Sales and Fulfillment

Outsourcing vs. in-house fulfilment: Pros and cons

A recent study has shown that 24% of shoppers abandon their purchase if the business cannot provide a delivery date, and 69% of shoppers are unlikely to return if the order does not arrive within two days of the promised delivery date. This motivates businesses to ensure their fulfilment is at its best.

Businesses have the choice between outsourced and in-house order fulfilment to ensure they can keep up with the evolving market trends and customer expectations. But which one should they choose?

In-house fulfilment

In-house fulfilment refers to handling end-to-end order fulfilment – order processing, picking, packing, shipping, and returns – within the company’s infrastructure and resources.

Here are the key pros and cons of in-house order fulfilment to help you understand if it is the right choice for your business:

Pros

• Keeping order fulfilment in-house offers complete control and autonomy over fulfilment.
• With this level of control, businesses can customise their fulfilment process to offer a personalised experience to every customer. This can involve custom packaging, shipping options, personalised “thank you” notes, and much more for a strong customer experience.
• Businesses must also maintain high-quality standards across product, packaging, and shipping. This not only ensures the customers receive the perfect delivery experience, but your team can quickly solve any product-related issues in-house as well.
• In-house fulfilment also ensures a consistent brand experience, from ordering experience to post-sales service.

Cons

• Although in-house logistics management can be ideal for managing small order volumes, this approach has limited scalability as the business grows and order volumes rise.
• Setting up a fulfilment operation in-house requires significant investment in infrastructure, personnel, and technology. This can be a substantial upfront cost for many businesses.
• Logistics management is an inherently challenging process, especially without the right experience and expertise. Finding and retaining the right personnel can be a big hurdle when trying to keep up with changing market trends and regulatory landscape.
• Managing your own order fulfilment is a daunting and time-consuming task, which can distract you from other core business areas.

Outsourced fulfilment

Outsourced fulfilment, on the other hand, is where a business hands over parts, or all, of the fulfilment process to a third-party vendor or an external service provider. Outsourced fulfilment services specialise in logistics and supply chain management, helping businesses customise and optimise order fulfilment processes with their expertise, resources, infrastructure, and technology.

Handling everything from inventory management and order processing to customer support and returns management, outsourced fulfilment offers the following pros and cons to contemporary businesses:

Pros

• Outsourcing fulfilment operations allow businesses to save costs associated with infrastructure, technology, and personnel. They can leverage outsourcing partner’s resources to benefit from economies of scale and optimise fulfilment costs even further.
• Outsourcing allows businesses to scale their operations up or down depending on business needs. For example, outsourced fulfilment services can scale as your business grows or offer additional support in peak seasons and scale back during the off-season.
• With fulfilment outsourcing, you have access to the expertise and resources of the third-party service provider across logistics, supply chain management, and order fulfilment. This makes sure you always follow industry best practices and stay on top of the evolving market trends.
• As opposed to in-house order fulfilment, outsourcing allows you to focus more on core business aspects instead of worrying about day-to-day fulfilment operations.
• With a third-party partner, you can also expand your operations across borders, easily reaching a wider customer segment, which would have been costly and challenging to achieve on your own.
• Outsourced fulfilment services facilitate access to efficient inventory management tools, order tracking systems, and multiple shopping options, helping businesses offer cost-efficient and faster deliveries and contributing to an improved customer experience.

Cons

• You may have less control over your fulfilment operations with third-party service providers, and any issues with orders or shipment delays may reflect poorly on your brand.
• Some outsourced fulfilment services may carry steep upfront costs – account set-up and system integration – which you may need to factor into your budget.
• As the external fulfilment company works with many businesses, your operations may not be their top priority, which can result in an inconsistent brand experience.

How can Infosys BPM optimise fulfilment and logistics management?

Infosys BPM sales and fulfilment services can help businesses optimise their value stream and supply chain with the help of a customisable suite of next-gen tools. With services encompassing everything from pre-sales management and order fulfilment to managed logistics services and carbon footprint analysis, Infosys BPM can help you streamline and optimise your fulfilment operations for a sustainable competitive advantage in today’s dynamic globalised market.

Read more about outsourced fulfilment services at Infosys BPM.