Practical Ecommerce

Top 7 Reasons Why You Shouldn’t Outsource Fulfillment

The allure of outsourced fulfillment (such as Amazon’s FBA program) is strong. But, don’t get sucked in by the hype! In any business, you never outsource anything that you can do better or more efficiently yourself.

If you don’t think you can make your fulfillment operation more efficient than a third party, then you’re not trying hard enough. All of Amazon’s super-advanced technology is designed to handle the massive size of their operation. If you’re a small business, you don’t need advanced technology to grab a product off a shelf, put it in a box, pad it, and put a label on it.

Here are my top 7 reasons why you should perform your own fulfillment:

  1. Would you outsource your customer service? Of course not. Fulfillment is probably the most important aspect of an e-commerce business because it’s the LAST thing customer’s remember about their interaction with your store. If a waiter is great for an entire meal, but takes five minutes too long to bring the check, you’re going to have a poor opinion of them. It’s human nature. If everything about your site is great, but the customer has a bad fulfillment experience, they’re going to blame you and not your fulfillment company.

  2. Vendors are going to make mistakes. They’re going to send the wrong item. They’re going to send too few or too many of an item. Items will get broken during delivery to the fulfillment center. How is your fulfillment company going to handle this for you? Will they even know if an item is damaged? Will they know if your vendor made a change to the packaging? Will they know if the vendor changed a spec of the product? If the vendor forgot to inform you, you won’t know until a customer complains! This will cause you constant headaches. As soon as you lose control over such an essential part of your business and you’re at the mercy of another company, you’re destined for major problems.

  3. Returns. When a customer needs to return an item, do they send it back to the fulfillment company? Are you going to trust the fulfillment company to decide if the product is in good enough condition to resell? You may put yourself into a position where you have to eat all returns. Also, if the returns aren’t sent to you, you lose out on a valuable feedback mechanism to determine why a particular product has a high return rate.

  4. You won’t save money. Seriously. The fulfillment company is going to charge you to store product (remember that about 80% of your products aren’t best sellers). They’re going to charge you to pick product, to pack product, and to actually ship it. They may pass along some of their volume postage savings, but they have to make a profit, too. When you add up all of those costs, you might as well hire someone to do it yourself. At least you’ll have control over the entire process. If you don’t do enough business right now to hire someone, then do it yourself and include a hand-written “thank you” note inside each order.

  5. Don’t get duped by the “we’re experts in fulfillment” sales pitch. As a small business owner, you’ve figured out how to performs tons of things you never thought you could do. Determining the best way to send an item without it breaking during shipping is definitely something you can do. I don’t mean to sound crass, but at a 3rd party fulfillment company, they don’t have PhD’s packing your product. You can figure out how to do this efficiently for your business and teach an employee how to do it.

  6. Customization: You have best sellers. You can purchase boxes that fit those items exactly. This saves tremendously on shipping costs because you don’t have to use void fill material and the chance of breakage drops to nearly nil. Third-party fulfillment can’t (and won’t) do this.

  7. Breakage. The fulfillment company doesn’t know anything about your products. They don’t know what’s highly susceptible to breakage. They’re going to pack everything in exactly the same manner. When breaks occur, you’re the one who will have to deal with the customer service and pay for the reshipment. Yes, the fulfillment company might reship for free, but you’re out the cost of the product. You also have an angry customer. If you handle fulfillment, you can make adjustments so that the same problem doesn’t repeat itself. A large 3rd party fulfillment company can’t handle this level of customization.

Third-party fulfillment companies setup their operations to be as generic as possible. This, by definition, is going to be less efficient than what you can create yourself.

The only cases in which I think outsourced fulfillment makes sense is if you do not have the physical space to do it yourself. Otherwise, roll up your sleeves, and learn something about shipping! You’ll be glad you did.


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  1. crucialmusic June 11, 2011 Reply

    In the last week here in the UK I sold nearly 100 CDs through Amazon FBA. As a one-man (virtually) business there is no way I could have handled that volume of picking and packing with the addition of sales on eBay and other venues
    With Amazon Fulfilment customers TRUST the site to deliver quickly, to deal with queries and be 100% customer focussed.
    I would agree with your comments regarding using an unknown fulfilment house but, in my own experience, Amazon has been a boost to my business and, apart from the costs, I have no complaints (and judging from my feedback neither do my customers!)

  2. minrivertea June 13, 2011 Reply

    Good points! I agree that cost is definitely not a reason to outsource fulfillment, especially not FBA. However, one other situation (ie. my situation) where it’s essential is where you’re fulfilling internationally. I live and work in China selling Chinese tea to Europe. Sending the products direct from China would mean a 3-4 week delivery time. An outsourced fulfillment system like Amazon or Shipwire means I can guarantee 1-2 days delivery to UK customers.

