The Great Fulfillment Debate: Keep It In-House or Outsource?

The biggest pro of in-house fulfillment is also its biggest risk: Total Control.

By managing fulfillment in-house, you have complete say in how you store and manage your inventory, pack orders, and the speed in which you get packages out the door. If there is a problem with a product or process, you can lay eyes on it immediately and problem-solve in real time.

However, with total control comes total responsibility. By managing fulfillment in-house, you’re responsible for the cost of renting and outfitting warehouse space, navigating tech issues, and overseeing more full-time employees. When you start to scale into more retailers or product categories, it’s all on you to become an expert in compliance, carrier requirements, and routing guides.

For young or niche brands, this may be a fair trade-off. But as with any decision, it helps to map out the upsides and the drawbacks, so let’s break down the key pros, cons, and hidden costs you should keep in mind:

• Control and visibility: You oversee every order from start to finish, which means you can quickly spot and fix issues like mis-picks or damaged packaging. This level of control is appealing if you want to closely monitor quality and inventory.

• Custom experiences: Managing fulfillment yourself makes it easier to create memorable touches from ultra-branded and luxury unboxing experiences to including personalized notes. While some 3PLs offer high-touch services, many don’t. For brands where unboxing is part of the customer experience, this level of customization can help strengthen loyalty.

• Flexibility: If you need to make a same-day change like swapping inserts or updating SKUs after a last-minute promotion, your team can pivot immediately without waiting for a partner’s approval or timeline.

• No reliance on outside systems: All operations run on your own software and processes.This independence can feel safer for brands that want to avoid adapting to a third party’s tech or workflows.

• High overhead: Renting warehouse space, hiring staff, and investing in equipment requires significant upfront spend. These costs can be hard to justify if sales dip unexpectedly or orders fluctuate drastically month to month.
• Scalability challenges: Seasonal surges or sudden growth often overwhelm small in-house teams. Without backup labor or extra space, service levels can slip, negatively affecting the customer experience.
• Fixed costs: Unlike outsourcing, overhead stays the same regardless of sales. Even during slower months, you are paying for space, salaries, and systems that may be underutilized.
• Leadership distraction: Founders and managers often end up focused on solving shipping or staffing problems. That pulls time and focus away from marketing, product development, and customer acquisition.

• If you’re an emerging or small brand selling less than 500 DTC orders per month.

• If you require highly personalized and branded unboxing experiences

• If your brand is regionally focused

• If you sell personalized or customized products

• If you run a drop ship or pre-order model

Outsourcing fulfillment is a lesson in give and take.

What you lose with direct control, you gain with bandwidth to focus on growth. What you gain with on-demand scalability, you could lose with quality.

Outsourcing fulfillment to a 3PL shifts the weight of warehouses, labor, and logistics tech off your shoulders and onto a partner built to handle them. And instead of worrying about how to scale, you’re able to tap into existing infrastructure, expertise, and systems that flex as your brand grows.

This makes outsourced fulfillment especially attractive for brands reaching new milestones, adding SKUs, or stepping into wholesale and omnichannel. But it does mean that quality and oversight has an increased risk of falling by the wayside.

Just like with in-house, there are tradeoffs, so let’s look at the main pros, cons, and growth benefits:

• Variable costs: With a 3PL, you only pay for what you use. Need FBA prep or kitting one month but not the next? A provider charges for that one-off service without you having to staff and maintain it in-house year-round.
  
  

• Scale on demand: Easily adjust space, labor, and shipping to match demand, from holiday spikes to slower months, without extra staff or unused warehouse costs.
  
  

• Advanced tech: Most 3PLs offer real-time inventory visibility, automated tracking, and integrations with major platforms. You get enterprise-grade tools without heavy upfront investment.
  
  

• Faster reach: Multi-warehouse networks ship from the closest location, turning a five-day delivery into two. Even using one centralized warehouse location can speed up delivery time with access to cheaper, faster services than a brand could get on their own. That helps you compete with the “fast shipping” expectations set by Amazon.
  
  

• Focus on growth: With logistics off your plate, internal teams can double down on marketing, customer engagement, and product expansion instead of packing boxes.

• Less direct control: Packaging and processes are managed by your partner. While many 3PLs offer customization, it is not the same as having your team on-site. Getting to the root of a problem can take significantly longer when you’re not on the ground to address the issue in person.
  
  

• Service mismatches: Not every provider delivers the same SLA performance. Even the speed and service promised on paper may be backed up by so many loopholes that those “promises” rarely see the light of day, all while your hands are tied. This is why through vetting is so crucial.
  
  

• Potential hidden fees: If it looks too good to be true, it probably is. Some 3PLs hope to sway brands with low pick, pack, and ship fees because they can rely on sneaky penalties and confusing fees to make up the difference. Without transparent pricing, you’ll have a harder time budgeting expenses, and could see costs balloon over time.
  
  

• Switching complexity: Transitioning from in-house fulfillment to a 3PL takes time, planning, and overlap. It is not a flip of a switch.
  

• If you’re selling more than 500 DTC orders per month

• If you’re experiencing or anticipating rapid growth or SKU expansion.

• If you’re hoping to expand into wholesale, retail or international channels.

• If you have products with hazardous/dangerous goods classifications