One of the biggest operational decisions any UK ecommerce business faces is whether to manage fulfilment in house or hand it over to a third party. Both approaches can work well, but they suit different stages of growth, different budgets, and different levels of operational complexity. Understanding the trade offs between 3pl fulfilment and managing everything internally can help business owners make a decision that actually fits where their company is headed, not just where it is today.
This blog breaks down the pros and cons of each approach and looks at the signs that suggest it might be time to switch.
What Is In House Fulfilment?
In house fulfilment means a business handles its own storage, picking, packing, and shipping, usually from its own premises or a rented warehouse space. The business owns the process from start to finish, including hiring staff, managing equipment, and negotiating directly with couriers.
What Is 3PL Fulfilment?
3pl fulfilment involves outsourcing these same tasks to a third party logistics provider. The provider stores inventory in their own warehouse, then handles picking, packing, and shipping on the business’s behalf, often with established courier relationships and streamlined systems already in place.
Pros and Cons of In House Fulfilment
Advantages
- Full control over every part of the process, from packaging to customer communication
- No reliance on an external partner’s systems or availability
- Potentially lower costs at very low order volumes, since there’s no per order fee to a provider
Disadvantages
- Requires significant investment in warehouse space, staff, and equipment as volume grows
- Harder to scale quickly during seasonal peaks without overstaffing during quieter periods
- Courier rates are often less competitive than those a larger 3PL can negotiate
- Managing logistics internally takes time and focus away from other parts of the business, like marketing or product development
Pros and Cons of 3PL Fulfilment
Advantages
- Access to established courier relationships, often resulting in better shipping rates
- Ability to scale up or down quickly based on demand, without long term staffing commitments
- Frees up internal resources to focus on growth rather than day to day logistics
- Experienced providers often bring efficiency improvements that are hard to replicate in house
Disadvantages
- Less direct control over the physical handling of products
- Reliance on the provider’s systems and communication for order updates and issue resolution
- Per order costs can feel higher at very low volumes compared to doing it internally
Cost Comparison: When Does 3PL Make Financial Sense?
At low order volumes, in house fulfilment can sometimes be cheaper simply because there’s no per order fee being paid to a provider. However, as order volume increases, the fixed costs of running an in house operation, staff wages, warehouse rent, equipment, often outweigh the savings, especially when compared to the negotiated rates and efficiencies a 3pl fulfilment provider can offer.
Many UK businesses find that the tipping point comes when order volumes start requiring additional staff or warehouse space just to keep up, at which point outsourcing tends to become more cost effective overall.
Signs It Might Be Time to Switch to 3PL Fulfilment
A few common indicators suggest a business might benefit from outsourcing fulfilment:
- Order volumes have grown to the point where current staff or space can’t keep up
- Shipping costs are rising faster than the business can absorb through in house negotiation
- Seasonal peaks are causing consistent delays or missed delivery targets
- Fulfilment tasks are taking up time that should be spent on growing the business
- Expansion into new markets or regions would require additional warehousing that isn’t practical to build in house
If several of these apply, it’s usually worth exploring what 3pl fulfilment could offer before committing to further investment in an in house setup.
Choosing the Right 3PL Partner
Not all third party logistics providers operate the same way, so it’s worth looking closely at a few factors before switching:
- Experience working with businesses of a similar size and product type
- Transparent pricing without hidden fees
- Strong technology for real time inventory and order visibility
- Proven ability to scale during busy periods
- Good communication and support when issues arise
Waypoint 3PL, a UK based third party logistics provider, works with ecommerce businesses looking to move from in house fulfilment to a more scalable 3pl fulfilment setup, offering the infrastructure and courier relationships that are often difficult to build internally.
FAQ
Q: Is 3pl fulfilment always cheaper than in house fulfilment?
A: Not always, at very low order volumes in house can be cheaper, but as volume grows, the fixed costs of running things internally often make 3pl fulfilment more cost effective.
Q: What are the main risks of switching to 3PL fulfilment?
A: The main trade off is less direct control over physical handling, and a reliance on the provider’s systems and communication for updates and issue resolution.
Q: How do I know if my business has outgrown in house fulfilment?
A: Common signs include struggling to keep up with order volume, rising shipping costs, missed delivery targets during peak periods, and fulfilment tasks taking too much time away from growth activities.
Q: Can a business switch back to in house fulfilment after using a 3PL?
A: Yes, though it usually requires rebuilding warehouse space, staffing, and courier relationships, so most businesses only switch back if their operational needs change significantly.
Q: What should I look for when choosing a 3pl fulfilment provider?
A: Experience with similar businesses, transparent pricing, strong inventory technology, and the ability to scale during busy periods are all important factors to consider.
Conclusion
Deciding between in house fulfilment and 3pl fulfilment depends on where a business currently stands and where it’s headed. In house fulfilment can work well at smaller scales, but as order volumes grow, the cost and operational benefits of outsourcing often become hard to ignore. Recognising the signs that it’s time to switch, and choosing the right partner, can make the transition smoother. Waypoint 3PL supports UK businesses making this move, offering the infrastructure and experience needed to scale fulfilment without the growing pains of managing it all in house.