    On the other hand, if I could do the shipping myself, I absolutely would, for the ability to personalise and ‘delight’ the customer much more than I can with Amazon.

  3. Elizabeth Ball June 14, 2011 Reply

    If you sell generic, "pick’n’pack" items in huge volume, I would definitely suggest you use a fulfilment company to save time, money and storage space.
    But if you sell anything that’s personalised in any way, or that is meant to be a gift, a fulfilment company simply will not provide the "delight" your customers expect.
    I have a suspicion that many of the older Baby Boomers who don’t wish to retire will be snapped up for customer service and complex fulfilment roles by specialist online retailers.

  4. Jamie Salvatori June 14, 2011 Reply

    @crucialmusic – If FBA works for you, that’s great, but you’re missing out on opportunities to brand yourself. Everything from Amazon says "" on it. They may think they purchased from Amazon — not from your company. In small business, repeat customers are essential.

  5. BIONIQ June 17, 2011 Reply

    At the very least try to pick a fulfillment company like Shipwire that doesn’t compete with you. Why educating your competitor with your sales data and help them to build their brand?

    • Gisli December 6, 2013 Reply


      I´m looking for warehouse/fulfillment service in The Nederlands.

      could you please send me information on your company.


  6. gmunnik August 25, 2011 Reply

    I do not agree with any of the above points mentioned. I own a fulfillment business in The Netherlands. We pick and pack the orders specifically to clients requirements. There is no reason why we would have any more breakage. Due to the large volume of packages we ship out, our clients benefit from our discounted shipping rates as we send out more than 250,000 cartons a year.

  7. John Lindberg October 31, 2011 Reply

    The #1 reason that ecommerce merchants outsource fulfillment is aggregate cost reduction per order shipped and this is especially true at shipping volumes less than 2,000 orders per month.

    The overhead cost of UPS or FedEx daily pick up service, or fees, and package processing software like ShipWorks can add up to over $3,000 per year and these basic costs are all avoided by outsourcing.

    When the cost of printers, scales, shelving, facilities, labor and supplies is factored in, it is not uncommon for the total outsourced fulfillment cost per order to come in at less than half of the DIY cost per order.

    This doesn’t include the value of the working capital and management focus freed up by moving the repetitive process of warehousing, picking, packing and shipping to others which can mean the difference between sales growth vs. stagnation over time.

    It is true that fulfillment outsourcing is not for everyone, but it would be a good idea for most online merchants to research the facts and figures carefully before making their own DIY vs. outsourcing decision.

    John Lindberg – President

  8. Tandy Byrd December 26, 2012 Reply

    One more point I did not see addressed for the small home business: scalability. My book business has outgrown my storage space. Fulfillment by Amazon allows me to increase stock without renting a storage unit or the like. Much cheaper to "rent" space at an Amazon warehouse than do it on my own. I send only items that amazon can’t damage (too often) in their picking and packing.

  9. Trelos June 9, 2013 Reply

    We have been using drop-shipping services since 2000. Yes, things very occasionally go wrong but our own warehouse is only 1000 square feet. We use trade warehouses whose combined area is around 60,000 sq ft. We couldn’t afford to rent that space, never mind buy it. Nor could we employ 6 – 12 extra staff.

    As we are – acting as middle-men – we get the advantages of scale without having to pay for them. The stock is always available for shipping direct to the customer and we don’t have to pay for it until 30 days after the customer has paid us.

    We could never dream of affording the stock and the storage space.

  10. Michael Nelson June 14, 2013 Reply

    Most fulfillment companies claim a 99% accuracy rate. They have systems and procedures in place to make sure things go out correctly.

    Mike Nelson
    Xipix Logistix Order Fulfillment

  11. Rob February 6, 2014 Reply

    I agree with Jamie. FBA’s rising costs make it less possible to make a good profit. And once any warehouse has your goods you are at their mercy. They don’t care like you do. Plus the opportunity for smart cross-promo is too valuable to give away. Fulfillment is not rocket science and I consider it a core skill for ecommerce success.

  12. alastair Michel April 23, 2014 Reply

    There are some very valid points in the above. However, it is important to remember there are some very good fulfilment companies out there who could enhance your business as well as some very bad ones who will provide nothing but heart ache.

    From my perspective (as an owner of a fulfilment company), the decision whether to outsource depends on scale. I would strongly advise any start up company to handle their fulfilment in house in the early days. This will minimise the drain on cashflow and allow them to get an understanding of their order profiles.

