Partially Outsourcing Fulfillment: A Smart Move or Strategic Mistake?

Anyone who’s seen a horror movie knows the classic mistake: splitting up. In ecommerce, partially outsourced fulfillment sometimes gets the same treatment. Managing part of your fulfillment in-house while outsourcing the rest can sound like you’re asking for trouble – more complexity, more risk, more things to manage.

But unlike a horror flick, splitting up doesn’t always lead to disaster.

In this article, we’ll break down what partially outsourced fulfillment actually looks like, when it makes strategic sense, and how fast-growing brands can make it work without losing control.

What Is Partially Outsourced Fulfillment?

Partially outsourced fulfillment is a hybrid logistics model where a brand splits its order fulfillment responsibilities between internal teams and a third-party logistics (3PL) provider. Rather than handing off 100% of inventory and shipping to a 3PL, the brand retains control over part of the process, typically by fulfilling select SKUs, order types, or regions in-house while outsourcing the rest.

For example, a brand might handle high-touch orders like influencer kits or local deliveries internally while outsourcing everyday DTC orders to a 3PL. Or they might use a 3PL for U.S. orders while keeping Canadian fulfillment in-house.

This setup gives ecommerce businesses more control and flexibility – but it also adds operational complexity. The challenge lies in making sure both fulfillment channels stay tightly coordinated so inventory visibility, shipping SLAs, and customer experience don’t suffer.

When Partially Outsourcing Fulfillment Makes Sense

Rapidly growing online stores benefit from the simplicity of having all of their supply chain communications and controls under one roof. However, there are situations where splitting fulfillment may make more sense.

Let's explore these circumstances in detail:

Managing Seasonal Fluctuations

Partial outsourcing makes it possible for a retailer to maintain control over core inventory management while leveraging a 3PL's resources to handle overflow during critical high-volume periods. That comes in handy when seasonal fluctuations require temporary increases in fulfillment capacity. 

For example, a holiday decoration retailer might have a surge plan in place with their 3PL to meet demand between October and December. They wouldn’t necessarily be handing all of their inventory over yet would benefit from peace of mind and cost savings.

The alternative – acquiring warehouse space and staff – requires much greater time and monetary investment. 

Entering New Markets at a Lower Cost

Companies looking to test new markets without committing to long-term infrastructure investments can use partial outsourcing as a low-risk entry strategy. Consider an American apparel brand exploring expansion into the European market. Rather than establishing their own European distribution center – a multi-million dollar commitment – they might maintain their U.S. fulfillment in-house while partnering with a European 3PL to handle orders from the new market. 

Such an arrangement would allow them to test demand, gather data on regional preferences, and establish a presence without overpaying for shipping from a fulfillment center in the U.S. vs. a fulfillment center abroad. If the market proves viable, they could then make informed decisions about establishing their own infrastructure.

Protecting High-Value or Sensitive Products

A hybrid approach ensures maximum security and quality control for valuable inventory while achieving cost efficiencies for standard items. Similarly, companies with proprietary technology or products requiring specialized knowledge often keep these items in-house while outsourcing more generic inventory.

Take a luxury watch retailer, for instance. It might decide to keep premium timepieces (items worth $5,000+) in a highly secure in-house facility with specialized handling protocols while partnering with a 3PL to manage its more mainstream accessories and watch bands. 

Diversifying Risk

For brands looking to build a more resilient operation, partially outsourcing fulfillment can help reduce dependence on any one facility or region. For example, a health supplements company might divide inventory between an East Coast self-operated facility, a West Coast 3PL, and a Midwest fulfillment partner so that when regional disruptions – whether from natural disasters, labor disputes, or local regulations – occur, orders can still flow from unaffected locations. 

Advantages and Disadvantages of Partially Outsourcing Fulfillment

There are arguments to be made for and against splitting fulfillment operations. The situations we just went through are mere examples – it's possible you have an entirely different challenge to solve or a combination of several. With that in mind, we recommend making things easier by taking a step back to assess the pros and cons on an individual basis.

Fulfill More Orders Faster

Distributing your inventory across multiple fulfillment centers – whether self-operated or through third-party partners – allows you to process and ship orders from locations closer to your customers. This strategic positioning dramatically reduces transit times and shipping costs while enabling same-day or next-day delivery options that were previously impossible with a single warehouse.

