This is a pretty complex question and the answer is going to be based on your business model. Really you need to look at the whole order and shipping process, define your requirements and decide what solutions are a good fit. In some cases you might have to revise your process to make it the most cost effective.
Here are some important things I would do if you haven’t already:
- Create an order workflow from cradle-to-grave. (Where does your product originate? how is that order processed, how and where does it get delivered?
- Define your geo-markets. Are you shipping worldwide? Regionally? Nationally?
- Have you defined the common shipping requirements and service levels? Transit times—i.e. next day, overnight etc. Not all fulfillment providers have the services you might require (or offer your customer). Shopify uses the USPS (United States Postal Service) which is one flavor essentially. You won’t get any overnight shipping options with that.
Are these high value items and should they be insured? Can they even be insured (might not even be an option with some cookie-cutter fulfillment/online stores?)
- Do you need system integration? Who’s going to process the order AND setup the shipment? This can be automated (semi or fully) but it takes integration services with the fulfillment system. Depending on the level of integration it might add an additional setup fee.
- Identify the main differences between each fulfillment system. Companies like Amazon charge for order handling in addition to pick & pack and it costs even more if the orders originate from other channels. Amazon’s value is in the exposure your product receives so there is marketing value as well but is really a different animal.
There are pros and cons to using a third party fulfillment company but the value (in my opinion) of working with a 3rd party logistics/shipping provider is they can tailor shipping services to your needs. A good logistics partner will align themselves with your current, short term and long term goals and work with you in all phases of the shipment lifecycle and will use your shipping volume to your benefit (unlike the Shopify’s of the world where they aren’t offering you any tailored solutions for shipping). Are they offering you any incentive for your volume (if you have it?) … Probably not.
Another nice advantage of 3rd party logistics services is some of them will conduct shipping and pricing analysis and will negotiate on your behalf. This results in REAL discounts being applied to your shipping instead of those so-called “discounts” that are marketed to you by other companies.
Alex Van Baelen
Read Alex Van Baelen’s answer to, “What Are Customizable, Flexible, and Efficient Ways to Conduct Fulfillment and Delivery for an Online Store?” on Quora.