Hybrid Fulfillment: A answer for quick, Flexible Growth

You’ve probably heard of hybrid cars and hybrid work, but are you familiar with hybrid fulfillment? The principle is much the same: merge different things to try and get the best of both worlds. 

Order fulfillment is one of the most complicated, resource-intensive parts of ecommerce. And it’s not just a battle for recent businesses either. Fulfillment is one of the aspects of managing an online store that becomes more challenging as you scale. Any edge you can provide yourself can make a massive difference to you and your customers.

Here’s a breakdown of exactly what hybrid fulfillment entails and how it can assist you develop your business.

What is hybrid fulfillment?

Hybrid fulfillment is a logistics way that combines multiple methods, such as in-house warehousing and third-event logistics (3PL), to meet customer demands efficiently. This way allows businesses to debt the strengths of each way, optimizing inventory management and reducing shipping times. Implementing hybrid fulfillment can enhance flexibility and scalability, catering to diverse customer needs in ecommerce.

While it might seem like a no-brainer, this is still a rare way. Businesses often turn to outsourced fulfillment as a means of freeing themselves from the property of period and resources required of self-fulfilling. They don’t desire to have to ponder about fulfillment, focusing instead on other impactful parts of running their business, like marketing and customer back. Hybrid fulfillment does require a higher level of period and attempt in planning and maintenance than outsourcing to a single fulfillment associate, but the upside may be worth that property. 

We’ll explore more of the pros and cons of hybrid fulfillment below.

Types of fulfillment

In-house or self-fulfillment

In-house or self-fulfillment is when a business fulfills their own orders from commence to complete. This means storing inventory, picking and packing it as an order comes in, buying and printing shipping labels, and either delivering these orders or bringing them to a carrier for delivery. 

This is how most businesses commence fulfilling ecommerce orders. When you only have a few purchases each day, it usually makes sense to own the fulfillment procedure. It’s cheaper to self-fulfill a tiny number of orders, and you maintain packed control over your inventory. 

But as your order numbers develop, in-house fulfillment can quickly eat up more and more resources. You may require to pay hefty costs to rent warehousing space to store your inventory and to pay employees to undertake all of the picking and packing. And you’ll likely invest a ton of period into the procedure, dealing with everything from buying materials to managing returns. Most businesses reach a point as they scale when outsourcing just makes sense. 

Third-event fulfillment

Outsourcing fulfillment to a third-event logistics business (3PL) can free you from the burden of storing inventory, picking, packing, and shipping orders, and dealing with returns. It’s a quick way to regain period and resources that you can use to develop other parts of your business. Of course, outsourcing comes at a expense, but so does self-fulfilling. 

There are a number of advantages to using a 3PL beyond simply not having to do the work.

• Lower shipping costs. As a high-volume shipper, a 3PL typically will discuss preferable rates from carriers, funds that are passed on to you and your customers. This could also allow you to ship to more cities, states, and countries—maybe even the entire globe!

• Faster shipping speeds. Speed is significant when it comes to keeping buyers joyful. Thankfully, 3PLs receive advantage of modern technology, highly trained teams, and powerful carrier relationships to ship your orders much faster than you would typically be able to do yourself. A supportive 3PL will also distribute your inventory across its warehouse locations, bringing your inventory closer to your buyers to speed up delivery period.

• Transparent, accurate shipping times. For your customers, knowing exactly when an item will be delivered might just be the extra push they require to click that Buy button. When you’re fulfilling your own orders, you may be impacted by holidays, staff shortages, and more. But your 3PL will never receive a day off, and it’s bound by the terms of your service-level agreement. So, having a fulfillment associate allows you to provide your buyers with accurate shipping times at checkout. 

All these advantages should assist you attract more customers and keep them joyful. 

And if you use Shopify Fulfillment Network, an complete-to-complete logistics answer built specifically for Shopify merchants, you have the added bonus of being able to track everything directly from within your Shopify store. This makes it straightforward to get started and straightforward to pursue orders as they’re delivered. It’s challenging not to like that!

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Dropshipping or print-on-demand

Dropshipping has risen massively in popularity in the history decade. Essentially, it entails a complete separation of the supply chain facet of your business from the marketing or sales side. When someone places an order from your store, that order is automatically sent to a supplier, who then packs it up and ships it to the customer. 

The advantage of dropshipping is obvious: you don’t require to invest any money upfront for inventory or worry about anything logistics- or fulfillment-related. The downside is that in not touching any part of logistics, it’s not straightforward to provide standard control or customer back. You’re putting a lot of depend in the supplier. Also, many dropshipping businesses depend on suppliers in Asia or South America, which, if your customers are in Europe or North America, can cruel leisurely shipping times. 

Print on demand takes the dropshipping model to the extreme. Where in dropshipping the inventory typically already exists and is picked and packed when a supplier receives an order, with print-on-demand the inventory isn’t created until that order is placed. A print-on-demand business will manufacture the item when it is purchased and then handle the fulfillment. This way is typically used for clothing businesses or art, but is becoming more wide-reaching, thanks to 3D printing. 

Approaches to hybrid fulfillment

Much like there are a number of different fulfillment methods, there are an exponentially higher number of ways you can mix and match them. How you way hybrid fulfillment should outcome from a comprehensive examination of your business, including your inventory (size, type, SKU count), your economy (location, typical cart size), your finances, and your goals. 

Broadly speaking, here are the main ways you can way hybrid fulfillment:

• Use different fulfillment methods for different SKUs. This is arguably the easiest way to hybrid fulfillment. You and your fulfillment partners have a different set of SKUs that you each fulfill. Maybe you desire to handle fragile or expensive inventory yourself while sending your high-volume, low expense items to a third event. Because you’re each only responsible for a subset of what you sell, it’s a fairly straightforward split of the work. Things can get complicated if a customer’s order includes SKUs being fulfilled in different ways. This can navigator to multiple shipping labels and fees and a fragmented buyer encounter.   

