In-House or Outsource: Which Fulfillment Option Is Better?

Simply put, fulfillment is an operational process, essential for every existing subscription business. Besides the companies who are selling products directly to customers, ecommerce and subscription businesses also need to deal with fulfillment.

The subscription fulfillment process has three main stages:

receiving your products from suppliers
packing them into monthly subscription boxes/packages and
actually shipping your products

There are also many smaller, but equally important processes in between as well – organizing the team of packers, assembling of the boxes, labeling, etc. Each one of them can present a challenge.

This is super important if you’re running a curation subscription box, which is a type of subscription box model where the contents are selected around the subscriber’s preferences, often on an individual level, and often changing each month. Subscription box contents can include anything from clothing to food to hygiene and home products — your imagination’s the limit!

While there’s no limit to the amount of items you can include, it may vary from month to month, and whether you’re running your fulfillment processes or they’re outsourced, varying weights and dimensions may impact your fulfillment process.

Which doesn’t frighten you, because you’re a warrior, not a worrier, right!? Right.

Moving on…

Fulfillment options

Only properly fulfilled boxes can meet all your customer’s wishes and expectations. Small hint: your customer always, always expect nothing less than perfect.

Despite this sounding quite clear, there are many challenges connected to this process, with the main one being – where and how should you do it?

These are the two main options you could use for subscription box fulfillment:

In-house – meaning literally going through the operations in your office or the particular space you rent for fulfillment purposes (your own house also counts here).
Outsourced – meaning someone else, somewhere else covers all the fulfillment services.

Especially at the beginning of your business, it feels good to keep an eye on all operations all the time. It gives you control of your products; primarily with how they’re handled from the time they arrive in your mailbox to the time they make it into your beautiful custom packaging, ready to be unboxed by your subscribers.

By all means, if your subscription empire is still in diapers, with a 2-digit number of monthly boxes, then sticking to in-house fulfillment is probably a wise decision.

As you’ve already learned, there are a lot of operations involved in in-house subscription box fulfillment and it’s good to keep an eye on them, even if that means doing most of them yourself.

Fulfillment options

However, once your business grows to a couple of hundred customers, preparations for shipping become distracting and time-consuming. Imagine a stack of hundreds of boxes waiting to be assembled, packed and sent out.

Taking care of this amount of packages takes your focus away from other essential elements needed for the growth of your subscription business.

The growth elements you should be primarily focused on are nurturing and growing your customer base (attracting new customers). And if you’re doing it right and your subscriber list grows…

… so does the number of monthly subscription boxes you sell!

When your base of subscribers crosses the three-digit mark and exceeds it, then outsourcing becomes not only a practical option, but also a necessary solution. Turning to another professional can both be an affordable and scalable decision.

If you stay in-house, you’ll need employees who will undertake the process from the moment of package receiving up to shipping. Choosing the right people can lead to high-quality fulfillment.

However, you’ll be the only one to figure out how much you’re willing to pay your employees and if the outsourcing in this stage of your business will pay off.

In-house operations require interviewing and hiring employees, which includes the procedure (training) around their employment, various paperwork, and more. Later on, these workers need to be coordinated so that everything runs smoothly.

It’s also possible that you’ll need to include a new team member, a manager of some sort, who will observe, plan, organize, and coordinate all the packers. Again, this is only if you do not wish to do it all by yourself. If you do, we can’t stop you.

On one hand, this seems like a lot of work, and it is – searching, interviewing, organizing, and doing paperwork. But, if you choose to do it this way, you’ll have a trusted team of people YOU picked under your roof. Can you put a price on that?

And remember, mind your overall expenses — they can have knock-on impacts on all your other financial metrics too!

Just like you can put a price on the contents of your boxes themselves, you can put a price on fulfillment. If your subscription box fulfillment option of choice is in-house, we already mentioned that you’ll need to think of employee salaries.

But beyond labor costs, monthly fulfillment carries additional expenses. These might not be evident right away.

