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There are A LOT of considerations to go through when choosing your e-commerce fulfillment solution. You can choose to outsource fulfillment to a third-party company or handle warehousing and fulfillment services in-house—and we’re here to provide expert advice for whichever path you take. A great choice will take your business to the next level. A poor one can significantly set back your progress. This article will take you through the things you need to consider as you’re interviewing e-commerce fulfillment partners or setting up the ideal in-house warehouse operation.

Outsourcing with an Ecommerce Fulfillment Center or Warehouse: How to Get it Right

E-commerce sellers frequently consider outsourcing their fulfillment operations to specialized third-party providers for a variety of reasons.

Why Companies Outsource Ecommerce Fulfillment

Outsourcing fulfillment can provide a streamlined solution to meet the evolving demands of online merchants. Fulfillment centers offer a professional infrastructure that addresses the complexities of storage, shipping, and order management, allowing sellers to offload operational burdens and concentrate on other core aspects of their business. This approach is especially valuable for startups and scaling businesses that lack the resources to build an in-house logistics system from scratch. Beyond that, e-commerce fulfillment offers several distinct advantages:

• Product Type: Certain products, such as climate-controlled or food-grade items, require specialized handling that is cost-prohibitive for many businesses to implement and manage in-house.
• Cost Savings: Outsourcing reduces costs by utilizing shared employees for labor, implementing more sophisticated storage tactics, and leveraging aggregated buying power for freight, packaging, and other supplies.
• Minimize Startup Costs: Upfront investments in space and equipment may not be feasible for new or small businesses.
• Scalability: Larger organizations can easily scale operations, eliminating the need for major infrastructure investments during periods of growth or contraction.
• Expertise and Technology: E-commerce fulfillment providers utilize their experience and advanced tools that startups usually lack.
• Faster Shipping: Fulfillment centers’ strategic locations and carrier relationships enable quicker delivery times, improving customer satisfaction.
• Enter New Markets: Using outsourced fulfillment allows businesses to expand into new regions or countries effortlessly.
• Focus on Core Business: Businesses free up time and resources to dedicate to product development, marketing, and customer service by outsourcing.

What to Look for in an Ecommerce Fulfilment Company

Most advice on choosing an e-commerce fulfillment company emphasizes commonly-known factors like checking customer reviews, years in business, or reputation. While these are important, they only scratch the surface. To find the right fulfillment partner, you need to take a deeper dive into their capabilities and qualifications.

Here are a few “gems” to look for in an e-commerce fulfillment company:

• Product Specialization: Ensure the provider specializes in your product type. If they don’t have experience with your specific product, it’s a red flag.
• B2C Service Orientation: If you only sell to consumers, choose a provider that prioritizes B2C operations and has experience with this sales channel rather than primarily focusing on B2B or traditional warehousing. Too many merchants have received poor service from a company that had the wrong focus – or focused on too many things.
• Order Flexibility: Look for a company that offers good cut-off times (late in the day) and fast order processing turnaround times, but that also allows you to make last-minute changes to orders when necessary.
• Reporting and Flexibility: Evaluate their ability to provide custom reports – some fulfillment providers only offer superficial canned reports, lacking the specific details you need for your business operations.
• Quick and Accurate Receiving: Many brands complain that it takes too long for their 3PL to receive new inventory OR that the inventory counts are consistently accurate.
• Geographic Location: Smaller businesses usually need a single location provider, and it doesn’t necessarily need to be near you.
• Shipping Discounts: Some companies lure you in with a promise of aggressive rates only to bait and switch. Make sure you get actual sample prices for mock shipments to ensure the rates they’re providing are as good as promised.
• Efficient Returns Handling: Some companies don’t process returns for weeks. Quick returns processing ensures not only accuracy but a better ability to refund customers quickly and reuse sellable stock.
• The Right Size: Most e-commerce fulfillment companies won’t help startups or smaller volume brands. If you’re a smal business, there are companies that will help – they’re just harder to find.
• Transparent Pricing: Look for affordable rates without hidden fees or unexpected rate changes after signing. Countless companies have switched providers because they were promised rates but found out the pricing was more than promised.
• Avoid Biased Sources: Don’t trust ‘top lists’ (they’re mostly paid, they are self-produced and rank themselves first, and they only include a few of the thousands available), referral sites that say they’re free (they’re almost certainly not unlike our company and almost always earn commissions that impact your business one way or another link to How it Works), software companies that earn money by referring 3PLs that use their service, or 3PLs that refer you to other 3PLs (even 3PLs are monetizing the referral to other 3PLs link to my top page)

Choosing the wrong provider can cripple your business. Many companies switch 3PLs due to unexpected cost increases, hidden fees (e.g. touting that they don’t charge certain fees but inflating shipping costs, which ultimately leads to higher overall expenses in the long run), and broken pricing promises. Performance issues, such as slow or inaccurate receiving, lost inventory, incorrect orders, and subpar shipping practices, are also common concerns, as are poor communication and the inability to meet technology requirements (like custom reporting or system integrations). Be careful – this is an important decision!