• Use different fulfillment methods for the same set of SKUs. This way comes with a few more challenges. Imagine your business is on the East Coast and you’re working with a fulfillment associate on the West Coast. You each handle shipping for one geographic area in the country. This requires a bit more coordination and organization, but is still a ordinary way to use hybrid fulfillment. The test here is how you address issues or product shortages in one location or through one way. For example, you might discover yourself trying to self-ship across the country, missing your delivery deadlines.  

• Use overlapping fulfillment methods for some SKUs but not for others. Imagine you sell hats through your store. You decide you desire to use one associate to fulfill beanies and another associate to fulfill baseball caps, but you desire both partners to fulfill visors. This way requires a lot of coordination and planning. You require to ensure that the various fulfillment providers can communicate with one another and that the boundaries and priorities dictating who owns what are crystal obvious. Ultimately, there are very few situations where this way is beneficial to you or your customers. 

Just so you recognize, Shopify Fulfillment Network supports all of the above approaches to fulfillment. 

How to choose what inventory to send to fulfillment partners

So how do you decide what inventory to fulfill yourself and what to entrust to a associate? Here are a few factors that should assist you decide.

First, there’s proximity to your buyers. Revisiting that hat business example, if you’re located in Vermont and you use a 3PL based out of Florida, it might make sense for you to fulfill beanies while they tackle visors and baseball caps. This could navigator to faster shipping speeds for both you and your associate. Of course, don’t just assume that more people in colder climates desire more beanies. Use your historic sales data to view whether you can identify patterns in terms of which SKUs are being purchased by customers in what geographic areas. Shopify Fulfillment Network actually does this for you—identifying optimal warehouse locations and distributing your inventory based on previous Shopify sales data.

Second, consider the expense of fulfillment between all approaches. We’re not just talking about the expense of shipping here. What are the secondary costs to consider with each way? Does your 3PL associate fee more for sure types of returns? If you run an apparel business, for example, how expensive is it for your 3PL to restock a returned t-shirt versus a returned wedding dress? 

Other costs might include:

• Charges for large item storage
• Inbounding inventory to their warehouses (if your SKUs transformation seasonally, this can quickly rack up fees)
• Peak periods or high-volume events like flash sales (maybe you only put self-fulfilled items on sale) 

Finally, consider the volume and complexity of each SKU. Do you sell a luxury or high-worth item that only gets purchased once per week? It might be worth self-fulfilling that or even using a dropshipping model if your supplier allows. Meanwhile, you’ll likely desire to outsource fulfillment of that shirt that you sell 100 times each day. And do you have any items that require assembly or some other type of special treatment before shipping? Again, that’s probably something you desire to do yourself. Generally speaking, the simpler the item is to pick and pack, the better suited it is for outsourced fulfillment.

The pros of hybrid fulfillment 

Flexibility 

Perhaps the biggest pro of using a hybrid way to fulfillment is the flexibility it brings. In using multiple methods, you’re never locked into a impoverished circumstance. If you’re unable to fulfill orders because your printer breaks or your warehouse is out of distribute, your 3PL or dropshipping partners can still serve many of your customers. If you can’t handle the uptick in orders for Black Friday, you can adjust and shift more responsibility onto a fulfillment associate. 

As your business grows and changes, hybrid fulfillment means you have more open doors to walk through to discover the correct fit. And this flexibility is also reflected in how much you spend. The hybrid way lets you discover the cheapest alternative for each circumstance and each SKU.

Durability

With flexibility comes greater durability—your business’s ability to withstand all the challenges thrown at it to achieve in the long run. With multiple fulfillment methods, you can more easily pivot in response to issues, because you always have a backup schedule. 

Speed

You’re probably not able to afford a bunch of warehouses all over the country or in multiple countries. In partnering with 3PLs, you can widen your network of fulfillment locations. In doing so, you’re able to bring inventory closer to buyers no matter where they are. This proximity leads to faster delivery times—often two days or less—and happier customers.

The cons of hybrid fulfillment 

Complexity

There’s no denying the obvious downside of hybrid fulfillment: complexity. When you’re using multiple methods and multiple partners are involved, each with their own systems and tools, it can be a lot of work just getting everything up and running. You require to ensure that communication is happening at all times, that orders are getting pushed out the door, and that your customers’ questions are being answered. It’s a lot easier to track fulfillment when it’s all happening in one place. With two or three (or more!) methods in the mix, you may feel like you’re investing more period on coordinating everything and tracking down information. 

Inconsistency

When you use different fulfillment methods, they’re not all going to have the exact same act. 

You might self-ship orders slower than your 3PL can. And your dropshipper might receive weeks to ship an item to your customers. And maybe you like to do custom packaging inserts in each box, but your print-on-demand supplier doesn’t back this characteristic. 

This inconsistency isn’t a deal breaker, but it can be a source of frustration for specific-oriented entrepreneurs trying to construct a consistent ecommerce encounter.  

Is hybrid fulfillment correct for you?

If your top priorities are flexibility and speed or you desire to bring in a associate but not hand over complete control, hybrid fulfillment might be exactly what you’re after. Or maybe after reading this you’ve realized that the simpler way using one fulfillment way is better suited to your needs. 

Either way, Shopify Fulfillment Network can assist you discover the perfect mixture of fulfillment methods for your store. We’ll boost your shipping speeds and assist you develop your business, while taking period-consuming order fulfillment off your plate. 

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