How to Decide: Self-Fulfillment vs. Outsourcing to a Warehouse Fulfillment Provider
Deciding whether to manage order fulfillment yourself or outsource to a fulfillment company depends on multiple factors, including cost, order volume, scalability, and operational efficiency. Below is a detailed comparison to help you make the right choice.
📌 Key Factors to Consider
1️. Order Volume & Business Size
✅ Self-Fulfillment – Suitable if your order volume is low to moderate (e.g., fewer than 100 orders/day).
✅ Outsourced Fulfillment – Best for businesses handling high order volumes (e.g., 500+ orders/day) or expecting rapid growth.
📌 Example:
If your business sells 20–50 orders daily, you can manage it in-house. But if you scale to 1,000+ orders, outsourcing ensures efficiency.
2️. Storage Space & Inventory Management
✅ Self-Fulfillment – If you have your own storage space, racking system, and inventory tracking, self-management is possible.
✅ Outsourced Fulfillment – If storage is limited or costly, a fulfilment provider offers scalable warehouse space with professional inventory management.
📌 Example:
Running out of space? A fulfillment company stores inventory, manages stock rotation (FIFO/FEFO), and prevents overstocking issues.
3️. Order Processing Speed & Accuracy
✅ Self-Fulfillment – If you can accurately pack and ship orders on time, managing it yourself may work.
✅ Outsourced Fulfillment – If order errors, delays, or returns increase, outsourcing ensures faster and error-free fulfillment using automation and trained staff.
📌 Example:
A fulfillment provider offers barcode scanning, automated picking, and real-time order tracking to reduce mistakes.
4️. Shipping & Delivery Costs
✅ Self-Fulfillment – You negotiate directly with couriers but may lack bulk shipping discounts.
✅ Outsourced Fulfillment – Fulfillment centers negotiate lower shipping rates due to bulk shipments, saving you money.
📌 Example:
A fulfillment provider shipping 5,000+ parcels/month gets better courier rates than an individual business shipping 200 orders.
5️. Technology & Integration Needs
✅ Self-Fulfillment – If you have basic e-commerce operations, manual order management may be enough.
✅ Outsourced Fulfillment – If you need real-time WMS, ERP, and e-commerce platform integration (Shopify, Shopee, Lazada, TikTok), outsourcing offers seamless connectivity.
📌 Example:
A fulfillment center automates inventory updates, order tracking, and shipping status across multiple sales channels.
6️. Costs & Profitability
✅ Self-Fulfillment – No external costs, but expenses include warehouse rent, labor, packaging, software, and shipping fees.
✅ Outsourced Fulfillment – You pay a fulfillment fee per order, but save on rent, staff salaries, and logistics management.
📌 Cost Breakdown Example:
| Cost Factor | Self-Fulfillment (Monthly) | Outsourced Fulfillment (Monthly) |
|---|---|---|
| Warehouse Rent & Utilities | RM3,500- RM5,000 | Included in service |
| Staff Salaries | RM2,000 (2 workers) | Included in service |
| WMS Software | RM1000 | Included in service |
| Shipping Fees | Higher (low volume rates) | Lower (bulk discount) |
| Packaging Materials | RM500 | Included or lower-cost bulk pricing |
| Total Cost | $5,800+ | Varies, but often more cost-efficient |
📌 Example:
If you’re spending RM5,000+ per month managing fulfillment, outsourcing might be cheaper & more efficient.
7️. Business Growth & Scaling Potential
✅ Self-Fulfillment – Suitable for small-scale businesses with manageable growth expectations.
✅ Outsourced Fulfillment – If you plan to scale quickly, a fulfillment company ensures faster expansion without increasing overhead.
📌 Example:
An e-commerce seller expanding from 500 to 5,000 orders/month can outsource fulfillment instead of hiring more staff & renting larger warehouses.
📌 Final Decision: Should You Manage Fulfillment or Outsource?
✅ Choose Self-Fulfillment If:
- You process less than 10 orders/day.
- You have warehouse space and staff to handle inventory.
- You want full control over packaging & branding.
- You are okay with higher overheads costs per order.
✅ Choose Warehouse Fulfillment If:
- You handle 50+ orders/day or plan to scale fast.
- You want lower fulfillment & shipping costs.
- You need real-time inventory tracking & order automation.
You want to focus on business growth, not logistics.
