Why some e-shops prefer to keep their logistics in-house and why we think they can change their mind.
First of all, we are not fully independent on the matter. Prime Penguin is made for logistics outsourcing and our vision and goal is to make it as easy and as naturally as possible for e-shops to outsource their logistics. But, on the other side, we also talk to many e-shops about the topic and therefore hear a lot of arguments for why they sometimes prefer an in-house solution, which is interesting.
In this short article, we will present those “arguments” and share our thought about why they are worth a second thought.
Typical arguments for in-house logistics (as heard from the e-shops themselves):
“We are three hardworking founders of this e-shop, who all put more than 12 hours per day into the business, so there is time for us to handle the logistics in-house, also at a free cost.”
“We believe in the quality of service, provided by 3PL companies, but we can’t really buy into the price tag of its services, which is higher than the hourly paid salary to our employees.”
“Efficient and well-working logistics is super important for our overall success and should, therefore, be considered as one of our core operations. Therefore, we need full control which we probably would lose if we outsource it.”
Okay, let’s start with the fact that there obviously is a cost involved for external logistics. That is of course perfectly true and this total amount should honestly be compared with the total cost of an in-house solution.
What is important though, is to be totally honest to yourself and involve all costs in this comparison. One concrete example is that you (as a business owner) should set a relevant price on your own time which you are putting into the logistics handling, as you actually work for your company. This price should be in line with your salary, or set to the same price as if it was done by an hourly paid employee or consultant.
Regarding the price tag: There is a very positive factor involved in the 3PL pricing which simply expressed is that “you pay for what you get”. Mainly not in the sense that you pay more for a high-end solution but more that you only pay for work that actually has been done. The reversed example can be found in an in-house logistics set up with a cost of employees, even if there are no logistics operations ATM.
The fear of losing control of physical orders and warehousing activities is of course also understandable. This is a classic outsourcing dilemma, where you basically have the feeling of losing control when not handling operations in-house. This is fully understandable and it is also one of the big reasons why we developed the Prime Penguin cloud-based platform, for a total overview of your outsourced e-commerce logistics.
Interested in outsourcing your e-commerce logistics? Simply start with Prime Penguin today!