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SPONSORED: Third-Party vs. DIY Shipping – Which One Is Right for Your Business?

ByBusiness.com Contributor,
business.com writer
|
Sep 26, 2019
Image credit: Kritchanut/Getty Images
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Find out how to choose the best shipping option for your small business.

Online shopping is the new norm, attracting consumers with interests and needs across the board to e-commerce brands. However, interwoven with increased online shopping is the increased demand for efficient shipping. 

One positive aspect of visiting a brick-and-mortar location is that you leave the store with the product you purchased in hand. When buying online, you must wait – sometimes days or even weeks – for your item to arrive. 

 

As an e-commerce business, you must ensure your customers are satisfied with your packaging and delivery. There are multiple shipping options to consider; the two most common are third-party fulfillment shipping and a do-it-yourself approach. We outlined these two popular options below to help you choose which is right for your business.

What is third-party shipping?

Third-party shipping involves outsourcing another company to handle your shipping and delivery process for you. The company stores your products, and packs and ships orders to your consumers, letting you focus on other aspects of running your business. 

Typically, a seller who chooses this option does not have a warehouse of their own to store their bulk merchandise and/or the funding to staff the entire operation. Instead, the seller contracts with a fulfillment warehouse to handle these processes for them.

What is DIY shipping?

DIY shipping, on the other hand, involves handling shipping on your own. Depending on the size of your business, this might entail obtaining a warehouse and hiring in-house workers to fulfill orders. 

DIY shipping differs from drop shipping, which is a retail fulfillment method in which a business or store sells products that it doesn't stock. When a product is sold, the seller purchases the product from a third party and has it shipped directly to the customer. The latter option typically requires you to fill individual orders rather than bulk orders.

The benefits of DIY shipping

DIY shipping offers numerous benefits, especially for businesses with a relatively small order volume (typically less than 1,000 packages shipped per month). 

These are the main benefits of DIY shipping:

1. You have direct control over your inventory and warehouse.

Through DIY shipping, you decide how your items are stored and how orders are packaged and delivered. This control can be reassuring – your processes are completed the way you want them to be and by in-house experts you trust.

2. You can more easily offer a unique experience.

Some companies customize their deliveries by adding personalized notes or including fun packaging. This not only improves customer satisfaction but increases the visibility of your brand to consumers. If you have the time and resources to hire an in-house team who can implement what you envision for your shipping, this option might be right for your business.

3. You can expect minimal costs.

While DIY shipping can be difficult to scale quickly, if you know you can handle your current volume of orders in-house – and don't anticipate a meteoric rise in the foreseeable future – handling fulfillment yourself saves a lot of money. For example, you can expect to save up to five cents on every letter and up to 40% off USPS Priority Mail with Pitney Bowes' SendPro Online. These savings add up quickly, especially for smaller businesses.

4. You don't have to be a large business.

One of the best things about order self-fulfillment is that even the smallest businesses can do it with the right tool. Whether you're a retailer with a small team or a solopreneur, DIY shipping let you reach customers all over the country without outsourcing to a third-party fulfillment company.

The benefits of third-party shipping

Depending on the type of business you run and the volume of inventory you must store, one option might be better for you than the other. 

Here are some pros of working with a third-party shipping company:

1. You don't need to hire staff.

While many small business owners handle their own shipping, many hire a team to handle their shipping needs. Outsourcing the fulfillment process saves you the time and energy of recruiting and managing the right workers. 

If your business is experiencing growth, you might be wary of hiring a full-time employee, and rightfully so. Rather than managing a team of warehouse staff yourself, you can outsource this work to experts who can find the right employees and manage staffing and training for you.

2. You can offer affordable two-day shipping to more people.

Pitney Bowes noted that 91% of consumers leave a site when shipping isn't free or fast. Efficiency is everything in the e-commerce industry, and while you might be killing it with your products, you likely aren't a packaging and delivery expert. Today's consumers are impatient – and can afford to be.

Is third-party or DIY shipping right for my business?

When deciding whether you should outsource your shipping or do it yourself, ask yourself these five questions:

1. How many stock keeping units (SKUs) do you need?

A SKU is a code that identifies products for inventory management purposes by certain characteristics, like color or brand. The number of unique products you sell impacts how much you pay a third-party logistics company; in other words, the more SKUs you have, the higher your warehousing fees will be. However, if you have your own warehouse, you determine how to store your merchandise without worrying about fees.

2. Where are your customers located?

Are your customers international, or are they tied to a specific region? In other words, can you fulfill orders to your customers quickly? If you answered yes to the latter question, you likely can fulfill and ship orders yourself. If that's not the case, consider hiring a third party to help you efficiently ship orders.

3. Is your order volume based on seasonal trends?

If your shipping demands change with certain seasons, consider choosing a third-party company that can accommodate fluctuations in volume rather than renting out warehouse space yourself that might end up being too small or too large.

4. Do you want to offer a customized experience?

You might have creative ideas for your shipping process, from packaging to delivery. Perhaps you'd like to personalize each order with a thank-you note, or maybe you want to offer overnight shipping for special orders. 

According to Pitney Bowes, "The package your customer opens up is an extension of your brand's marketing." If you choose a third-party company to handle this process for you, you'll want to ensure it aligns with your vision. Otherwise, you may want to choose the DIY shipping method.

5. What is your returns process?

What happens when your customers' orders are incomplete, damaged or incorrect? Do you want to manage this process, or would you rather let someone else handle it for you? If you don't think you'll have enough time to provide the care and support your customers deserve, you should let a third party do it for you. 

The choice between a third-party shipper and DIY shipping should not be taken lightly, as it impacts your bottom line. There are many aspects to consider when making this decision, from where your customers are located to the volume of products you maintain. 

Neither choice, however, is permanent; perhaps you start with one shipping method and switch to another method. Whichever route you take, make sure both your needs and your customers' needs are being met, and with ease.

This article is sponsored by Pitney Bowes.

 
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