If you’re just starting an eCommerce business, you’re probably figuring out that there’s more to consider than what products you’re going to sell. The logistics behind selling and shipping your products—otherwise known as fulfillment—are a major part of running your business. Fulfillment is the process of inventory management, processing orders, packing items, and shipping products, all essential components of running a successful eCommerce business. Below, we share four options for fulfillment and three questions to ask when deciding which fulfillment strategy is right for your business.
The Four Types of Fulfillment
1. Self-fulfillment
As the name implies, self-fulfillment is when your business takes care of all stocking, fulfillment, and shipping needs in-house. If you’re just starting out and anticipate a manageable amount of orders, you should consider using self-fulfillment. Self-fulfillment may also be your best option if you sell products that are highly personalized and handmade to order, such as special embroidery or ceramics.
Pros:
- Self-fulfillment can be your cheapest option depending on your business model and demand.
- Since you are responsible for everything, you have control over all aspects of fulfillment.
Cons:
- Self-fulfillment can be incredibly time-consuming.
- It can be less economical depending on your business model and demand.
2. Dropshipping
Dropshipping involves a third-party supplier buying products on your behalf, packaging, and shipping theme for you. You only pay for what your customers order, but you will have very little to no customization options.
- With dropshipping, you’ll have lower overhead because you only pay for what your customers order.
- You’ll have many options for what products to sell
- There’s more flexibility in adding and removing products from your offerings as you only pay for what customers order.
- You don’t have to worry about any shipping logistics, warehousing, or hiring for fulfillment roles.
- Many dropshipping suppliers let you put your own branding on the packaging so your customers won’t know you’re not fulfilling their orders yourself.
- Outsourcing your fulfillment and shipping means that you have no control over the process, but still have all the responsibility to your customers.
- Dropshipping can lead to lower margins for your business depending on your business model.
- As there is minimal customization, there’s potential for overlap in selling the same products as other retailers.
3. 3PL
With 3PL, or a third-party logistics provider, you partner with a company that handles fulfillment and shipping, but you provide all inventory. Some 3PL providers also offer IT, customs clearance help, and returned product management services. You pay for all inventory, or backstock, and for their services instead of paying a warehouse lease. If you have a unique product that dropshipping or print on demand wouldn’t be able to accommodate along with a large number of orders, 3PL may be a worthwhile investment.
Pros:
- Since you provide the inventory, you have control over quality and quantity of products.
- A 3PL often has access to discounted shipping rates.
- You don’t have to worry about leasing or staffing your own warehouse space.
Cons
- 3PL is a big investment and therefore only makes sense for a large company.
- Since you are responsible for your inventory, it can be stressful to ship your products to the correct warehouse when inventory runs low.
- Though you have control over the quality of your products, you don’t have control over shipping, but you still have responsibility for any issues to your customers.
4. Print on Demand
Similar to dropshipping, print on demand involves a third-party supplier fulfilling and shipping your customers’ orders, but print on demand allows for a lot of customization. That’s because print on demand prints your designs on products as orders come in, then fulfill and ship the products for you. Like dropshipping, you only pay for what your customers order.
Pros:
- You can change your inventory and the designs on your products as much as you want since you only pay for what your customers order.
- You don’t have to worry about any shipping logistics, warehousing, or hiring for fulfillment roles.
- Customizing products means you likely won’t be competing against as many businesses.
Cons:
- Depending on your business model you may experience lower margins.
- Outsourcing your fulfillment and shipping means that you have no control over the process, but still have all the responsibility to your customers.
Three Questions Ask Yourself When Picking a Fulfillment Strategy
Still unsure about which fulfillment strategy is right for you? Here are three questions to ask to help you make a decision.
1. What does your sales volume look like/what do you anticipate it will look like?
If you anticipate low order volumes, you may be able to handle self-fulfillment. Otherwise, you’ll want to look at drop shipping, print on demand, or 3PL.
2. On how many channels do you sell/plan on selling?
If you’re selling at a high volume across multiple channels, you may want to consider using 3PL, for example.
3. How much customization do your products require?
If your products are customized to order, you should consider using print on demand or self-fulfillment. If you are selling somewhat generic products, you should consider drop shipping or 3PL.
Gooten: Your Order Fulfillment Solution
Gooten uses print on demand to transform the way online brands manufacture and fulfill merchandise to their customers. We enable businesses of all sizes to easily and automatically fulfill orders for products. Gooten is your partner in building a successful eCommerce business. Our technology and people help you create and manage products and their varieties across our catalog, integrate quickly and easily with platforms & marketplaces like Shopify, Etsy, and Woo, and access high-quality on-demand production from our global network of manufacturers who fulfill orders for products that ship to customers around the world. Curious about what we have to offer? Click here to get started for free.
