Self-fulfillment vs Outsourcing Logistics: the Final Verdict
To outsource or not to outsource – that is the question.
In eCommerce, the question of fulfillment is always tricky, especially when it comes to the final leg of fulfillment, i.e. last-mile logistics.
Depending on the quality of your shipping service and the variety of shipping methods you can provide, you will either lose or win new business.
How do you ensure top quality of your delivery services? Should you outsource logistics or handle deliveries in-house? This guide will help you make the right decision for your business.
What is self-fulfillment?
Self-fulfillment is a type of order fulfillment managed entirely in-house. This means that every stage of eCommerce order fulfillment is handled by the retailer.
- Inventory management.
- Order processing.
- Last-mile delivery.
- Reverse logistics.
The biggest advantage of self-fulfillment and self-delivery is that you get to control the entire shipping process. This means you can optimize costs and refine customer experience.
The main downside of self-fulfillment is the fact that you need to have sufficient in-house resources – both human and equipment/tech.
What is outsourced logistics?
Outsourced logistics, much like outsourced fulfillment as a whole, is a type of eCommerce fulfillment that involves third-party service providers.
In the case of outsourced fulfillment – either to a 3PL or 4PL – some of all of order fulfillment is handled by a third party.
Outsourced logistics, meanwhile, involves a carrier that handles last-mile delivery only. Inventory and order processing are still handled in-house.
Self-fulfillment vs outsourced logistics: pros and cons
In eCommerce order fulfillment, there’s no single recipe for success when it comes to last-mile delivery. However, there are pointers you can use when building your shipping strategy.
Below is an overview of the pros and cons of self-delivery.
Now, let’s look at the pros and cons of outsourcing last-mile logistics to a third-party carrier.
As you can see, both self-delivery and outsourced logistics come with advantages and entail risks. Before settling on either type of fulfillment, be sure to consider every point.
Logistics solutions for eCommerce
Now that we’ve reviewed the pros and cons of self-fulfillment and outsourced logistics, let’s look at some of the tried and tested solutions used by in-house and outsourced operations alike.
Route optimization
Route optimization is what allows you to deliver more and faster than you would normally. This is possible due to algorithms that can consider many parameters at once to combine orders into routes. To name a few:
- customer address,
- time slot,
- cargo,
- priority,
- geo area,
- driver availability.
The best part is that route optimization can be done in seconds. No need to invest in costly systems: even logistics software for small businesses can provide advanced route optimization.
Load planning & confirmation
A crucial part of route optimization is load planning, i.e. figuring out the best and safest way to load packages onto a vehicle and confirm that all packages are loaded correctly.
This can be done with the help of shipping labels. By printing and scanning shipping labels, drivers can make sure they have the correct packages on board.
You don’t need extra hardware as a barcode scanner can be a part of your mobile app for delivery driver that comes with logistics software.
Live tracking & ETA
How do youHow do you keep customers happy while minimizing the load on your support team? You give customers asset tracking notifications with live links.
By sharing delivery notifications with ETAs before the driver starts their route, you make sure the customers are there to receive their packages.
They’ll also be less likely to call you and ask about order status if they have the option to track drivers in real time.
Proof of Delivery
Proof of Delivery (POD) is a document that confirms successful order fulfillment.
It’s an electronic note populated with the customer’s e-signature, photo of the delivered package, timestamp, and any other info you choose to include.
All of this information is gathered by the driver and populates an ePOD note automatically when you have last-mile delivery software in place. By sharing the note with the customer, you minimize mistakes and avoid disputes.
Recap
Self-fulfillment and outsourced logistics are both viable models for eCommerce logistics. The challenge is to map your customers’ needs to your own resources.
In addition to weighing the pros and cons of self-delivery vs outsourced logistics, make sure you give logistics solutions a try. The truth is that many eCommerce businesses do a combination of in-house and outsourced. Use all the tools you can to build the best shipping experience.