Outsourcing vs In-House Logistics: Pros and Cons

Ecommerce businesses and online shopping are commanding more of the market share than ever. Post-pandemic, customers have become used to the convenience of ordering a wide range of products online and having them delivered directly to their door step.

But this increase in online shopping has come with two big problems for business owners. There is now a lot more competition with stores across the globe, and as sales grow warehouse management, shipping costs, and storage needs just keep increasing.

As a result, many businesses have turned to third party logistics providers to help them manage their logistics operations, improve shipping, and increase customer satisfaction levels.

To remain competitive, you need to be able to keep your shipping costs down and delivery times as quick as possible. 3PL logistics can help you make cost savings across the board when it comes to your shipping and inventory management systems – and you can pass these savings onto the customer.

But, is turning to a third party logistics company in Melbourne the best choice for your business? The size of your business, order fulfilment levels, and current budget will all come into play when making your choice.

Below we will take a look at the pros and cons of shipping in-house and outsourcing shipping for your online store.

What Are the Pros and Cons of In-House Shipping for Your Business?

Pros of Keeping Shipping In-House

1. Maintain control of your supply chain management.

Using a 3PL warehousing and shipping service means relinquishing control over either all or some elements of your pick and pack process. However, some business owners may feel uncomfortable with trusting this important aspect of their company to another provider.

However, proper research and due diligence checks can help to alleviate fears and you can find cost effective Melbourne 3PL services which will support your standards of shipping and customer service.

2. Easy In-House Communication

Keeping your fulfilment centre and warehouse space inhouse means that you can share communications and problem solve in real time, without having to wait for a representative to get back to you.

Some business owners may feel more comfortable with involving as few levels of communication as possible and a streamlined inhouse process.

Cons of Shipping Your Products In-House.

1. Increase Costs and Responsibilities

Keeping your warehouse and shipping service in house inevitably means an increase in cost for your business. You need to pay for warehouse space, logistics management software, staff, shipping supplies and transport.

You will also need to make sure that all of your equipment meets health and safety regulations, oversee training of new staff, and that you are compliant with local laws.

2. Deal With Fluctuating Demands

If you ship seasonal products or have fluctuating sales levels – making sure you have the correct number of staff and resources can be difficult. You don’t want to overstaff and may need to scale back at certain points – this means you’ll need to extra resources to manage staff levels and training.

3. Lack of Shipping and Warehouse Expertise

Online customer reviews have never been more important, and if you are struggling with building up your own shipping department, this could result in negative feedback which will damage your business.

Professional logistics services will have the expertise, experience, and industry contacts necessary to streamline shipping so that it is both reliable and cost effective.

4. You have to Deal with Returns and Exchanges

Shipping a sold item, isn’t where your business responsibilities end. Dealing with returns and exchanges can be complicated and time-sapping activity for your inhouse warehouse which pulls away from more profitable tasks.

Moving these tasks to an 3PL warehouse means that these reverse-logistics will be handled without you noticing and at a fraction of the associated costs of dealing with this inhouse.

Pros and Cons of Outsourcing Your Shipping

Pros of Outsourcing 3PL Logistics

1. Flexibility and Different Shipping Options.

Third party logistics providers have a vast array of shipping options, tracking capabilities and staff sizes available. This means that they can tailor their shipping to businesses of all sizes who are selling a wide variety of inventory.

Whether you need only local deliveries or global logistics assistance, they will have the capabilities to get the job done.

2. Reduce Your Operations Costs

Although a 3PL logistics company in Melbourne will charge you for their services, the majority of business find that this cost is cheaper than handling warehouse and shipping in house.

You will be avoiding staff costs, warehouse costs and related insurance, software, equipment, and shipping supplies. Instead, you will simply need to pay one upfront cost each month for professional standard shipping through the world.

3. Access to Shipping and Logistics Expertise

Specialist third party logistics companies in Melbourne are dedicated to providing the best and most cost effective shipping options available. They will be experts in the best shipping solutions for a wide variety of businesses and customer bases.

You won’t have to worry about your packages being compliant with local regulations, whether you have all the right paperwork, and ensuring your products are packed safely and securely. 3PL providers will have all of that expertise and experience already in place.

4. Support Your Business Scalability

if you are looking to grow your business, move into different markets, or expand your product lines – this comes with extra costs in terms of staff, storage space and shipping.

A 3PL logistics company will enable you to grow without having to invest in increasing your inhouse logistics capabilities. The company will be able to provide increased staff and shipping quickly and at a reasonable cost.

5. A Vested Interest in Your Business Success

Although you may worry that the partner company may not care about your shipping and customer service standards, nothing could be further from the truth.

#PL providers need your product delivery service to be as seamless and successful as possible if you are to continue to use their company.


Cons of Using Third Party Logistics

1. Commitment to a Long Term Relationship

3PL logistics companies will generally set up long term shipping practices and strategies for your company, requiring a certain level of financial commitment for your business.

2. You Need to Trust In Their Service

it is important that you do your due diligence when it comes to researching the best 3PL logistics for your Melbourne business. If a shipping service provides shoddy service, this will reflect on your company in customer minds.

3. Increased Stages of Communication

Professional, expert and experience third party logistics companies will have the software and communication procedures in place to make sure that information is effectively conveyed back and forth from your company.

You need to make sure that your check how the provider companies communicate, how often they will communicate with you and what procedures they have in place if there is an emergency or mistake.


When deciding whether you should keep your shipping inhouse or outsource to a third party logistics company, cost effectiveness and reliability are bound to be your main concerns.

Choosing the right 3PL providers for your company is essential. Making sure that you select a professional, experienced, and high-standard 3PL logistics company can help your business and save money.

For more information about third party logistics in Melbourne, contact Effective Logistics today. Our team will talk you through your options and how 3PL can benefit your business and cut costs.

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