    Once the business is established and the systems have bedded down, then that is the time to consider outsourcing should you wish.

    From our perspective we like to work with companies where we can integrate our systems, develop bespoke services and reporting. We are happy to make the front end investment to dove tail our services and this results in long term and successful partnerships.

    However, such can only be achieved when there is a certain volume to justify the time investment and the client has systems in place support the integration.

    3PL’s and their clients should work together as a team for the common goal. Providing a seamless quality service will simply result in more volume for all!

    CEO AFM Ltd

  13. Simon Wright June 19, 2014 Reply

    I feel that with a company like Amazon, the economies of scale offered can make it cheaper to outsource fulfilment. However as your theoretical e-commerce store increases in size, it may make more sense to fulfil orders yourself. There is also the option of going for multiple carriers one of which Parcelhub offers

  14. Dallas Nelson August 27, 2014 Reply

    I could not disagree more. There are times when you can not do the volume you need on your own. Look for a company that has been doing fulfillment for over 10 years and knows what they are doing. That is no dupe. Sometimes the money you spend at first gains you relevancy later. Could not be happier with Supplier Oasis.

  15. Eric November 4, 2014 Reply

    We are a fulfillment company and let me tell you. We have saved our customers plenty of time. We have our employees working all day long shipping items. Our customers can focus on selling their item and continue to make money. We take the burden of storing, packing, and shipping. We save our customers money on shipping because we ship such a large amount that they get a discount. We want to make sure our customers get the cheapest price and get the best experience. If you know of anyone that wants a fulfillment company please give us a call we will take care of you! (800) 765-4031.

  16. elizabeth sinnott January 19, 2015 Reply

    I couldn´t agree with you more. Of course each business is different but our business was small but growing until we “outsourced” to a professional fulfillment firm. This was because we decided to move to France (from Germany). We lost 50% of our customers within the first three months: this company also took our phone orders which we had been doing personally before. Huge mistake. Huge. Now we have so few customers left that no other fulfillment will take us on. I really enjoyed doing my own fulfillment, putting a personal touch on things and knowing my customers. We´re presently considering moving back or sending from France, which is expensive and difficult. But yes, I whole-heartedly agree with your opinion.

  17. Bill T March 18, 2015 Reply

    We have a small housewares company that currently outsources fulfillment to a local developmentally disabled not-for profit. Sales are growing fairly quickly. We are in 2 national chains and have been approached by several very large (500+ Stores). I don’t think Amazon/Shipwire/ is the answer-where would you suggest we go to scale fulfillment quickly, provide EDI, and easy customer ordering allowing electronic order flow from original order input to shipping of the order and electronic accounting as well?

  18. Tommy Hua April 23, 2015 Reply

    I don’t think your article gives Fulfillment Warehouses justice.

    You have to factor in many things in running your own warehouse.

    Is your warehouse scale-able? If you are shipping 100 shipment a month out of your garage, then it’s better for you to stick to your garage. If you are growing and start shipping thousands of orders per month. You can’t grow space, without renting out a warehouse, etc. More shipments also equals more labor. More labor means hiring employees and equals more expenses. Payroll, payroll taxes, payroll processing fees, and liability insurance (which is very high for warehouse employees). This is just a summary of all the things that need to be factored into your plans.

    We carry about 4000 different types of products, and our company has used Rakuten Super Logistics and FBA for fulfillment. There has been less than .01% error rate, which is much lower than what we had with our own warehouse employees.

    When you have 4000 different products in your warehouse, you need to invest in costly (very expensive) warehouse management system.

    Another thing is shipping rates; unless you ship out thousands of orders a month, you are over paying for shipping. These fulfillment centers have contracts with many carriers, and could ship out your products at a lower cost, and at a quicker turn around time. Keeping your customers happy with ship time, and you happy with lower shipping cost.

    I’m getting kicked off my computer. Thanks for Reading!

  19. Craig July 1, 2015 Reply

    Shipping is prohibitively expensive for small businesses who don’t have the ability to negotiate for better rates. I sell a product that retails for $29 and shipping from Toronto to Vancouver costs over $30 with UPS! My fulfillment company does it for $2.20

    I rolled up my sleeves and learned something about shipping with my last product: outsource.

    I would never use FBA though. There are plenty of smaller fulfillment companies that can give you something similar but with more flexibility and customization.

    • Steven August 18, 2015 Reply

      That seems… unlikely. But if true, I would love to get the name of your fulfillment company! The only thing I can think of is that you sent it UPS in a box and they figured out they can send it lettermail in an envelope, but then no way it is getting there as fast, plus no tracking, plus they didn’t do anything you couldn’t have. But yeah, if they really are getting UPS shipping from TO to VAN down to $2.20… give me their name!

