Outsourcing warehousing pays off when your own warehouse reaches its limits: too little space, fluctuating volumes, staff that cannot be scaled up flexibly or fixed costs that also arise in quiet months. A warehousing provider takes over goods receipt, storage, picking and shipping and usually charges for the services actually used. Whether the step makes financial sense for you is shown by an honest comparison of full costs.
What does outsourcing warehousing mean?
When you outsource warehousing, you no longer store your goods on your own premises but with a logistics provider, often also called a 3PL (third-party logistics). The provider supplies storage space, staff, equipment and software. Depending on the agreement, it takes over only storage or the entire chain:
- Goods receipt: acceptance, quantity and visual inspection, booking into stock.
- Storage: on pallet spaces, on shelving or as bulky goods.
- Picking and packing: Pick & Pack for individual orders or picking of entire pallets for retailers and branches.
- Shipping: as parcels, groupage freight or pallets via various carriers.
- Returns: acceptance, inspection and restocking.
You keep control over your product range, purchasing and sales. The provider carries out the physical processes and reports stock levels, shipping status and returns back to your systems. You will find a fundamental comparison of both models in our article 3PL vs. in-house logistics.
Warning signs: when your own warehouse becomes too small
The right time to outsource is rarely a specific revenue figure. More often, it is recurring problems in day-to-day operations. Check how many of the following points apply to you:
- Lack of space: Goods are standing in aisles, in the office or in additional rented space. You cannot take on new products because there is no room.
- Fluctuating volumes: At peak times such as the Christmas season, there are not enough staff, while in quiet months some of them have no work.
- Delayed shipping: Orders pile up, delivery times get longer and customers start asking.
- Picking errors: Wrong items or quantities lead to complaints and returns.
- Stock discrepancies: The system stock does not match the shelf. Overselling and stockouts become more frequent.
- Management time tied up: You or your managers spend a lot of time organizing the warehouse instead of on purchasing, sales or product development.
- Upcoming investments: A new lease, shelving, forklifts or a warehouse management system would have to be acquired.
- New markets or channels: You want to deliver abroad or connect new marketplaces, and your own warehouse is not designed for this.
If a single point applies, it can often be solved internally. If several apply, a detailed comparison is worthwhile.
Cost comparison: weighing your own warehouse against a provider fairly
The most common mistake in the comparison: the rent of your own warehouse is compared with the provider's offer. This leaves out most of the costs. A fair comparison records the full costs over a period of at least twelve months so that seasonal fluctuations are included.
Costs of your own warehouse
- Rent or depreciation of the space, service charges, energy, insurance.
- Staff for goods receipt, storage, shipping and returns, including employer social security contributions, cover for vacation and sick leave, and temporary staff at peak times.
- Equipment such as shelving, industrial trucks, packing tables, scanners and printers, plus their maintenance.
- Software for warehouse management and shipping, licenses and interfaces.
- Packaging material.
- Shipping costs at your own rates.
- Working time of management and administration spent on warehouse matters.
- Costs caused by errors: mispicks, returns, inventory discrepancies.
Costs with a provider
- Goods receipt, often per pallet, carton or item.
- Storage, often per pallet space, shelf compartment or volume and period.
- Picking and packing per order and per item.
- Packaging material.
- Shipping per shipment.
- Returns processing per return.
- Possibly setup fees, minimum revenues or special services.
Calculate both sides with your real volumes: How many pallets do you store on average, how many orders do you ship per month, how many items does an order contain? The most important difference often lies not in the total but in the structure: your own warehouse mainly generates fixed costs, the provider mainly variable costs. With strongly fluctuating volumes, this often speaks in favor of outsourcing. Read more about the individual items in our article on fulfillment costs.
Switching to a provider step by step
A well-prepared switch runs without a longer interruption in deliveries. These steps have proven effective:
- Compile data: product master data with dimensions, weights and packaging units, stock levels, order volumes per month, seasonal pattern, shipping destinations and return volume.
- Define requirements: shipping times, cut-off time, packaging specifications, inserts, special services such as labeling or kitting.
- Obtain and compare offers: with the same volumes for all providers so that the offers are comparable.
- Connect systems: Connect your store, marketplaces or ERP system to the warehouse so that orders arrive automatically and stock levels and tracking numbers flow back.
- Test phase: Run through test orders and a small test delivery, including a return.
- Relocate goods: Deliver stock consolidated on pallets. Plan the move for a quiet sales period and agree on the cut-over date from which orders go to the new warehouse.
- Count and reconcile stock: After goods receipt, compare the counted stock with your data and clarify any discrepancies.
- Monitor key figures: In the first weeks, closely track shipping times, error rate and stock accuracy, and agree on regular check-ins.
What to look for in a warehousing provider
- Suitable storage types: pallet racking, shelving, bulky goods. Does the infrastructure suit your goods?
- Location: Is the warehouse conveniently located for your suppliers and customers? Are there loading docks for trucks?
- Contract terms: setup fees, minimum contract term, notice period and minimum volumes.
- Transparent prices: Are all services listed individually? Which special services cost extra?
- Connectivity: Which store systems, marketplaces and ERP systems can the warehouse be connected to?
- Shipping options: Which carriers does the provider work with, and can it ship pallets and groupage freight in addition to parcels?
- Additional services: returns processing, Amazon FBA Prep, customs clearance for imported goods.
- Accessibility: Are there dedicated contact persons, and how quickly do they respond?
Risks of outsourcing and how to limit them
Moving to a provider's warehouse also involves risks. Most of them can be managed well with clear agreements:
- Dependency: Long contract terms make a later switch more difficult. Look for short notice periods and make sure your data can be exported at any time.
- Less direct insight: You no longer see your goods every day. Agree on stock reports, access to shipping and returns data and the option to visit the warehouse.
- Quality of special requests: Gift wrapping, inserts or special inspections must be described in writing, otherwise they will be carried out inconsistently.
- Liability and insurance: Clarify who is liable for damage, loss or inventory discrepancies and up to what amount. Check whether your own insurance needs to be adjusted.
Warehousing at FulFra
FulFra operates its own warehouse in Lehrte near Hannover with loading docks and a bonded warehouse. For imported goods, the bonded warehouse makes it possible to store goods for up to 90 days without paying customs duties. Learn more about storage on our page about the fulfillment warehouse.
As part of E-Commerce Fulfillment, we take care of goods receipt, storage, Pick & Pack, shipping and returns. For bulky goods and two-person handling, there are additional locations in Renningen and Augsburg. For shipping, we draw on a network of more than 50 carriers. There are no setup fees, no minimum contract term and no minimum volumes. You can cancel on a monthly basis.
Frequently asked questions
When does it pay off to outsource warehousing?
There is no fixed threshold. Outsourcing usually pays off when several warning signs come together: lack of space, fluctuating volumes, shipping delays or upcoming investments in your own warehouse. A full cost comparison over twelve months provides clarity.
Will I lose control over my goods?
No. You remain the owner of the goods and control purchasing and sales. Through the system connection, you can see stock levels, shipping status and returns. Agree on regular reports and dedicated contact persons.
How long does the switch to a warehousing provider take?
That depends mainly on the system connection and the amount of goods to be relocated. Plan data preparation, connection, test phase and the move as separate steps, and schedule the move for a quiet sales period.
Can I outsource only part of my goods?
Yes. Some sellers initially outsource only individual product ranges, excess stock or one sales channel. This is a good way to get to know the provider before you switch everything over.
Are you considering outsourcing your warehousing? Describe your product range, stock levels and order volumes in a fulfillment request, and we will get back to you.