Studies consistently show that faster delivery correlates directly with higher customer satisfaction rates and increased repeat purchases. By strategically splitting fulfillment operations, businesses can effectively expand their geographical reach without the capital expenditure required to build out entirely new self-operated facilities in each region.

Agility as a Competitive Edge

Maintaining a diversified fulfillment strategy serves as a competitive edge of sorts – an insurance policy that pays off if and when competitiors can’t maintain their own service quality during disruptions. 

Redundancy proved especially valuable during the COVID-19 pandemic. Businesses with diversified fulfillment networks could maintain operations while those reliant on single fulfillment centers and warehouses often faced complete shutdowns. Building supply chain resilience means being able to preserve existing customer relationships and potentially create new ones by filling gaps made by industry-wide slowdowns.

Access Outside Expertise

Partnering with specialized third-party logistics providers gives businesses access to operational knowledge and industry insights that would take years to develop internally. Established 3PLs bring decades of experience optimizing warehouse layouts, implementing efficient picking methodologies, and negotiating favorable carrier rates – all things that immediately benefit your operation.

Beyond the tangible infrastructure, the strategic guidance offered by seasoned logistics professionals can help identify operational inefficiencies and growth opportunities that might otherwise go unnoticed. Knowledge transfer has the potential to extend beyond fulfillment, influencing broader supply chain decisions that improve overall business performance. For instance, a 3PL is in the right position to recommend specific or custom shipping box sizes for savings on dimensional weight-based shipping. 

You May Lose Control/Visibility

When outsourcing any portion of your fulfillment operations, you inevitably surrender a degree of direct oversight that comes with managing processes in-house. Some business owners fear a reduction in visibility because it can make maintaining consistent quality standards across all fulfillment channels a challenge. Issues like incorrect packing, delayed shipments, or inventory discrepancies may take longer to identify and address when occurring at a third-party facility.

While modern 3PLs typically provide robust reporting systems, the granularity and immediacy of information often fall short of what's available in self-operated facilities where you control the technology stack.

Not All Partners Are Made Equal

3PLs are great, in theory. Service providers, on the other hand, aren't one and the same. There's variation to be noted from the perspectives of both service quality and scope. Even established 3PLs with impressive client rosters may have specific limitations in handling certain product types, managing seasonal volume spikes, or servicing particular geographical regions.

Meanwhile, selecting a suboptimal partner can lead to performance issues that directly impact your customer experience and operational costs. You'll need to put time and effort into finding the best 3PL for your specific needs.

Splitting Inventory Is Complicated

Distributing inventory across multiple fulfillment locations introduces substantial complexity to inventory management and forecasting. Deciding which products to store at which locations requires sophisticated analysis of order patterns, regional demand variations, and shipping costs – calculations that become exponentially more complex with each additional SKU and fulfillment location.

Synchronizing inventory data across multiple systems presents another significant hurdle, as discrepancies between platforms can lead to overselling, stockouts, or fulfillment delays. When inventory issues inevitably arise, troubleshooting becomes more difficult as you must coordinate between multiple partners or locations to trace the source of errors.

So, Should You Split Fulfillment?

Deciding to implement a split fulfillment system is tricky because it only works in certain case scenarios. You'll need to be realistic by thoroughly considering the following factors before making this move. Doing so can mean the difference between well-optimized logistics and backend operations that end up hurting growth rather than helping it.

It really comes down to this:

The benefits of working with a 3PL can apply in both fully outsourced and partially outsourced fulfillment operations. Only the latter case means having to put more attention towards coordinating between internal and external teams. Is that something you can do? Is it something your 3PL of choice is agile and communicative enough to make work?

Partially Outsourcing Fulfillment? It’s Possible with Shipfusion.

Get all of the advantages of partially outsourcing fulfillment and none of the drawbacks with Shipfusion as your 3PL. We quite literally fulfill expectations in every domain. Whether it’s splitting inventory in multiple locations across the country or arranging special warehouse projects to accommodate gift boxes, our network of North American facilities can do it all at an industry-leading 99.9% accuracy rate. Dedicated Account Managers act as on-the-ground problem-solvers, ready to tackle surprises before they turn into problems.

Stop worrying about problems and start thinking about solutions by contacting Shipfusion to request a free consultation today.