Fulfillment is a part of every eCommerce business. In fact, it's such a huge part of eCommerce that the fulfillment industry is now worth a staggering $9 billion, with companies like Deliverr mirroring Amazon-like fulfillment for Shopify sellers. Whether your products are with your supplier, overtaking your garage, or sitting in a warehouse, you need to pick, pack and ship them quickly and cheaply.
What are your Shopify fulfillment options?
As a Shopify eCommerce store owner, you have three fulfillment options:
Dropshipping is an entirely hands-off order fulfillment process. A third-party supplier is responsible for sourcing, storing, packing and shipping the products; you simply market and sell them.
In-house fulfillment is a completely hands-on order fulfillment process. You source, store, market, sell, pack and ship the products.
Outsourced fulfillment sits between dropshipping and in-house fulfillment. You're responsible for sourcing, marketing and selling the products, while a third-party fulfillment service integrates with your Shopify store and is responsible for storing, packing and shipping the products.
Many Shopify store owners start their eCommerce journey with in-house fulfillment, progressing to outsourced fulfillment as they continue to grow and the task becomes too time-consuming. Others get caught up in a cycle of in-house fulfillment; not wanting to outsource but struggling to grow and cope by doing it all themselves.
The benefits of outsourcing your Shopify fulfillment
Knowing the benefits of outsourcing your Shopify fulfillment helps you to understand when it's time to outsource to a third-party fulfillment provider.
With 66% of online shoppers considering fast and affordable delivery as the most influential factor in cart abandonment, you know the importance of quick shipping. But, as your orders continue to increase, delivering items quickly and on time becomes challenging.
Third-party fulfillment providers have the expertise, staff, and geographical locations to get your orders shipped in the fastest way possible - giving you a competitive advantage and getting your customers their orders as soon as possible.
Outsourced fulfillment services also have expertise in how to deliver your products in the most cost-effective way, helping you benefit from volume shipping prices and low warehousing costs.
Shopify store owners save between 15 - 35% on shipping rates when outsourcing their Shopify fulfillment, not to mention the money saved on operating expenses and empty warehouse space. These are savings that can be used to provide free or discounted shipping for your customers.
Better customer service
High shipping costs and slow delivery are the two top causes for cart abandonment. Using an outsourced fulfillment provider not only enables you to increase your sales conversions, but it also results in deliveries that are on time and of consistently high quality. Customers will be kept up-to-date with timely tracking information, and you'll spend less time handling customer delivery complaints.
With your fulfillment service provider taking picking, packing, shipping and customer complaints off of your hands, you'll have more capacity to handle the storage and fulfillment of an increase in orders. You can expand into multi-channel selling and faster shipping programs, such as eBay Guaranteed Delivery, because you can process more orders to more locations without worrying about a drop in shipping standards.
You can then invest your extra time and money back into growing your business - developing and marketing your store.
Even better yet, you can benefit from eCommerce technology, without the cost of licenses and training. You'll have access to the third-party fulfillment service's software that seamlessly connects with your Shopify (eBay, Walmart, and Jet) sales channels - enabling orders to be fulfilled efficiently and providing you with better inventory management and order tracking data.
The cons of outsourcing your Shopify fulfillment
As with any benefit, there are factors to take into account when outsourcing your Shopify fulfillment.
Loss of control
Outsourcing your Shopify fulfillment also means outsourcing the control over and visibility of your fulfillment process. Some eCommerce business owners just aren't ready to relinquish that control and let go. That's fine as long as you aren't losing control over delivery speed and quality when you get busy, and you're not making any other eCommerce entrepreneur top time-wasting mistakes.
Using your own packaging
Using a third-party fulfillment provider also means that you can't personalize your packaging or offer gift wrapping - it takes up too much time and affects the speed of your deliveries. If the unboxing experience plays an essential part in your customer journey, keep your fulfillment in-house or consider using a mix of in-house and outsourced delivery to counter-act the downside of branded boxes.
Integrating with another system
The amount of software and apps involved with running your Shopify business can feel a little overwhelming and using an outsourced fulfillment provider can add to that. If you're considering outsourcing, look for a shipping fulfillment provider that provides multi-platform inventory management tools so that you can reduce the number of platforms you need and streamline your processes.
Third-party fulfillment comes at a cost. You will likely need to pay for storage, picking, packing, and shipping, which can mount up. Calculate what you already spend on warehousing, staff, packing, security, inventory management, shipping and insurance, and then compare this with the costs of outsourcing. Importantly, look for a fulfillment provider that offers an all-inclusive price (like Amazon FBA), with no long-term contracts or hidden fees.
How to choose the right fulfillment option for you
Outsourcing your Shopify fulfillment comes with plenty of benefits but some considerations too. Use the above pros and cons to weigh up what's right for your Shopify business and then:
Price it up - use a fulfillment cost calculator, such as the one at Deliverr, to see how much outsourced fulfillment can save you.
Trial some products - you don't have to jump in feet first to work out if outsourced fulfillment is for you. Trial some products to see how it works.
Ask questions - moving to outsourced fulfillment is an important step in your eCommerce journey. Make it successful by asking your potential fulfillment provider the right questions.
Importantly, take the time to study your options and, when you're ready, enjoy the benefits that outsourced fulfillment brings.
About the Author
This is a guest post from Michael Krakaris. Michael is one of Forbes' 30 Under 30 and the co-founder of Deliverr. Deliverr provides fast and affordable fulfillment for your eBay, Walmart and Shopify stores, helping to boost sales through programs like Walmart Free 2-Day Shipping and eBay Guaranteed Delivery.
Deliverr's FBA-like multi-channel fulfillment comes with clear pricing, easy on-boarding and a hassle free experience so you can focus on growing your eCommerce business.