In-House Fulfillment

The Ins and Outs

In-house fulfillment means fulfilling orders all on your own. When they first launch their own online enterprise, e-retailers usually begin learning the ropes of fulfillment via in-house. It’s square one, and that square tends to be a living-room-turned-HQ. It’s literally fulfilling orders in the house.

The model’s the easiest fulfillment framework to get off the ground, it’s cost-effective so long as order volume is manageable, and it offers you total control over getting product to the customer. And because you’re storing, packing, and shipping within your living room, you won’t need to make a large overhead investment on warehouse space or hiring — those may arrive later, though.

Just be sure to pay your rent!

The Process

In-house fulfillment is both clear-cut and simple compared to other fulfillment models. Here’s the flow.

1. Purchase product
   To get product to sell, you must first request and purchase it from your supplier(s). Note: when purchasing inventory, be sure that the send-to address is that of wherever you’re storing it.
2. Store the product
   Once the product you’ve bought makes its way to your HQ, unpack it, make sure it’s all accounted for, store it, and keep it safe, sound, and organized.
3. Make a sale
   After driving traffic to your webstore and working your marketing magic, a sale is made!
4. Fulfill the order
   Pluck the products in the order from storage, package the shipment, and send it on its way.

Complete Control

On a spectrum of control, in-house fulfillment offers the most compared to other fulfillment models. Control is the single largest benefit of the model, and — although it does have important disadvantages that we’ll cover soon — it provides some major pluses when it comes to getting products from A to B.

Quality Control

Because you won’t be working with any third party to store and ship orders — like a third-party logistics provider or dropshipper — you won’t need to worry about any other service failing to meet your fulfillment standards. Orders are fulfilled by you or anyone related to you, whether they’re a friend, family member, or employee once you get large enough to hire.

Unlike other models, in-house fulfillment also guarantees the ability to brand all of your packaging materials, so long as your budget allows for it. Custom-branded or colored boxes, packaging supplies, or business cards are all fair game. Throw in some peppermints. Include a discount code. It’s all up to you.

And as the ecommerce space gets more and more crowded, those two — quality control and branding — can significantly differentiate your business. Whether you’re selling on a hosted cart like Shopify or a marketplace like eBay, in-house fulfillment provides the means to change a customer’s experience from a boring to a memorable one.

Reacting to Demand

If an ever-rising order volume isn’t enough of a sign, growth will be pretty obvious once that living room turns into a scene out of an episode of Hoarders. In-house fulfillment let’s you quickly react to fluctuations in demand more so than any other model.

Inventory is at arm’s length — if product is moving quickly, you’ll know it, and restocking is in your hands with no intermediary like a third-party warehouse that needs to be alerted in advance. And if a product is stuck rotting on the shelves, you have the power to put up a promotion and restock product with ease once it kicks in.

Managing Returns

All of that control also makes the irritating and ever-present process of returns management far easier as well. For instance, if you were dealing with outsourced fulfillment — a model that places fulfillment squarely in the hands of a partner that you pay — an unwanted product would be sent back to them instead of you since they’re the ones storing and shipping the product. That can be an issue.

Any third party in your fulfillment process stands between you and your customer. The children’s game called “Telephone” comes to mind, where someone whispers a message and eventually it’s completely different — the more barriers between you and the customer, the more likely important information is to get lost in the mix.

The feedback you receive from a return can be important. Was the product not what the customer expected? Was it damaged? Not only is it important to satisfy the customer, it’s an opportunity to fix a mistake on your end that might occur again. With in-house fulfillment, communication is one-way.

In total, the control provided by in-house means clear visibility of inventory and a clear line of feedback with customers. It’s the simplest fulfillment model to start off using, and it also lets you bring in some branding.

Scaling with In-House

In-house sounds relatively simple, but when order volume rises, so does the amount of time and money you spend fulfilling in-house. As you grow and buy up larger amounts of inventory to meet increasing demand, that living room may become unlivable. That means it’s time to raise the complexity of your operation and scale.

Warehousing

To store a higher amount of inventory that meets your demand, look into leasing out a storage unit, warehouse, or some sort of commercial real estate.

It’s a matter of scaling — if you have a modest amount of product that doesn’t fit in your residence but is too small to warrant a warehouse, use a storage unit. And if your fulfillment operation is getting unwieldy, look into a warehouse or office space with enough space to store and ship your orders.

To easily find a storage unit:

• SpareFoot
• Storage.com
• FindStorageFast

To locate a warehouse or warehouse space for rent:

• LoopNet
• FLEXE
• City Feet

Employees

Every minute it takes to fulfill orders is a minute that could be spent on other business matters. At a certain order volume, a merchant may find themselves spending the majority of their day picking, packing, and shipping. If budget allows, it may be time to hire some part or full-time employees that do the job for you.

Downsides

At the end of the day, in-house can certainly scale, but the majority of its downsides revolve around growth. It might be an easy-to-start fulfillment model, but higher order volumes mean a higher workload and higher expenses, whether they’re security deposits, rent, hourly wages, or more cash tied up in inventory.

To be sure, running your business’ own fulfillment operation, regardless of scale, offers more control than other models. But that c-word is a burden as well. It can’t be said enough — in-house fulfillment means full responsibility for storing and shipping, and that means you’ll be dumping a considerable amount of money and time into the daily grind of cranking out orders that could be better spent on other business functions.