Firstly, space. As your business grows, the number of boxes increases too. This calls for a bigger space, not only for storing, but for the packaging processes as well.

If you choose to outsource your subscription box fulfillment, think of the thousands of dollars you may save, because you do not need to rent huge amounts of warehouse space. Actually, you might not need to think about space at all, and can focus on those margaritas and brainstorming ideas.

Pros of in-house fulfillment

It’s a good exercise to make sure you’re on top of all aspects of your fulfillment while you have the time to do it
Cheaper at the outset, and requires minimal investment to start
Allows you to personally oversee how your products and packaging are being treated

Cons of in-house fulfillment

Additional costs over time, including:
- Buying supplies such as tape, etc.
- Paying for extra liability insurance
- Doing occasional or regular pest control, especially if you’re dealing with food
- Cleaning the space and keeping it functional in every way
- Buying floor mats
- Air conditioning (packing spaces can get pretty dusty and unhealthy)
- Anything else that pops up… something always does
Having to hire, train, and pay additional employees
Additional administrative paperwork
Spending extra time on inventory management
Very hard to scale once you reach a certain point, especially when it comes to quality control on an individual box basis

As you might see, subscription box fulfillment requires a high level of planning, effort, coordination and in a way, creativity. Knowing this, one has to be sure that outsourcing is the smart move needed to keep the business going and growing.

However, outsourcing is a matter of responsibility.

An enormous responsibility will lie on the shoulders of your fulfillment partner if you choose to outsource. Ensuring an outstanding customer experience is the pillar of every subscription business (and any service, really).

What will eventually distinguish you from your sea of competitors is how well your business serves people. A proper fulfillment process will surely influence this, so it matters greatly who will do that job.

Keep this in mind when the time comes to choose your fulfillment partner.

Outsourcing is often done to ensure better service and easier operations, but in order to make a choice, we must first understand what is being offered, right?

It’s important to know that different companies offer different service packages and conditions. For now, let’s say that your choice is a full-service fulfillment company, so you could enjoy yourself, sip margaritas and brainstorm all day (every business owner’s dream).

Jokes aside, you can generally expect to receive everything you need as part of a complete fulfillment process from a full-service firm:

Receiving the products
Storing inventory safely
Packing of subscription boxes/packages
Handing the boxes to shippers/carriers
Dealing with inventory management
Emailing your customers that their subscription box is in transit
Additionally: handling the credit-card processing, updating inventory, reordering, sending of notices, dealing with returns or damages.

Just a mere glance at all these services makes it clear how much responsibility outsourced fulfillment companies have to take on. But don’t worry, this guide will provide a detailed rundown of the pros and cons, so you can make the decision easily.

Imagine that you never have to think about where and how to store the received products. Can we hear a sigh of relief?

We know what you may be thinking: I just started this subscription business, I don’t really have that many subscription boxes.

But listen, you may only sell a few subscription boxes a month now, but that (hopefully) won’t last forever! Your business will soon grow, especially if you stick with Subbly. In no time, you’ll turn your business around and rather than have a couple of packages, there’ll be hundreds.

That increasing number of boxes will require more and more time, staff, and resources. Luckily, outsourcing your fulfillment solves more than one problem.

At a single expense, you’ll cover all your fulfillment needs. When the fulfillment is outsourced, you’re paying for an entire service and do not have to think much about it afterwards.

When you’re negotiating with vendors, the cost is generally calculated per individual subscription box and then scaled up as your subscriber count increases, often with discounts the higher your volume. Simple as that – the costs of their employees, additional resources, and service is included.

Plus, there’s another bonus if you’re located far away from the majority of your subscribers!

While it’s nice to have a fulfillment company near you, because of the feeling of having more control and smoother communication, having one near to your subscribers pays off greatly.