    • Wes February 29, 2016 Reply

      Yeah I’d like to know the name of your fulfillment company too. :) I’m encountering the exact same issue right now in Canada, and looking for that exact solution….

  20. Stephen Griffith October 1, 2015 Reply

    Yes i take in you 7 points but what you forget is this, when you operate out of Northern Ireland and the item is not produced in the UK, Ireland over, is very bulky, 1 metre cubed, and is in massive demand it makes sense to choose fulfillment as an option due to that piece of Irish Sea. Believe me in this case Fulfillment is much cheaper and much better logistical.
    I suppose what i am saying is this, you cannot write off fulfillment in all instances and your document should reflect this.

  21. Ashley December 12, 2015 Reply

    As a company who uses Amazon FBA and has been using it since its infancy in 2008, I can say that Amazon FBA is not as rosy as people might think. Can we send a single 3 LB book anywhere in the U.S. for $3.85 with anyone but Amazon, well no. But…you get what you pay for, truly. The woes with Amazon FBA begin with their receiving, which they say takes 3 business days, but that’s only after they take as long as they darn well please to issue an appointment for the trucking company to deliver your goods. Yep, this has taken as many as two weeks before. Then, once they do check your inventory in (3 days later), they send your inventory into transshipment, which can taken, again, another two weeks or more. This means a portion of your inventory is “locked up” and inaccessible in the abyss of “transfer” status for as long as Amazon would like.

    I’m posting this here because I want to make sure this is terribly clear to anyone considering FBA. Be very cautious before you become all-in with Amazon. We became all-in with them in 2009 and 300+ SKUs and hundreds of thousands of shipments to customers later we are desperate for a different solution. After months of research to partner with other fulfillment companies, we would be talking about quadrupling our cost. Just not feasible.

    We are now seriously considering bringing fulfillment in-house, which means a warehouse, a fulfillment staff, equipment, packaging, everything. It’s daunting and will be an up-front investment but I just don’t see Amazon ever improving as each year becomes more of a mess and the service provided gets further away from the United States. As an aside, I literally received a response in broken English today from someone named “Cloud.”

    Any suggestions anyone has on how to begin down this path of bringing this in-house is appreciated, as this is clearly more than just a roll-up-you-sleeves proposition (30,000+ orders just in the month of Dec.).

    • Toby January 28, 2016 Reply

      Speaking as the owner of a fulfillment company, the first and most important order of business is Order Management and Warehouse Management systems. It’s the place where the magic happens (and something this post overlooks). And be sure they integrate with whatever intake(s) you have for receiving orders (shopping carts, files, hand-entered). Focus on fulfillment accuracy first.

      Issues with virtually any other area of the operation can be overcome with brute force (more bodies and/or time). The physical world problems are mostly things you can be inefficient with at the start, and improved upon as time goes by and experience accumulates.

      • Toby January 29, 2016 Reply

        And remember — you can start small. Just pick off a slice of your orders and inventory to process yourself, and work your way up to full speed.

      • Carl ferraro March 14, 2016 Reply

        I saw your post on PracticalEcommerce. I am bringing a new product to market and would like to discuss fulfillment with you. I can be reached at the email provided or I can provide a telephone mumber if you email me.

        • Mickey February 27, 2017

          Hi Carl,
          I’m also about to launch a new product, except it’s now February of 2017. Care to share some of your experience?
          Thank you,

  22. Tony Marchese June 3, 2016 Reply

    I’ve done order management system, warehouse management systems, and ecommerce platforms for 35 years now. Half our clients do their own fulfillment, and the other half are fulfillment companies. There are situations where either is more economical, and there are good and bad fulfillment companies out there. This list of 7 points is a great set of criteria for seeking out a fulfillment company that has the software and warehouse infrastructures, a good culture (from company values all the way to the conversations by the water cooler), and a reasonable but adequate pricing structure to maintain the necessary motivations. In other words, what will happen when you get past their glitzy hype and sales process, and then the long term relationship kicks in? Lastly, (just like with the software systems for these things) there are so many fulfillment companies out there, but they are not all easy to identify. So the ones that are easy to find will usually cost more, simply because they spent so much on marketing.

    • Parisa December 14, 2016 Reply

      Dear how can find price fulfilment?

  23. meretailpteltd June 22, 2016 Reply

    Order fulfillment operation more efficient than a third party. All of Amazon’s super-advanced technology is designed to handle the massive size of their operation no doubt about it they are having world best chain regarding this..thank you for sharing informative blog like this.

