Product delivery is a fundamental part of doing an online-selling business. Many merchants manage their own dropshipping warehouse, while some others choose to outsource warehouse-related work. Below is the comparison between the two options: to own a warehouse or to outsource?
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1. Dropshipping warehouse
In dropshipping, merchants have to do nothing with inventory and warehouse management. When an order is placed, the merchants forward the order information to their dropshipping warehouse, then the warehouse picks, packs, and ships the order directly to end customers.
ADVANTAGES:
- Low initial investment and no overhead costs
- No need for warehouse ownership and management
- Shortened order processing time (because products are delivered directly from its source to end customers)
DISADVANTAGES:
- Too reliant on warehouses
- Less control over order fulfillment and product quality
- Less profit
2. Renting/owning a warehouse
Merchants can control product fulfillment by themselves via renting or owning a dropshipping warehouse, but this option also comes with costs. They have to put in more money to hire people to work for them, manage inventory, and machinery.
ADVANTAGES:
- More control over product fulfillment (stocking, packing, shipping)
- Shortened order processing time (Merchants have their own warehouse supplied for themselves only, while other warehouses can supply for many merchants at once)
DISADVANTAGES:
A lot of money and efforts required for:
- Renting ground, buying machinery, employing people
- Managing the supply
- Supervising and managing warehouses
- Negotiating with the transport company
3. Using fulfillment service
If merchants don’t prefer to manage inventory by themselves, they can use fulfillment service. Fulfillment service providers can help merchants manage human resources, handle warehouse-related work, and work with transport companies.
ADVANTAGES:
- Full warehouse services are guaranteed without labor costs and ground rent.
- Warehouse-related work done without having managerial expertise.
DISADVANTAGES:
- Supply management required
- Less control over product fulfillment (product picking, packing, and shipping)
