In today's world, where eCommerce and fast delivery are critical to business success, efficiently managing the storage and shipping of products has become a priority and this is where two key approaches come into play: Fulfillment and traditional Logistics, both of which play fundamental roles in the distribution process, but there are significant differences between them that can drastically affect the customer experience and performance of an eCommerce.
In this article, we will explore each of these methods in detail to help you understand their advantages and disadvantages.
What is traditional logistics?
In this type of logistics, the company is responsible for the entire process, from the acquisition of the products to their storage, order preparation and shipping, and sometimes those responsible for this area must maintain and manage the inventory.
What is Fulfillment?
Fulfillment, also known as Fulfillment By Merchant or Outsourced Fulfillment, is a more modern, outsourced approach to product management and delivery. Here, a specialized Fulfillment company takes care of the logistics aspects, i.e. warehousing, inventory management and control, product preparation and shipping, while the business focuses on its core operations.
🚀 Here you will find more information about Fulfillment processes and models.
Traditional logistics VS Fulfillment
Control and customization:
✅ Fulfillment: In this approach, the company cedes logistics control to an external provider, which means that it has less control over specific aspects of the process but more time to implement improvements in other areas or processes of the company.
✅ Traditional Logistics: Here, the company has full control over each stage of the logistics process, allowing for greater customization.
Initial investment:
✅ Fulfillment: Outsourcing fulfillment may require a minimal initial investment, as the company does not need to set up its own logistics infrastructure.
✅ Traditional Logistics: Traditional Logistics can require significant investment to establish and maintain warehouses, equipment and personnel.
Flexibility and scalability:
✅ Fulfillment: By relying on one supplier, companies can scale their operations more quickly and efficiently to meet increased demand or expand into new markets.
✅ Traditional Logistics: Scalability can be slower and more complex due to the need to increase your company's infrastructure and personnel.
Operational complexity:
✅ Fulfillment: Outsourcing fulfillment can simplify a company's logistics operations and allow it to focus on its core business.
✅Traditional logistics: The company must manage every aspect of the logistics process, which can become more complex and demanding as the business grows.
Costs:
Fulfillment: Using a fulfillment provider can result in variable costs, as the company pays for services based on the amount of products shipped and cubic meters your product occupies in the warehouse.
✅Traditional logistics: Although there may be a higher initial investment, logistics can have more stable and predictable costs over the long term.
The choice between Fulfillment and Traditional Logistics will depend on the specific needs and objectives of your
e-Commerce, for example, Traditional Logistics may be suitable for companies with smaller operations and absolute control over the entire process. On the other hand, Fulfillment is an excellent option for those looking to focus on their core business, outsourcing logistics to achieve greater efficiency, flexibility and cost reduction.