A subscription box professional should choose one or multiple fulfillment companies that are nearby (or somewhere in the middle) to the zone(s) where the most of the customers are. Determine where the people addicted to your boxes live and, especially if you’re sending through USPS, get as close to them as you can.

So, the big questions always revolve around one thing – money. But another question remains – who do you want in charge of fulfillment operations?

It comes down to these two factors that every business owner should ask themselves:

Can I afford it, and will it pay off to hire a new team and do the fulfillment in-house, with regard to the stage of my business? Or…
Can I afford it, and will it pay off to outsource the fulfillment to a trusted service, with regard to the stage of my business?

Always keep those two dimensions in mind – can you afford something without risks, and will it pay off? The second one is rather difficult to project… unless you’re a clairvoyant.

However, if you succeed in finding an ideal subscription box fulfillment company, you’ll be able to save time on a massive scale. You have a business to grow, we get that. Think of it this way – do you really have enough time to cover all the ongoing operations, put out all the fires, and use up precious time on fulfillment?

The biggest benefit of outsourcing your subscription box fulfillment might be that it gives you the space and time to focus on things that help you maintain and grow your business.

As a subscription business owner, you have a lot on your mind and even more on your schedule. Finding ways to make everything better and keep everyone happy is not easy. When we say everyone, that includes you – don’t forget about your own happiness.

Above all, the most important point of your business is your customers and their satisfaction with the products and services you provide. Make sure you have enough time to engage with them.

Pros of outsourced fulfillment

An end-to-end solution – covering all tasks and processes related to fulfillment
Save money on employee costs
More time and space to focus on growing your business
Outsourcing to fulfillment professionals may unlock access to better shipping rates
Returns and broken items dealt with on your behalf
Faster shipping, if you choose a fulfillment company near the majority of your subscribers

Cons of outsourced fulfillment

Higher initial cost
Harder to gauge reliability of a company from first glance
Shipping costs, if your fulfillment partner isn’t close to you

When choosing your outsourcing partner, choose a top-quality one. Don’t make this decision too quickly, as it may immensely influence your business.

Take your time to go through all the offers, options, recommendations, and reviews for all of the fulfillment companies that you find or that reach out to you. Remember, the people working there will have direct access and power to your boxes.

Do I have recommendations for this service?
What is their history of work and is it transparent enough?
Do they have any experience working with subscription box services?
How would they deal with quality control, particularly when it comes to broken or otherwise unsatisfactory products?
What is the procedure in the case of returns (including all the insurance related factors too)?
Is the communication flowing nicely, and is everything clear (difficult one to define, but you can determine this from the first couple of talks)?
Are they too expensive and if they are, can this be negotiated?
Where is their fulfillment center located and if it’s not a local service, how can I monitor their work?
Does the price change if we exceed, for example, 100 or 1000 boxes per month?
Will I be consulted if the appearance and dimensions of my boxes’ custom packaging leads to changes in the packing process?
Is their fulfillment center clean and neat?
Do they offer inventory management?
Overall: does this option seem fast, pleasant to work with and reliable?

Understandably, we can’t tell you which option is 100% the best option for you, but this guide should have given you more than enough food for thought to make an educated decision.

Let’s wrap it all up now:

An in-house option gives you the control to monitor and organize all fulfillment operations. On the other hand, it can cost much more than outsourcing and it can distract you from other tasks that’ll grow your business.

Outsourced fulfillment companies free your mind and schedule of many tasks, leaving enough space for growth strategies. On the other hand, it’s not easy to find a reliable outsourcing partner, so make sure you take the time to do the research, taking into account any and all recommendations and reviews.

Consider the costs involved in both options: the stage of your subscription box business, the resources you have and the answer will emerge by itself. It probably already did while you were reading through. And if you’re looking for an all-in-one solution that’ll let you manage everything under one roof, it might be the perfect time to try out Subbly, too – start your 14-day free trial today and see for yourself!

Subscription box fulfillment: in-house and outsourcing options explained

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Subscription box fulfillment options

Fulfillment options