  24. Yashar Novruz July 19, 2016 Reply

    Many people – from both e-commerce side and fulfillment side – have already mentioned drawbacks and benefits of using fulfillment center. Instead of repeating what has been already said, I would like to specifically address every point mentioned in the article one-by-one:

    1. It is correct that you may end up with a fulfillment company that may ruin your reputation. However, if you do your homework and choose the right company you shouldn’t worry about it, because in most cases, due to experience, fulfillment companies handle it better than you would do with less experience.

    2. I don’t know what this claim is based on. At fulfillment house everything is handled in an organized way. Upon receipt of inventory, it is controlled, counted, every single issue/situation is reported to the owner, and then distributed to the shelves.

    3. It is not a rocket science. E-commerce company sets the rules and gives the checklist. (e.g. re-ship it if x, y, z conditions hold, otherwise do (you name it))

    4. Not all fulfillment companies charge storage fee. For example, we don’t charge it.

    5. E-commerce companies don’t use fulfillment house because they don’t know how to pack their orders. They usually use fulfillment house for the reasons that my fellows from both e-commerce side and fulfillment side have mentioned.

    6. Fulfillment companies actually use what the e-commerce company provides. For example, most of our customers purchase or custom order their packaging boxes, protective material etc. and have them shipped to us. We keep these material together with their inventory and use for their orders. So, every product goes in to the box that is is custom made for the item e-commerce products. Or in some cases they don’t know what to do, or they don’t have time – because they are too busy with marketing and sales – and we arrange the custom made packaging materials on their behalf.

    7. At Packageman, after deciding how certain product is going to be packaged we conduct intensive test to see how durable it is. Throwing the package from one end of the warehouse to the other end like a football, dropping the package from the height of truck top, kicking the package on the ground, and doing all sort of torture… If only it passes the test do we start applying that packaging method. For example, we have an Italian food product company that sends subscription boxes to its customers. In every box there are between 4-7 jars and bottles. Since we took this company on board we are yet to hear a complaint about breakage.

    Finally, there are some factors that are not considered in this article. Proximity of the fulfillment house to your customers is one of them. For example, we are located in greater New York City area. In addition to our nationwide fulfillment service, we provide Same-Day Delivery to the entire New York metro area. Moreover, because it is a local delivery, it is cheaper than ground shipping. So, imagine this – a fulfillment house that doesn’t charge you a storage fee, you don’t have to maintain a warehouse, you don’t have to spend money on inventory management softwares (which is pretty expensive), you save money on shipping that covers more than what you pay for fulfillment service AND your orders are at your customer’s doorstep on the SAME DAY they are placed. And we are still debating if e-commerce companies should or shouldn’t use fulfillment companies?

    Yashar Novruz
    Packageman Inc.
    E-Commerce Fulfillment and Same-Day Delivery

  25. Serkan Yildiz December 4, 2016 Reply

    I understand that you have some good points but you are treating all 3PL companies the same way. Any company that sells less than 2-3 thousand orders per month should always consider 3PL companies since they will be saving from carrier pickup fees, endicia fees, warehouse and extra employee costs etc.

    I know that you may have those issues with larger size 3PL companies but please remember there are small and medium size 3PL companies that are treating their customers business like their own.
    For example my company accepts limited clients to keep a higher level of service and we make sure that customers feel like they have their own warehouses and employees and they can contact anytime via text and live video apps. We always discuss with clients if there is anything questionable so they take the final decision on almost everything. I know this may not happen with larger size 3pl companies but I find this article offensive to other 3PL companies that do things the right way.

    I also want to respond to your 3rd,6th and 7th reasons. My company sends a picture of any questionable returned item to the client to decide whether to dispose or add it back to inventory.We always customize the boxes for customers needs, and most 3PLs do care about breakage. So, since we are not the only one providing this level of service, this article is discrediting the advantage of many 3PL companies.

    Long story short,I believe it would be better to suggest people to make sure they go with the right companies rather than saying 3PL is not the way to go.

    Serkan Yildiz Prep & Ship and Order Fulfillment

  26. Dyan April 17, 2017 Reply

    Obtaining Velocityship services is really a no-brainer. These guys make my life so easy, never had a complaint, shipments always out promptly, no headache, no hassle. I used a different company for my fulfillment before and they were terrible. After working with Velocityship I can’t recommend them highly enough. Give them a shot, I promise it will be the best decision you made for your business all year.

  27. Alicia August 10, 2017 Reply

    We have been very pleased with Velocityship and would highly recommend to other companies! Charlene is fair, honest and very hard working, as is the rest of the wonderful team. We can always count on velocityship to help us in a pinch and to follow through as promised.