Asking the right questions is essential when determining if outsourcing your fulfillment is right for you. Additionally, approved asking and the right questions when interviewing fulfillment companies can and will determine your profit increase.  For information and a list of questions to ask when interviewing fulfillment companies, checkout The Interview section under our Fulfillment Services Guide.

What are the differences between fulfillment services and drop shipping?

If you sell online and are looking for ways to reduce costs, comparing the benefits of fulfillment vs. drop shipping may be of interest to you to determine whether you are benefiting from the most cost effective shipping solution.

Drop shipping is used to ship out inventory you do not own. You may advertise products from various vendors on your website or through other channels, just as though they were your own products. It’s a good way to add additional products to your own inventory without having to purchase large quantities. Many choose to drop ship additional products in order to test the market, determine consumer demand, expand their own product line, and eventually manufacture on-site or drop the product.

Some disadvantages to drop shipping are loss of control over decision-making. The owner of the product may want to stick with one shipping method which may not be your cheapest option. A portion of each product sold is shared with the owner of the product causing a reduction in your earnings.

Fulfillment is used by those who own their inventory and desire to have warehouse and shipping services handled by a third party. It is a cost effective way to store, ship, and return merchandise locally or internationally.

Fulfillment services benefit those who want to focus on their product sales through marketing and customer service. Outsourcing the distribution process to an experienced fulfillment company not only reduces costs, but substantial shipping discounts are realized because of the large volume of products shipped each day.

Why would I choose fulfillment services over drop shipping?

Order fulfillment centers are experienced in shipping and order processing and have developed efficiencies in those areas. If you own your own product and are currently having it shipped from the site of manufacture, you should compare your current costs to those of a fulfillment center in order to determine if cost savings are a possibility.

Order fulfillment centers are able to negotiate shipping rates with carriers due to large quantity shipping and can offer flat-rate shipping options. These savings can be passed on to you. Predictable shipping fees allow you to accurately attach cost to products in order to determine profit margins.

The physical location of a fulfillment center versus a drop shipper is of consideration. Transportation expenses can vary greatly based on distance from point of sale to intended destination.

Is there a point at which you should ship your own product?

Possibly. Depending on a number of aspects, it may be best to ship your own orders.

Calculate the cost of maintaining your own shipping/receiving department and compare that to using a fulfillment service. On your own, staff will need to be paid regardless of shipping volume. If you experience business growth, you will have to increase the size of your workforce, train them, and potentially increase the size of your warehouse.

A fulfillment center should only charge you for processed orders and storage fees. Fulfillment centers can also pass on shipping discounts due to negotiated prices with shipping carriers.

Where are you located? Shipping rates are based on distance. If your warehouse is on the west coast and you ship orders to the east coast, you will pay more for shipping than a warehouse centrally located in the US.

Do you handle international orders?

Yes! See our International Shipping page for more details.

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