What You’ll Pay for E-Commerce Fulfillment

E-commerce fulfillment costs typically include setup fees, receiving fees, storage fees, fulfillment fees (pick and pack), and additional service charges. According to our latest survey of over 600 warehouses that have been conducted since 2017, here’s what to expect:

How to Manage Your Order Fulfillment Provider

Effectively managing your relationship with a 3PL e-commerce provider is possible if you institute a clear agreement with specific SLAs (service level agreements) and regularly hold the company accountable during check-ins and meetings:

• Error Rates: Define acceptable error margins for order accuracy and inventory management. According to industry data, the average picking accuracy is 99.51%, with an average inventory shrinkage of 0.65%. Ensure your 3PL tracks and commits to specific error rates within the contract.
• Contract Length: Determine a contract duration that aligns with your business needs. Over half of fulfillment providers offer month-to-month agreements, providing flexibility, while others may require annual or multi-year commitments. Choose the best option for your company – short-term flexibility or reduced rates from longer terms arrangements.
• ����ɫ�� Fees: Clarify all associated costs, including storage, handling, and any additional services. Pricing can vary based on factors like volume levels, product types, and geographic location.
• Service Levels and Responsibilities: Explicitly outline the services provided by the 3PL, such as order fulfillment, returns processing, and customer service and specify achievable goals to track performance.
• Insurance, Damages, and Liability: Define the insurance coverage necessary for your inventory and delineate liability terms for potential damages or losses, so that each party knows who is responsible for loss or damage.

Beyond the contractual agreement, maintaining open and regular communication with your fulfillment center ensures adherence to the collective goals. Schedule periodic performance reviews (monthly, quarterly, or yearly). This proactive approach allows for timely identification and resolution of issues.

Connect with Trusted E-Commerce Fulfillment Services

Don’t rely on search rankings alone—many top listings are paid placements, not the best options. Our curated network, built on unbiased reviews since 2005, connects you with reliable warehouse services in Florida. Fill out our form or call us to get your tailored matches today.

Running Your E-commerce Operations In-House Like a Pro

Doing e-commerce fulfillment yourself is possible – with tons of planning. But with the right space and systems, and a little elbow grease, you can get the job done like a professional.

Why Managing E-commerce Fulfillment Yourself is Good

Opting for in-house e-commerce fulfillment offers several advantages.

• Complete control over your operations: One of the primary benefits is having complete control. After all, your business is your baby, and it’s difficult to get someone else to treat fulfillment with the sense of urgency as you. Managing fulfillment internally allows you to oversee every step, from inventory management to packaging and shipping, ensuring that each order meets your quality standards and aligns with your brand’s image. This level of control enables you to implement customized packaging, personalized notes, and other unique touches that enhance the customer experience.
• Avoids Communication Friction: Direct communication within your team helps avoid any breakdowns. In-house fulfillment eliminates the potential communication barriers that often arise when coordinating with third-party logistics providers, allowing for quicker responses to issues and more agile adjustments to strategies and tactics – resulting in faster resolution of challenges.
• Cost Effective When Leveraged Appropriately: Managing fulfillment internally can reduce costs in the short run, especially for small to medium-sized businesses. By handling fulfillment in-house, you can avoid certain fees such as storage (by using your home or garage) and labor (by using your labor rather than employees).

