Is fulfilment worth it?
The question is usually asked too late – when the in-house warehouse is already struggling. A sober comparison before the pressure arrives is more useful.
What rarely gets counted in an in-house warehouse
The comparison favours the in-house warehouse as long as you only set rent against the provider’s quotation. The calculation is only complete once you add the items that sit in other budgets.
- Staff costs including holiday, sickness and turnover
- Racking, forklifts, maintenance, inspections
- Packaging material and the space to store it
- Software for warehouse management and dispatch
- Space held for peaks that stands empty the rest of the year
- Management time spent on warehouse matters instead of on selling
When the in-house warehouse stays ahead
There are cases where outsourcing does not make sense – and a provider who does not say so is not a good adviser.
- Very small volumes, where any basic charge weighs disproportionately
- Products that are finished individually shortly before dispatch
- Ranges needed constantly by production or the workshop
- Business models where the packaging is the product
- Very few orders combined with very many items
The figure to decide on
Rather than arguing from instinct, one simple calculation helps: work out your full cost per order dispatched in-house – all the items above divided by a year’s orders. You can set that figure directly against a quotation.
Two things belong in the thinking. First, scaling: what happens to your figure if order volume doubles? In-house it jumps with every additional person and every new hall. Second, peaks: the comparison has to reflect the strongest month, not the average.
The middle way that gets overlooked
It does not have to be all or nothing. It is often sensible to hand over only part: the end-customer business with many small consignments to a provider, project and key-account business staying in house. Or the other way round – the heavy, bulky items go out, the small parts stay.
Seasonal outsourcing is possible too: the in-house warehouse carries the year, the provider carries the peak. That takes more coordination but is considerably cheaper than holding space and staff all year for two strong months.
Frequently asked questions
There is no universal threshold – it depends on order structure, not on turnover. What is meaningful is comparing the full cost per order in house with a concrete quotation.
Yes. Splits by sales channel, by product group or seasonally are common. What makes sense follows from the structure of your orders.
Not counting your own staff costs in full, and looking at the average month instead of the peak. Both make the in-house warehouse look cheaper than it is.
And if you would rather hand it over
- Fulfillment and Warehousing – Goods receiving, storage, order picking and dispatch
- Industrial Services – Assembly, promotions, container unloading
More from the guide:What does fulfilment cost?Changing fulfilment provider
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