Self fulfillment vs. marketplace fulfillment: which is best?

Marketplace fulfilment tends to offer more advantages than drawbacks, while self fulfilment brings more challenges. Neither option is automatically better. Marketplace fulfilment is the hands off route where the platform stores, picks, packs, ships and returns your orders, which suits sellers with steady volume who want to focus elsewhere. Self fulfilment keeps everything in your own hands, which suits small or starting sellers and larger brands that want full control over packaging and experience.

Great order fulfilment is critical in ecommerce. Customers want their order quickly and they want it for free, and if they do not get it, they shop elsewhere. Marketplaces also expect their sellers to deliver the best possible fulfilment experience: send orders out fast, package them well and deliver on time. You have a choice in how you achieve this. You can let the marketplace handle it, or you can do it yourself.

What is marketplace fulfilment?

Marketplace fulfilment is when the platform you sell on handles your order fulfilment process for you. The marketplace warehouses your stock, picks it, packages it, ships it out and takes care of any returns. Some marketplaces, such as Amazon, will even handle the customer service tied to those orders. All you have to do is send your products to the marketplace warehouse.

What is self fulfilment?

Self fulfilment, also called in house fulfilment, is when you take care of the entire order process yourself from start to finish. You handle warehousing or storage, inventory management, order processing, packaging, picking and packing, shipping on time, customer questions and complaints, and returns. When you are small enough, you can run self fulfilment from your own home or another space. Once your business grows, you will need to invest in a warehouse.

This choice has a significant impact on your business, so it pays to choose carefully. Here are the pros and cons of each option.

Marketplace fulfilment pros

Marketplace fulfilment is the easiest, most hands off way to ship orders, and it comes with real strategic perks. It can unlock international reach, build customer trust, keep you within strict platform standards and even win you better visibility. These are the main upsides.

It is easy

If you want the easiest, hands off fulfilment method, marketplace fulfilment is the way to go. All you do is bundle your items according to the marketplace specifications and ship them off. Once the marketplace accepts your stock, your work is done. There is far less day to day stress involved.

Cross border access

With marketplace fulfilment you can sell wherever the marketplace operates, or wherever it works with international partners. This opens the door to international commerce without extra fees, paperwork or expansion investments. You reach more buyers without building the logistics yourself.

Customer trust

When buyers choose between an item fulfilled directly by the marketplace and one fulfilled by a third party seller, they are more likely to pick the marketplace. Marketplace fulfilment acts as a stamp of approval and is a great way to build trust with consumers. That trust can translate directly into more sales.

Marketplace standards

Can you always ship products out within one or two business days? Marketplaces maintain high standards for fulfilment, shipping, customer service and returns. Using the marketplace fulfilment service guarantees that you meet those standards automatically. Any issues with late shipments, delayed delivery or lost items are no longer your concern.

Seller benefits

Marketplaces tend to favour sellers who use their fulfilment services. Sometimes that simply means better product visibility. Typical perks also include commission discounts, free ads or promotion services, all of which can give your listings an edge.

Customer service

Marketplace fulfilment services usually include some form of customer service, and this is an area that heavily affects your seller ranking, so it needs to be done right. Some marketplaces, such as Amazon, take care of all customer service related to your fulfilled orders. Once customer inquiries start to pick up, this can save you many hours.

Returns logistics

Handling returns correctly is essential for ecommerce success. You have to approve, refund and authorise return shipment labels promptly, and then the returned stock needs to be managed correctly. Letting the marketplace fulfilment service take care of this for you is a significant advantage that removes a major operational burden.

Marketplace fulfilment cons

The convenience of marketplace fulfilment comes with trade offs. You become dependent on a platform whose priorities are not your priorities, you take on built in costs that may not always pay off, and you give up control over packaging. These are the main downsides to weigh.

Dependence

If the marketplace changes its terms and conditions, you are the one who takes the hit. When Covid 19 hit, Amazon altered its fulfilment service terms and prioritised baby, health, household, beauty, personal care, grocery, medical and pet supply goods, along with certain scientific and industrial products. Other sellers were out of luck. Because of its labour conditions, Amazon also faced regional warehouse shutdowns and changed its inventory limits right before Prime Day, drastically reducing what sellers could send in. Some went from a 6,500 unit allowance to a 1,500 unit limit, leaving fulfilment by Amazon sellers with thousands of units they could not send in. Remember that you are not the customer. The marketplace benefits from you selling there, but your business is not its primary concern. Amazon's goal is to maximise its own platform sales.

High cost

Marketplace fulfilment brings built in costs that may not be worth it for you. You may pay a subscription to use the service, and there can be inventory management, storage, restocking, relabelling and disposal fees. On top of that, if your inventory does not sell fast enough, the marketplace can charge you penalties.

