Hybrid fulfillment: an innovative new solution

By Oleg Mikhailenko
Published in Solutions
July 15, 2022
4 min read
Hybrid fulfillment: an innovative new solution

Merchants and fulfillment experts are increasingly urged to find new and better ways to get their products into the hands of their customers. After all, we’re living in a post-Amazon world, where customers demand two-day shipping. Long shipping times or expensive delivery costs kill order conversion like nothing else, so it’s more important than ever to find a speedyl, cost-effective solution. Despite this, we’re living in one of the most uncertain times for shipping and commerce in recent memory, with the war in Ukraine and the ongoing Covid-19 pandemic wreaking havoc on the supply chain.

It can be tricky as a merchant to get and stay on top of this ever-changing landscape. Necessity, however, is the mother of invention, and an interesting new fulfillment model has cropped up that many see as an innovative solution for novel problems. Read on to discover the differences between the traditional fulfillment models and how this new solution differs from the tried-and-true methods of the past.

In-house

In-house fulfillment is exactly what it says on the tin— the merchant themselves handles all aspects of the internet sales/e-commerce fulfillment process without relying on any third-party or dropshipping partners. Many sellers start out this way, especially if they’re making and selling products they’ve designed and manufactured themselves. It can seem easy to devote a small portion of your house or office space to the packing and labeling of products. As long as one has the space to store mailing envelopes or boxes, shipping labels, and any other necessary items, anyone can do it. However, in-house distribution and shipping can take up lots of valuable time. Many sellers find that once their business has grown big enough, most of their day is spent packing and shipping goods. Time spent on this can’t be spent on developing new products, improving marketing, or customer service. Merchants are left facing the dilemma of whether to hire additional staff to pack their goods at no small expense, or outsourcing to third-party warehousing and storage companies. However, the control an e-commerce company has over their orders is almost complete using this method. The only thing out of your hands is the occasional interruption in inventory, shipping supplies, or delivery, making this an especially customer-friendly fulfillment strategy.

Third-party

When a merchant hands off their orders to a third party company, it often means the seller initially was doing the work themselves, but their business has grown to such a degree that continuing to fulfill all orders single-handedly has become unsustainable. Instead of building your own distribution infrastructure, which can be time-consuming and expensive in its own right, you might eventually choose to bring in someone else. Each and every third-party distribution company is different, and many offer perks such as packing services, temperature control, or prep for FBA orders. These companies also often have their own dedicated online ecommerce fulfillment warehouses. It’s important to research these companies beforehand, though— customers may be unaware that you don’t handle distribution yourself, and can misdirect their frustration with the delivery process onto your business, when in actuality it was completely out of your control. For this reason, it’s paramount that you fully research any third-party distributors before committing long-term.

Dropshipping

Dropshipping is an incredibly popular omnichannel fulfillment strategy for new and veteran sellers alike. Like with third-party, there’s no need for a seller to develop their own e-commerce fulfillment system from scratch. Unlike third-party, however, the merchant never even lays hands on the products being sold. Instead, requests from your online storefront are routed directly to a wholesale manufacturer, which handles everything from product development to packing to shipping the product directly to your customer. To grow and expand your business, all that’s needed is to scale your marketing efforts and add new products to your shop. Your dropshipping partner takes care of everything else. However, you have to vet your partners carefully. If they deliver too slowly, or provide poor-quality or even the wrong products, all the heat from your customers will fall back on you instead. As mentioned before, customers are seldom well-informed about distribution strategies and whether something is or isn’t entirely your fault. All they care about is their overall satisfaction.

Hybrid fulfillment

There are several ways these three classic ecommerce fulfillment models can be mixed and matched in ecommerce fulfillment meaning there’s multiple ways you can go about getting your orders into the hands of your customers. Everything can be customized to support your unique business needs. For example, you could use different fulfillment models for different SKUs. Perhaps, for example, you produce a certain subset of products yourself, leading you to in-house fulfillment for that particular group, but everything else is ordered from a manufacturer and therefore needs a 3PL. You also have the option of using multiple fulfillment methods for the same set of SKUs, or overlapping ones. Communication in this case needs to be crystal clear so each one of your partners understands exactly what they’re responsible for.

Benefits of the hybrid model

Of all the types of fulfillment models, hybrid fulfillment offers the maximum in flexibility, durability, and speed. If you’re experiencing a huge business boom in the fourth quarter, maybe for Black Friday or just before Christmas, and one of your fulfillment channels is struggling, it’s a snap to switch the overload to another method so you can keep pumping out orders. Although this tactic is a bit more complex than others, and can be inconsistent if not applied properly to the situation at hand, there are uncountable cases where it works out to be the best possible solution.

In conclusion

Bearing in mind the pros and cons of each of these strategies, take a moment to think about the size of your brand and your product distribution needs. Do you have the time and energy required to do everything in-house, or is dropshipping more your speed? No matter what, P2Pseller is proud to partner with you to make sure each and every order reaches your customer as quickly and efficiently as possible, all through leveraging the power of the shared economy.


Tags

#fulfillment#hybridmodel#ecommerce#solutions
Previous Article
Time in transit and other important shipping metrics

Oleg Mikhailenko

Co-Founder, CEO P2Pseller

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