?
All types of order fulfillment models have their pros and cons. Certain types of models are more recommended for specific types and sizes of businesses. So, what order fulfillment strategy will you use for your business?
MAI Fulfillment | 3PL Warehouse Chicago, Illinois
Warehouse | Cross Docking | Fulfillment | Kitting | Inbound/Outbound Voice | Freight Broker
Established in 1981, MAI is a privately-held 3PL company in Chicago specializing in warehousing, fulfillment, and omnichannel contact services. As an experienced outsourced provider, we provide value-added solutions designed to help companies build and maintain relationships with their customers.
The MAI business model offers clients the efficiency and convenience of dealing with a single accountable resource for a wide range of services. MAI areas of specialization include:
- Custom B2B and B2C warehouse/fulfillment solutions
- Omni-channel contact center services
- Technology support
A wide range of service offerings, strategic problem-solving skills, and experience make MAI a valued partner to a broad range of Fortune 500 companies. “Quality” is more than just a word here – it’s the foundation of how we conduct business and an integral part of the processes and metrics we use to deliver value to our clients every day.
Contact MAI today to learn more!
