What is hybrid fulfillment, and what does it mean for your business?
Hybrid fulfillment refers to a more adaptable and diversified approach to filling orders that incorporates a variety of fulfillment models, including in-house fulfillment, dropshipping, and/or third-party logistics.
This sort of fulfillment models gives ecommerce firms more leeway in how they handle their supply chain, whether they’re direct-to-consumer or B2B.
What kinds of fulfillment are there?
Today, e-commerce enterprises have more fulfillment management alternatives than ever before. The three most frequent fulfillment methods are discussed in this section.
In-house fulfillment
In-house fulfillment is the process of a company handling all phases of fulfillment itself, from warehousing and inventory management to picking, packing, and shipping.
Companies that wish to fulfill orders in-house hire personnel and acquire equipment and room necessary to do so effectively (whether at their own home or renting a warehouse).
In-house fulfillment is an excellent alternative for firms that desire complete control over their logistics operations and have the resources to manage it on their own.
Dropshipping
Dropshipping is the practice of a business’s supplier or manufacturer sending orders straight to the end consumer.
This technique of delivery allows businesses to focus on other aspects of their business without having to worry about inventory management or shipping orders.
It’s a fairly hands-free method that works well for businesses who are just getting up and growing or don’t have the resources to handle inventory on their own, despite its competitive flaws.
Third-party fulfillment
Third-party fulfillment is handled by a third-party logistics company (3PL), which assumes responsibility for delivery.
The 3PL partner for a firm handles every phase of the retail fulfillment process, from warehouse receiving to inventory management, storage, picking and packing, and shipping.
In the B2B and direct-to-consumer markets, fast-growing companies may effectively outsource fulfillment to a third party.
Hybrid order fulfillment
Hybrid fulfillment entails employing a combination of any or all of the above fulfillment methods rather than relying on only one.
By streamlining the sales environment, combining a single supply chain and integrating cross-border operations, ecommerce companies can create more efficient businesses with improved resilience to meet ever-changing market demands while also expanding.
A small business, for example, may maintain fulfillment in-house for domestic shipments, rely on a 3PL to manage international shipping, and utilize a dropshipper for certain products within their product line.
Hybrid fulfillment is a fantastic choice for firms that are expanding quickly and offer a wide range of goods, cater to many regions with varying expectations, and need bespoke fulfillment solutions to meet the needs of the business and its customers (e.g., outsourcing fulfillment of fast-moving items and fulfilling seldom orders SKUs).
The Advantages of a Hybrid Fulfillment Model
The combination fulfillment approach has grown in popularity among e-commerce enterprises since it allows for a lot of flexibility and customization. You may simply alter directions and have something to fall back on because there are several fulfillment methods to select from.
Choosing to go “hybrid” with your fulfillment approach allows you to experiment with new items, processes, and channels without putting too much at stake.
A hybrid solution has the potential to be more cost-effective if handled correctly, as it allows you to pick from a variety of fulfillment options. If you’re going for a hybrid approach, keep in mind that you’ll have to be strategic about which goods get sent using each method.
Dropshipping is especially useful when launching a new line of items, since you won’t have to store large amounts of inventory or incur carrying charges.
If you’re a business with big and hefty things to sell but no place to store them or the tools to package them, consider outsourcing your shipping to a 3PL.
Is a hybrid fulfillment approach best for me?
E-commerce companies may choose either a hybrid fulfillment approach or a single fulfillment center. Hybrid fulfillment is frequently an option for e-commerce businesses. Because you must manage or at least oversee several fulfilment operations, there are several moving components involved.
Managing your inventory across several sites and keeping orders fulfilled on time via all of these methods might be difficult and time-consuming.
However, supply chain technology makes it simpler to handle everything by gathering critical, real-time data at the company level.
When combined with the proper plan, tools, and technology, a hybrid fulfillment approach can provide your firm with the flexibility it needs to expand.
This option is ideal for you if:
- You’ve signed a lease for a warehouse in California but want better protection on the other side of the country (or around the world).
- Only a few things on your list require that you do them yourself.
- You’re always experimenting with new goods, ideas, procedures, and media.
- You’re planning to start selling online through your real store and want to offer both pick-up and delivery choices.
- You have the means to effectively monitor and manage all of your fulfillment options.
- If you don’t have the facilities or don’t want to handle big quantities of ecommerce inventory, this is not for you.
- You’ll need alternative fulfillment options to fulfill consumer demands and meet product customization requirements.