What’s the Difference Between In-House Fulfillment and Shopify Fulfillment?

E-commerce brands must strike a difficult balance between operational costs and great customer experiences. For millions of merchants, one answer is Shopify’s full-service eCommerce platform.??

Shopify provides the technology merchants need to build online stores, market to potential customers, sell products, and accept payments. The platform connects sellers to online marketplaces like Amazon, Walmart, and eBay, as well as via social media, search, and through emerging channels like TikTok Shop. But there is still a challenge any eCommerce merchant must tackle to succeed: e-commerce fulfillment.?

Why Good eCommerce Fulfillment is Critical?

EMARKETER discovered three primary reasons for customers abandoning online orders in a July 2023 survey:?

• High Shipping Costs: A whopping 36% of shoppers abandoned orders due to excessive shipping fees.??

• Delivery Timing Concerns: 29% left items in their cart because they wouldn’t arrive in time.??

• Slow Delivery: 20% abandoned orders citing slow delivery times.?

From order processing to inventory management and warehousing to shipping and returns management, every step of the fulfillment process plays a pivotal role in delivering a seamless customer experience.

Here are just a few reasons why brands need to define a strong fulfillment strategy to grow and scale:??

• Customer Satisfaction

• Scalability and Growth

• Positive Brand Image

• Cost Savings

Growing online brands should consider packaging, technology, warehousing or other storage, transportation requirements, international shipping, and much more before mapping their fulfillment strategy. They can then decide if running e-commerce fulfillment themselves (in-house fulfillment) or leveraging outsourced fulfillment works best for their business.??

How In-House Fulfillment Works?

In-house fulfillment, also known as merchant fulfillment, means the Shopify retailer manages the fulfillment process internally. That includes warehousing, inventory management, order processing, picking, packing, kitting or gift wrapping, shipping, and returns.?

The business maintains its own fulfillment centers or warehouses to store inventory, and the entire fulfillment process is managed by the merchant’s own staff.??

In-house fulfillment provides large and small businesses with greater control over their fulfillment process and allows for more customization and flexibility. But it requires significant infrastructure, resources, and expertise to effectively manage order fulfillment operations.?

Choosing Other eCommerce Fulfillment Strategies?

If In-house fulfillment doesn’t meet a retailer’s needs, there’s good news: there are other options—from Shopify eCommerce fulfillment to third-party logistics providers (3PLs).??

The Shopify Fulfillment Network (SFN)?

Shopify helps eCommerce merchants manage their eCommerce by outsourcing eCommerce fulfillment to Shopify’s fulfillment service, Shopify Fulfillment Network (SFN). The Shopify Fulfillment Network is a network of Shopify warehouses designed for order management, inventory management, and order fulfillment on behalf of Shopify merchants.?

The SFN provides Shopify order fulfillment services brands can use to store inventory and manage orders. Shopify utilizes a network of Shopify warehouses and fulfillment centers. It works with UPS, DHL, USPS, and other shippers to deliver orders.??

To use the Shopify Fulfillment Network, e-commerce merchants must sell in the US, have an active Shopify Payments account, and meet Shopify’s other eligibility parameters.?

Dropshipping?

With dropshipping, eCommerce businesses don’t hold inventory or handle product fulfillment directly. When a customer places an order, the business forwards the order details to a supplier or manufacturer. They then ship the products directly to the customer.?

The eCommerce business acts as an intermediary, taking orders and payments from customers and passing on the order information to the supplier for fulfillment. Dropshipping eliminates the need for inventory management and upfront investment in stock. Merchants instead focus on marketing, customer acquisition, and building their online presence.??

Dropshipping has potential drawbacks. eCommerce retailers have less control over product availability, shipping times, and customer experience since these aspects are managed by the outsourced supplier.?

Third-Party Logistics Partners (3PLs)?

Many growing eCommerce retailers outsource fulfillment to third-party logistics partners (3PLs). 3PLs are specialized fulfillment companies that manage warehousing, inventory storage, order processing, kitting or gift wrapping, shipping, and returns on behalf of merchants.??

