How to pick the best fulfillment logistics strategy for your brand

Editorial note: This article is written by Tom Wicky, Co-Founder and CEO of MyFBAPrep, a global FBA prep network with more than 100 facilities and 85 million square feet of operating warehouse space.

In ecommerce, one behind-the-scenes hero can make or break your customer experience: your logistics. From order placement to delivery, your setup directly impacts buyer satisfaction, trust, and loyalty, as well as gives your business a competitive edge.

However, not all logistical solutions fit every business model. Whether you ship products yourself, outsource to a third-party logistics provider (3PL), or prep for Fulfillment by Amazon (FBA), each delivery method has its benefits and challenges. 

So, how do you choose the right one?

We’ll break down these three setups to help you understand their strengths and weaknesses, then summarize the circumstances under which each one excels.

What is 3PL?

3PL involves outsourcing your fulfillment process to a specialized provider. These services handle back-end tasks such as warehousing, pick and pack, shipping, and even returns management. 

With a 3PL, you can offload the logistical workload, which allows you to redirect attention toward growing your business while benefiting from the service’s expertise and infrastructure.

The pros of 3PL

If handing off the heavy lifting of logistics sounds appealing, a 3PL could be a game-changer for your business. Here are the benefits of working with this type of service:

• Reduced workload: When you outsource to a 3PL, you free up hours every week to focus on what really matters: handling core business functions, improving your product, and connecting with customers.
• Access to specialized tools: Logistics can be complex, but 3PLs are equipped with advanced tools for robust inventory tracking, order management, and multi-channel integration.
• Faster shipping capabilities: 3PLs operate through multiple warehouse locations and have established relationships with shipping carriers, which can yield discounted rates and reliable shipping options.

The cons of 3PL

While a 3PL can simplify your logistics, it’s not always smooth sailing. Before you commit to this fulfillment method, it’s important to understand some of the potential challenges it poses:

• Potentially high costs: Between storage fees, pick-and-pack fees, and shipping costs, 3PL expenses can add up fast, especially for smaller businesses.
• Less control over the fulfillment process: When you work with a 3PL, you lose control over your packaging and branding, which may be a deal-breaker if you prefer more personalization.
• Potential delays: If a 3PL experiences delays or internal issues, it could impact your ability to fulfill orders and keep customers informed, leading to frustration for both you and your buyers.

What is in-house fulfillment?

In-house fulfillment is the DIY approach to logistics. You enjoy complete control over every step of order fulfillment, from storing inventory to shipping products directly to buyers. It’s fully hands-on but can be a cost-effective way to manage orders with the right tools and organization.

Here are the essential elements needed for in-house fulfillment:

• Inventory management software
• Packing supplies
• Shipping scale and printer
• Order management system
• Dedicated workspace

The pros of in-house fulfillment

If you like being involved in your logistics, in-house fulfillment may be your best option thanks to:

• Control over inventory and processes: When you handle fulfillment yourself, you gain complete visibility over your inventory, giving you peace of mind along with the flexibility to adjust as needed.
• Branded packaging and personal touch: You control how your products are presented, which supports a memorable customer experience.
• Lower costs for small businesses: If you’ve just launched your business, in-house fulfillment can be a budget-friendly option to keep overhead costs low.

The cons of in-house fulfillment

DIY logistics also face possible challenges that include:

• Need for logistical expertise: Dealing with fulfillment internally requires a solid understanding of inventory management, packing efficiency, and shipping regulations to avoid delays or overselling.
• Potentially difficult to scale: If your business grows quickly, the logistics may become overwhelming since you need to hire additional staff and invest in more advanced systems.
• Requires ample space and resources: As your product line and order volume grow, so does your need for storage, which eats up time, space, and money.

What is FBA?

If you sell on Amazon, FBA is one of the easiest ways to handle your logistics. Through the program, Amazon stores your products, packs orders, ships them to buyers, and handles customer service and returns.

But before you pass off the heavy lifting, you have to meet Amazon’s requirements:

• Product compliance: Your products must adhere to the platform’s strict guidelines for labeling, packaging, and shipping.
• Inventory management: You’ll need to monitor stock levels to avoid running out of inventory, as Amazon won’t automatically reorder for you.
• FBA fees: Be prepared to pay storage, fulfillment, and optional service fees. These can add up, so it’s crucial to ensure your margins can support them.

The pros of FBA

FBA offers significant advantages to help grow your business on the Amazon platform, including:

• Seamless integration with Prime delivery: The program allows fast and free delivery through Amazon Prime, and eligible products are prioritized in search results.
• Simpler compliance with Amazon’s standards: When you use FBA, Amazon ensures proper packaging to meet shipping deadlines and standards.
• Access to Amazon’s customer base: As an FBA seller, your products become visible to millions of shoppers who trust Amazon’s fast shipping and reliable service.

The cons of FBA

FBA may be an all-in-one solution for handling logistics on Amazon, but it’s not without certain drawbacks. Here are a few challenges to consider before committing to it:

• Limited branding: Because FBA products are shipped in Amazon-branded boxes, you lose some ability to showcase your brand’s personality during unboxing.
• Higher fees: FBA is convenient, but extra charges like storage and pick-and-pack fees can pile up quickly.
• Complete dependence on Amazon: When you use FBA, you’re entirely reliant on Amazon’s system, so you have to adhere to their rules or risk costly consequences. These include rejected shipments, listing removals, and account suspension.

Considerations when choosing your logistical approach

The most effective logistical strategy for your business takes time to determine, but doing so will save you headache (and money). Here’s what you should think about:

• Order volume: How many orders do you process each week? If you’re starting with only a handful of orders, in-house fulfillment is suitable. On the other hand, 3PLs or FBA are better for larger volumes.
• Budget and costs: In-house fulfillment has lower up-front costs but can become expensive as you grow. Meanwhile, 3PLs and FBA require ongoing fees for storage, shipping, and handling. Factor these costs into your budget and evaluate which setup offers the best balance of affordability and efficiency for your business.
• Product type and storage requirements: Your product plays a huge role in deciding which fulfillment method you need. Items that require special handling or temperature control may be better suited to a 3PL. For products with a high turnover on Amazon, FBA is an excellent choice.
• Shipping speed: How quickly do your customers expect their orders? If fast shipping is a priority, FBA or a 3PL with multiple warehouse locations can help meet consumer demands. In-house fulfillment may be challenging in this scenario unless you’re close to your customers or willing to invest in logistical infrastructure.
• Flexibility preferences: In-house fulfillment lets you customize every element in your logistical process, while 3PL and FBA require you to adapt to their systems. If flexibility and control are important, this might push you toward keeping fulfillment internal.

When to choose each option

To help you decide between the three methods outlined in this article, here’s a quick comparison of them based on different scenarios:

Finding your ideal fulfillment fit: 3PL, in-house, or FBA

Every brand’s fulfillment needs are unique. As partners, Pattern and MyFBAPrep can help you determine which logistics model is best for your business.

Contact Pattern to learn more about enterprise fulfillment and middle mile solutions. Contact MyFBAPrep to learn more about FBA prep.