Outsourced Fulfillment

The other choice is to outsource the order fulfillment process to a 3PL provider.

Choosing this option means relying on a third party to handle every phase of the fulfillment process. Inventory is received by and stored in the 3PL warehouse. Further, orders are picked, packed and shipped from this location.

Factors to Consider When Choosing a Fulfillment Method

Before choosing which fulfillment method will work best for your business, consider several factors. Each method has its own advantages and disadvantages, and cost weighs heavily into the decision. When using in-house logistics, there are the following expenses:

  • Rent
  • Insurance
  • Labor
  • Utilities
  • Software
  • Supplies

By comparison, when using a 3PL warehouse, there are no direct overhead costs. Instead, the cost is typically rolled into what’s called a “per-unit fee,” which can include:

  • A one-time setup fee
  • Order fulfillment fees per item or per order
  • Inventory receiving fees
  • Returns fees
  • Storage fees
  • Customer service or call support costs
  • Shipping material costs

Questions to answer when choosing a fulfillment method include:

  • How much control do you want over the fulfillment process?
  • Do you ship locally, nationally or internationally?
  • How fast is your business growing?
  • Do you have the staff to ensure orders are shipped quickly and securely?
  • Does your inventory require special storage needs?

Costs aside, consider the pros and cons of each method. The obvious advantage of using in-house logistics is that you maintain complete control over the order fulfillment process.

Another benefit is that you are the expert on your product, so if something should go wrong you can solve the problem more quickly than a 3PL warehouse.

On the other hand, with in-house order fulfillment you could end up locked into a lease with a warehouse that can’t grow with your business, which means you would either have to accept a limit to growth or have to deal with concurrent warehouse leases. Handling shipping also takes time that could perhaps be better used growing the brand and focusing on marketing.

The benefit of outsourcing fulfillment is that 3PL providers are experts with the built-in technology, infrastructure and know-how to pick, pack and ship products efficiently. And, because 3PLs ship such a high volume of orders, these businesses get better shipping rates than an individual company, thereby cutting costs.

One downside of using a 3PL is relinquishing control of your order fulfillment process. Further, it could take time for a 3PL warehouse to become familiar with your product. Another disadvantage is that the fulfillment company might work with several other companies at the same time, meaning your business is not its only priority. Nonetheless, it is always in the best interest of a 3PL warehouse to perform well for each and every client.

The key to success is finding the right warehouse for your unique product and fulfillment needs.

Learn about how Prologis can help ease your company’s fulfillment needs with the help of Last Touch facilities.

Related Content

4 trucks parlet outside of Prologis Cologne Eifletor DC4

What Is the Difference Between Cross Docking and Warehousing?

What is crossdocking in supply chain management? Learn the difference between crossdocking and warehousing in this short guide. 

An exterior aerial shot of Prologis Lehigh Valley East surrounded by lush green trees with trucks parked in the truck court

Free Trade Zone Warehouse

Learn about free trade zone warehouses, how they can benefit an American company trying to compete on a global scale, and information on taxes and regulations. 

An exterior shot of the front of Prologis Park Tacoma, with the truck court shown in the background and a UPS truck parked outside

Customs Bonded Warehouse vs. Free Trade Zone Warehouse

A Customs bonded warehouse is not the same as a free trade zone warehouse. Learn the differences between the two here.

Park Grande, Building


Every connection starts with a conversation. Our team is here to help.