Self-fulfillment shipping is an order fulfillment model where retailers store their own inventory and fulfill orders through their own distribution network(s).
This usually involves leasing a warehouse space and hiring a team of pickers and packers while incorporating a system or piece of software to manage orders, inventory and shipping.
Advantages of self-fulfillment
- Complete control. The whole pick, pack and ship process is handled in house so you have total control of the experience you provide for customers.
- Can be the most economical option. For some businesses, self-fulfillment can bring greater control than dropshipping and be a lower cost option than a third party logistics (3PL) provider.
- Negotiated shipping rates. Businesses shipping a high volume of orders can benefit from competitive and discounted rates.
- Stronger branding opportunity. Fully customize packaging material to reflect your brand identity and make order fulfillment a great marketing opportunity.
Disadvantages of self-fulfillment
- Time consuming. Setting up, overseeing and maintaining a self-fulfilled distribution network takes more time and effort than other fulfillment methods.
- Can be costly. For fast growing businesses it will likely become necessary to need warehouse space, staff, a Warehouse Management System (WMS) and shipping software.
- Complicated to expand. Expanding globally means setting up warehouses in different regions to avoid paying significant shipping costs and taxes.
- Lack of scalability. For smaller or individual sellers with increasing orders attempting to match the resources of typical marketplaces, scaling your business is difficult.
- Limited product range. You’re limited to selling only the products purchased and stored in your own facilities.
Who is self-fulfillment best for?
Self-fulfillment looks very different depending on the size and budget of a company and can be great if you have the funds to make it work. It’s perfectly suited to heavily brand-focused businesses who need complete control of their processes in order to maintain a strong image and reputation.
For single retailers with significantly less resources, self-fulfillment means being able to run a business without having to hire any staff or pay extra fees.
Who should avoid self-fulfillment?
Committing to self-fulfillment usually means a large capital outlay on warehouse leasing, machinery, staff and software. So relatively cash-poor early stage businesses who aren’t too heavily focussed on building a brand may do better by avoiding this method.
Self-fulfillment can also tie up a lot of time and focus for startups, leaving little time left over to focus on growing the business.