3PL vs In-house fulfillment #ecommerce #entrepreneurship #ecommercebusiness

Introduction

In 2021, we transitioned from fulfilling orders in-house to using a 3PL (third-party logistics) provider due to exponential growth. We had just secured a warehouse in February of that year, but by April, it was already filled to capacity. Given our growth rate, we realized we would need to upgrade to a larger warehouse every few months, which was not feasible. Thus, we decided to switch to a 3PL, even though it incurred a higher cost per order. This setup greatly facilitated our growth.

However, if you saw my last video, I mentioned how our 3PL is currently overcharging us on shipping and storage fees. After running the numbers, I found that if we were to bring operations back to Vancouver and handle fulfillment ourselves, we would save approximately seven dollars per order. This is a significant saving, especially given the current economic climate.

I'm sharing this experience to provide insights and hopefully help you make informed decisions for your business. I'm curious to know whether you would choose a 3PL or opt for in-house fulfillment.

Keywords

3PL (third-party logistics)
In-house fulfillment
Exponential growth
Warehousing
Overcharging
Shipping fees
Storage fees
Cost savings

FAQ

Why did you initially switch to a 3PL?

We switched to a 3PL due to our rapid growth, which made it impractical to keep upgrading our warehouse facilities every few months.

What was the primary drawback of using a 3PL?

The main drawback we encountered was that our 3PL provider was overcharging us on shipping and storage fees.

How much could you save by bringing fulfillment back in-house?

By fulfilling orders in-house, we could potentially save about seven dollars per order.

What factors should be considered when choosing between 3PL and in-house fulfillment?

Considerations should include your rate of growth, the cost of warehousing and logistics, and any potential savings versus the convenience and infrastructure provided by a 3PL.