Fulfilment Centre VS Warehouse: Which Should You Choose When You’re Ready to Break Free

Fulfilment Centre Staff Packing OrdersFulfilment Centre Staff Packing Orders

For many growing retailers, an online store starts out in a garage or spare bedroom. And as you know all too well, as business grows so does the pile of boxes. The love/hate relationship of more orders means more boxes and less living space. But what happens when the business outgrows the garage?

There are really only two viable options. You could purchase/rent a warehouse and run it yourself, or you could outsource the fulfilment to a third party logistics provider. But what’s the better option for you? And what are the main differences?

Let’s break it down.

The Warehouse Option

A warehouse provides nothing more than storage and is simply a place to store your products before they are sold and distributed.

If you are leaning towards warehousing, you’re probably looking at two scenarios:

  1.    Owning and operating your own warehouse.
  2.    Renting space in a warehouse

The latter is obviously the more cost-effective option, where you rent out the shelves and floor space you need via an existing warehouse company.  

If you have the financial capability and enough people to manage your own warehousing without it taking time away from day to day operations, then it’s a good option. Especially for keeping all eyes on your business.

Warehouse Benefits:

  • Keeping the process in-house gives you the feeling of full control and security: You can choose how to run the warehouse (or your section of the warehouse)
  • Keeps brand fully in-tact: Having your own warehouse means you can control how products are presented and packaged before sent out for shipping (outsourcing can potentially lead to a loss of brand identity if a fulfilment provider doesn’t offer custom packaging)

Ideal Customer:  A great option for anyone looking to keep full control on their logistics and products, but also has the time and resources to make this possible.

But a word of advice, specifically around renting a warehouse space. Australia is home to 3 of the world’s most expensive cities for renting a warehouse space. So be ready to pay a pretty penny if going down this route.  

The Fulfilment Centre Option: (also known as a 3PL)

If you’re considering third party logistics, you’re not alone. 18% of shippers now outsource these functions to keep up with customers’ demands. Outsourcing means you get immediate access to best practice systems and processes at lower costs.

In addition to holding stock, a fulfilment centre provides services to pick and pack orders and handle shipping and delivery to your customers in a timely matter.

A good fulfilment partner comes with a lot of perks like giving you access to a large 3PL warehouse network. Meaning you get to expand your reach and reduce shipping times, without having to worry about the logistics of it.

Skills that are mastered and already in process for a well-run 3PL:

  • Inventory management
  • Efficient operations
  • Receiving inbound inventory
  • Labelling shipments
  • Handling returns

Fulfilment Centre Benefits:

  • Your orders are managed and processed for you regardless of any emergencies or personal time off (now you can take that vacation you’ve been putting off!)
  • Customer service, picking and packing, shipping and other valuable services are at a fixed price
  • Saves time and reduces unnecessary overheads so you can focus attention to other aspects of the company.
  • Scalability. A 3PL can help you scale and continue your business growth journey.

Ideal Customer: 3PL’s are a great option for merchants that are being stunted by their business growth. If you don’t have the time or capacity to store, pack, and ship orders, outsourcing fulfilment can give back time and energy to continue developing your business.

If you run an eCommerce store and are considering outsourcing your fulfilment to a 3PL, get in touch today to learn how Fulfilio can help! We offer same day fulfilment, custom packaging and 99.9% error-free fulfilment. Above all else, we offer friendly and dedicated workers that care about representing your brand.