Tips for Mastering In-house Ecommerce Fulfillment

Small businesses can manage e-commerce fulfillment in-house as well as a professional logistics firm, with proper procedures for:

• Storage: Implementing vertical storage systems and modular shelving maximizes available space in tight spots. Organizing inventory based on demand frequency—placing high-turnover items in easily accessible locations—enhances picking efficiency. Regularly reviewing and reorganizing the storage layout ensures adaptability to changing inventory levels and product lines.
• Pick and Pack: Implementing batch or zone-picking methods can streamline the process, and utilizing barcode scanning technology reduces human error. Regular audits and performance monitoring help identify areas for improvement.
• Ecommerce Shipping: Small to medium-sized businesses can secure competitive freight rates by partnering with shipping aggregators or leveraging shipping and fulfillment software that compares rates across multiple carriers. Utilizing flat-rate shipping boxes offered by carriers like USPS can also help reduce costs.
• Technology Requirements: Implementing a robust technology stack, including a Warehouse Management System (WMS), helps track receiving, inventory, and order flows.  A WMS can also provide accurate inventory levels, notices for reorder points, timely order updates, and shipping tracking for customers.
• Returns Processing: Establishing clear return policies, coupled with a streamlined process for receiving, inspecting, and restocking returned items, will help reduce return rates and keep customers happy. Utilizing your WMS to track returns data can provide insights into common return reasons, informing quality control and product descriptions to reduce future returns.
• Packaging: Distinctive packaging helps your brand differentiate your customer experience. Investing in custom-branded packaging materials not only reinforces brand identity but also enhances perceived value. Ensuring packaging materials are both protective and aesthetically pleasing can encourage repeat business.

What You’ll Pay for In-House E-commerce Operations

Operating in-house e-commerce fulfillment can be tricky to calculate, especially if you’re using your labor (and not paying yourself an official check) and running your warehouse out of your apartment, house, or garage. Consider all the costs that come into play, especially as your business grows:

• Storage Costs: Securing appropriate storage space is a primary consideration. As you grow out of your garage, you’ll be forced to secure viable warehouse storage space. According to our industry data, warehouse rental and maintenance costs range from $1,000 to $5,000 per month for smaller spaces. Alternatively, utilizing personal spaces like a home, apartment, or garage may reduce direct rental costs but could introduce limitations in scalability.
• Labor Costs: Managing fulfillment operations requires staffing for tasks such as inventory management, order picking, packing, and shipping. Warehouse employees start around $25,000 annually or $16.95 per hour, depending on experience and region. For small businesses or startups, owners might initially handle these responsibilities themselves, effectively substituting labor costs with their time investment. However, as order volumes increase, this approach isn’t sustainable.
• Supplies and Equipment: Essential supplies include packaging materials such as boxes, tape, and cushioning, with costs averaging between $0.50 to $5.00 per order. Investing in equipment like shelving, packing stations, and barcode scanners is necessary for efficient operations. Implementing a Warehouse Management System (WMS) to oversee inventory and order processing is also advisable, though it entails further investment.
• Shipping Costs: Shipping expenses are influenced by factors such as package weight, dimensions, destination, and volume. While in-house fulfillment allows businesses to select preferred shipping partners, it may lack the discounted rates that third-party logistics providers secure due to higher shipping volumes.

How to Manage Your Goals with Self-Fulfillment

Managing in-house e-commerce fulfillment requires meticulous planning and execution to meet customer expectations effectively.

• Create S.M.A.R.T. Goals: Hold yourself accountable. Create goals for receiving, inventory, orders, and shipping – and check in monthly to see your progress.
• Speak With Customers Early and Often: To manage customer expectations effectively, communicate shipping policies, delivery times, and return procedures on your website. Providing order tracking capabilities allows customers to monitor their purchases, enhancing trust and satisfaction. Additionally, establishing a responsive customer service system to address inquiries and issues promptly can foster loyalty and positive reviews.

By focusing on these areas, e-commerce merchants can create a fulfillment operation that not only meets but exceeds customer expectations.

We’ll Help You Find the Right ����ɫ�� Solution

At ����ɫ��AndFulfillment.com, we take the guesswork out of finding the right warehouse or co-warehouse space for your e-commerce store. Instead of relying on broad, impersonal lists, we connect you directly with providers that are best suited to your specific needs.

By leveraging our network, you can save time and avoid the hassle of sifting through warehouses on your own. We’ll help you get matched with the right solution to support your business growth. Fill out our form or contact us today to get started.

FAQ’s About E-commerce Order Fulfillment

What is E-Commerce Fulfillment?

E-commerce fulfillment is the receiving, storing, fulfilling, and delivering of online orders to customers (D2C), which can include orders from a Web store as well as other online sales channels (Amazon, eBay, Etsy, etc.). Key parts of e-commerce fulfillment include automatically integrating with various online sales channels to receive orders, shipping small parcel orders, handling customer returns, and robust reporting of orders and inventory.

