Why self-fulfillment for online merchants is a bad idea

If you took the plunge and started an e-commerce business, you know it's a tough road and a lot of work. Constantly finding ways to save money is nearly as much work as managing all of the day to day challenges. If you're DIY-savvy, tackling everything yourself might seem like the way to go to save cash but beware; there are lots of hidden costs involved with that strategy.

Order fulfillment is one of the most common business aspects ecommerce managers attempt to take on themselves. Fulfillment entails storing inventory, picking and packaging products, and shipping it all out to customers. Why not handle this in-house, with no cost aside from shipping and any employee wages you might have?

Sounds like a great idea but is it really that easy and low cost? The short answer is no. Sure, that package you just shipped might have only set you back four or five dollars but don't forget about other expenses of the direct and indirect variety.

The real cost of packing materials

Ecommerce fulfillment demands a great deal of attention from all sides and one that piles up expenses quickly is packaging. Customers expect their orders to arrive in one piece, in a professional package. Your particular product types and sizes, along with what kind of shipping services you use, ultimately determines cost but you will most likely need these items on hand:

  • Boxes, envelopes, and other shipping containers
  • Packaging tape (lots of it)
  • Bubble wrap, packing peanuts, or other shipping cushion material
  • Labels
  • Printer, ink, and paper

Navigating the shipping routes

Let's say you have packaged a dozen of your best products and they are ready to head on their way to customers. Great, but now you have the shipping chore to deal with. For smaller businesses, this likely means piling everything into your trunk and driving to a UPS store or post office. That means time away from running your business, added mileage on your vehicle, and inevitable traffic snarls or not making it before the shipping location closes.

That leads to delays in shipping and unhappy customers on the other end. Not only that, a delay in shipping often must be addressed by expedited shipping and there goes extra money from the profit you thought you'd have at the end of the month. Delayed shipments can seriously jeopardize future business and this is a constant challenge for ecommerce. Today's customers expect lightning-fast service and have little patience if they don't get their way.

Opportunity cost challenges

Running a successful ecommerce business comes with an enormous number of evolving tasks to complete every single day. Opportunity cost is the loss of potential gain from other activities when you do another. Remember that every hour spent checking for new orders, packing items, driving to a shipping location, waiting your turn, and finally shipping your products; you missed the critical opportunity to grow your customer base, focus on new products, market your company, and plan a strategy for future growth.

Keep all of this mind and when the going gets tough, reach out to an order fulfillment professional.

For more information, contact the team at Overflo Warehouse at (800) 626-061600 or overflo.com for a free quote.

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