Packaging restrictions

It is great to have your picking and packing taken care of, but it comes with restrictions. First, it removes the option for branded shipment packaging. You can still design the packaging of the product itself, but anything shipment related will carry the marketplace signature. You may also be restricted on product dimensions or weight, or prevented from selling perishable goods.

Self fulfilment pros

Self fulfilment puts you in charge. For small or starting sellers it is easy to begin and cheap to run, and for established brands it protects the experience, from branded packaging to full control over how orders are handled. These are the main reasons to keep fulfilment in house.

Easy to start with

All you need to do is pack and ship orders as they come in. Marketplaces require you to carefully package your inventory to their standards and then bulk ship it to them, which can get pricey. If you do not meet their prep guidelines, they can refuse your stock, block you as a seller or dispose of your inventory. So if you are selling only a few products, self fulfilment might be the better fit.

Low initial investment

Marketplaces charge storage fees, seller fulfilment plan fees and other add on costs. You can avoid these with self fulfilment, especially if you sell only a few items and can store them at home or elsewhere. In that case, all you need to worry about is your packaging and shipping costs.

Package branding

Branding your packaging is one of the best ways to create a memorable customer experience, and when you fulfil in house you can get as creative as you want. This is something you miss out on when a marketplace fulfils your items. Product packaging matters: at least 40 percent of shoppers are more likely to repurchase from brands with premium packaging. If you want to give customers a great first impression, create share worthy unboxing moments. Packaging that is sustainable, minimalistic, story driven and engaging in its own right works well too.

Total control

Self fulfilment gives you ultimate control. If you want to uphold your own standards over warehousing, packaging and shipping, including sustainable options, this route is for you. It is an excellent option for larger professional sellers, especially those with a brand to protect.

Self fulfilment cons

Keeping fulfilment in house means the work, cost and pressure all land on you. It is manageable at small volumes but stacks up fast as you grow, it gets expensive, and it is harder to scale or reach distant customers. These are the main challenges to plan for.

More work and time

It is easy to ship a handful of products and manage it yourself, but once you are doing serious numbers the work stacks up quickly. You have to store your products or deal with warehousing, manage stock levels, package items, bundle orders for shipping, handle customer service and process returns. It is all on you. And vacations? Forget it. Your ecommerce customers own your time now.

Gets expensive fast

Anything beyond picking and packing a small number of orders gets expensive. Packaging material costs money, and shipping orders yourself is costly if you do not qualify for bulk shipping discounts. You also need shipping insurance to cover your products. Once you can no longer store items at your place, you have to invest in warehousing, storage or a full fledged fulfilment and distribution centre of your own. On top of that, you need software and tools such as stock and inventory management software, barcode scanning solutions, warehouse software and shipping software.

More pressure

Marketplaces have high standards, and with self fulfilment you are solely responsible for meeting them. No matter when or where a customer orders, your job is to get their products out within the marketplace timeframe. If you fall short or make picking mistakes, you face the consequences. If you go the self fulfilment route, make sure you can sustain the work involved. A central tool like e-tailize can help you keep an eye on everything happening across your marketplaces.

Harder to scale

More sales can mean more problems. You cannot simply run a new marketing campaign without doing the prep work to scale your self fulfilment infrastructure. And if sales slump, you are still responsible for maintaining that setup. This makes one off campaigns or viral moments harder to handle, and it complicates life when sales are not consistent year round, such as with seasonal items. With self fulfilment you need to do intensive sales forecasting and prepare your backend infrastructure in advance.

Limits on reach

Your inventory has to reach customers within a specific timeframe. If your stock sits in only one location, delivering orders outside your shipping zone can be challenging. International sales bring their own complications, and even if you do not list on global markets, you still need to prepare for the occasional foreign purchase.

Which fulfilment option should you choose?

Marketplace fulfilment carries a few more advantages than drawbacks, while self fulfilment brings more challenges, but that does not make one universally better. Both options carry risk. The right choice depends on the stage and shape of your ecommerce operation right now.

Self fulfilment may be right when:

• You are just starting out with a few sales
• You are only testing the waters
• You want to learn the fulfilment process in depth
• You run large scale operations and want to retain full control, security and brand consistency

Marketplace fulfilment may be the right option when:

• You want to put your energy elsewhere
• You have regular and stable sales
• You sell across several marketplaces and can spread the risk

Whichever route you choose, e-tailize helps you manage it from one central place. It can be your hub for extended data analysis, operational visibility, streamlined control and customer insights, whether your self fulfilment is automatic or manual. If you would rather outsource fulfilment, get in touch to explore your options with us.