The 3PL typically has expertise in fulfillment operations, established warehousing infrastructure, and advanced systems to handle fulfillment efficiently. This model allows businesses to focus on core activities such as marketing and product development, while relying on the expertise of the 3PL provider for an efficient order fulfillment process. It offers scalability, reduces operational costs, and provides access to specialized fulfillment services.? ?

Other ways 3PLs make eCommerce fulfillment simple, scalable, and customizable for Shopify merchants:?

• Automation: Utilize software and tools for order processing, inventory management, and shipping label generation.?

• Streamlined Order Processing: Simplify order processes. Utilize order management systems to centralize order data, integrate payment gateways for seamless payment processing, and implement fraud detection measures to minimize risks.?

• Inventory Management: Implement inventory management software to track stock levels, set up automatic reordering, and drive regular audits. Embrace real-time inventory tracking to prevent stockouts and ensure seamless order fulfillment.?

• Packaging and Shipping: Use standardized packaging materials, implement automated packaging systems, and work closely with shipping carriers to negotiate favorable rates and expedite deliveries.?

• Customization and Gifting: Leverage value-added services, like gift wrapping and customization. These services improve the overall shopping experience and differentiate an eCommerce business from its competitors.?

• Returns and Reverse Logistics: Manage returns with reverse logistics policies and processes. Great return experiences require creating clear return policies, providing return labels or instructions, inspecting returned products, and determining appropriate actions based on the condition of the items.??

The best fulfillment services or best 3PL provider for Shopify vary based on a variety of factors, but third-party logistics partners can make growing eCommerce on Shopify simpler.?

How Radial Works as an Outsourced 3PL for Shopify Webstores?

Radial is a trusted partner for Shopify merchants seeking to grow their eCommerce businesses quickly, efficiently, and profitably. We offer tailored and scalable eCommerce fulfillment for emerging and enterprise brands. Shopify merchants meet their fulfillment promises, and customer expectations, while reducing overhead and boosting profitability.??

With fulfillment centers world-wide, Radial helps Shopify merchants:?

• Grow Fast Through Seasonal Peaks: Manage surges in demand efficiently without compromising service quality. Adapt processes, technology, and workforce seamlessly to meet demand.??

• Balance Profitability, Efficiency, and Brand Experience: Manage costs and drive efficiency, without losing what makes your brand special.??

• Leverage Real-Time Analytics: Turn data into actionable insights to optimize your fulfillment strategy.??

• Ensure Reliable Carrier Partnerships: Ensure timely deliveries with strong carrier relationships negotiated by Radial.?

• Deliver to Customers Fast: Strategically position inventory near where your customers live to speed delivery times and reduce transportation costs.?

• Tailor Brand Experiences: Create tailored brand experiences with product personalization, gift wrapping, and other value-added services.?

• Manage Returns Effectively: Handle returns efficiently to minimize costs and maintain a positive customer experience.??

The Radial Fulfillment Difference for Shopify eCommerce?

Global brands trust Radial to help them deliver great consumer experiences through tailored, personalized, and scalable solutions. We partner with clients across Europe and North America with technologies like advanced eCommerce fulfillment omnichannel order management, as well as payment and fraud management.?

Delivering brand promises is simple with Radial Fulfillment and Shopify. Our Shopify app store certification grants the highest level of trust when integrating with Shopify. Radial’s pre-built integration leverages the Shopify Fulfillment API to connect our logistics services to the brand webstore for a smooth, efficient, and seamless flow of data. Once integrated with Shopify, Radial will be able to receive item and order information as well as provide inventory and order status updates.?

Not only does Radial provide expert insights based on years of experience fulfilling for brands on Shopify’s platform, but our access to Shopify’s resources ensures Radial stands as the right choice for eCommerce businesses seeking to improve their fulfillment.?

Partner with Radial to leverage 30+ years of deep industry expertise, extensive market reach, and the innovative approach necessary to drive seamless eCommerce fulfillment. Learn more about how Radial helps Shopify merchants succeed with tailored approaches to eCommerce and beyond—from click to delivery.?