What are the Order Fulfillment Methods?

There are four main methods for order fulfillment. Each method has unique benefits and challenges, making it essential to choose based on your business model, resources, and goals.

1. Self-Fulfillment: This method involves managing the entire fulfillment process in-house. Businesses handle inventory storage, picking, packing, shipping, and returns directly from their facilities. It provides complete control but requires significant time, space, and resources.
2. Outsourcing Fulfillment: With this approach, a third-party logistics (3PL) provider manages storage, order processing, shipping, and returns. This option is ideal for scaling businesses that want to offload logistical complexities and focus on core operations.
3. Drop Shipping: In drop shipping, the retailer does not hold inventory. Instead, when a customer places an order, it is forwarded to a supplier who ships the product directly to the customer. This method minimizes upfront costs but offers less control over inventory and shipping.
4. Hybrid Fulfillment: A combination of methods, hybrid fulfillment allows businesses to self-fulfill some orders (e.g., high-priority or custom items) while outsourcing or using drop shipping for others. This approach offers flexibility to meet diverse business and customer needs.

How Does E-Commerce Work Using an Order Fulfillment Center?

Outsourced e-commerce fulfillment involves a series of steps that streamline the storage, processing, and delivery of online orders. Below is a concise breakdown of these steps:

• Account Setup: The fulfillment provider integrates with your e-commerce platform by syncing shopping carts, creating unique SKUs, configuring shipping carriers, and customizing order processing settings.
• Receiving Inventory: The provider catalogs your products (descriptions, SKUs, and variants), inspects incoming shipments based on purchase orders, labels, or barcodes products as needed, and ensures inventory tracking aligns with your online store.
• Order Processing: Orders are transmitted to the fulfillment center via manual entry (for special cases), file uploads (bulk orders), automated APIs (real-time or interval-based updates), or Web Services, ensuring accuracy and accommodating order changes.
• Printing and Packaging Orders: Orders are packaged using standard or custom materials (e.g., branded boxes) with options to include packing slips, invoices, promotional inserts, or gift wrapping.
• Shipping Orders: Providers handle address verification, carrier selection (e.g., USPS, UPS, FedEx), optimized shipping rates via bulk discounts, and automated tracking notifications sent to customers.
• Inventory Control: Advanced warehouse management systems provide real-time inventory syncing, stock level alerts, and seamless updates to prevent overselling and ensure accurate inventory visibility.
• Returns Management: Returns are processed through authorization, inspection, restocking of sellable items, or disposal of damaged goods, with inventory updates and clear communication to your e-commerce platform.

How Does In-House E-Commerce Order Fulfillment Work?

Effectively managing in-house e-commerce fulfillment involves similar strategies to enhance operational efficiency:

• Receiving: Verify incoming shipments against purchase orders, inspect for damage, and label or barcode items for accurate inventory tracking.
• Storage: Organize inventory using shelving, bins, or vertical systems, placing high-demand items in accessible locations to streamline retrieval.
• Order Processing: Retrieve items immediately after orders are placed, using barcode scanners or automated systems to minimize errors and ensure accuracy.
• Printing and Packaging: Securely pack items with appropriate materials and elevate the customer experience with branded packaging, packing slips, or promotional inserts.
• Shipping: Select cost-effective carriers and service levels while providing customers with tracking updates for transparency and improved satisfaction.
• Inventory Control: Use inventory management systems for real-time updates and set alerts for low stock levels to prevent stockouts or overselling.
• Returns Management: Develop clear procedures for processing returns, inspecting items, restocking sellable goods, and disposing of damaged products efficiently.

Who are the Best E-commerce Fulfillment Centers?

While Shipbob, Shopify, ShipNetwork, Red Stag, ShipHero, EFulfillment Service, FBA, Shipfusion, and Shipmonk are the most listed, from the data we’ve collected, may not be the best option for most companies that are looking for small business fulfillment, lower costs, consistently high reviews, low error rates, and personalized customer service.

Is Fulfillment by Amazon (FBA) a good option for E-commerce fulfillment outsourcing?

FBA is very popular, but it’s also very problematic. The cons of FBA far outpace the pros these days for most small businesses: no customization, chat support instead of a live person, higher costs than boutique online fulfillment centers, unrealistic standards for labeling and long-term storage, ever-changing policies (such as the newly revised compensation for lost product), and the fact that at any moment, like during Covid, they can shut down your business for being “non-essential”.

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