Fulfilment vs In-House Shipping: Which is Right for Your UK Business?

Growing sales is the fun part. Getting orders to customers quickly, safely and at a cost that protects margin is the tougher bit. Many UK brands reach a tipping point where packing orders at the office no longer scales, yet outsourcing feels like giving away control. The right call depends on your product, your growth plans and your appetite for fixed cost.

Here is a practical guide to help you choose with confidence.

What each model actually looks like

• In-house shipping: You store your own stock, pick and pack orders yourself, and book parcels with carriers like Royal Mail, DPD, Evri, Parcelforce or UPS. You own the space, staff, equipment and process.
• Third-party fulfilment: You send stock to a 3PL that stores, picks, packs and ships under your brand. Your tech connects to their warehouse system, and they pass on carrier rates, service options and performance reporting.

Both can deliver next-day service, branded packaging and returns. The way you reach that point is very different.

The UK cost picture, line by line
Costs are always the headline. UK labour, rent and transport have all risen. The structure of costs for each model is different, and that matters for cash flow and risk.

In-house tends to involve:

• Fixed costs: space, racking, tables, printers, scanners, software, insurance, business rates, energy.
• Staff costs: wages, holiday pay, pension and NI contributions, training, cover for absences.
• Materials: boxes, mailers, tape, void fill, labels.
• Carriers: list rates or negotiated tariffs, fuel surcharges, residential surcharges, Highlands and Islands surcharges.

3PL tends to involve:

• Receiving fees and putaway.
• Storage charged per pallet, shelf or cubic metre.
• Pick and pack fees per order and per item.
• Packaging materials, sometimes included to a standard spec, sometimes charged.
• Shipping at 3PL rates, which can be sharp at higher volumes.
• Extras: kitting, relabelling, photos for QC, returns processing.

A simple comparison table
Below is a compact side by side view. These are generalisations, not a quote.

Factor	In-house	3PL
Setup time	Weeks to months to find space, hire and fit out	Often live in 2 to 6 weeks once contracts and integrations are done
Fixed vs variable cost	High fixed, lower variable	Low fixed, mostly variable
Control of packing and branding	Complete control	High, within 3PL capability and fee structure
Carrier choice	Any you can negotiate and manage	Choice within the 3PL’s network, sometimes multi-carrier routing
Cut-off times	Your call, limited by staff and carrier collection times	Often later cut-offs due to volume with carriers
Peak scaling	Hire temps, overtime, careful planning	3PL flexes staff, may add peak surcharges
Inventory accuracy	Your responsibility, needs process and audits	SLA backed counts, cycle counting programmes
Returns processing	You set process and timing	Structured workflows, photo evidence and grading tiers
International shipping	Complex but doable, requires paperwork know-how	Plug-in options for DDP, IOSS, paperless trade support
Data and reporting	Whatever your WMS provides	3PL portal, dashboards, API exports

Costs in numbers, by scale
The exact figures swing by region and product, yet directionally:

• Small brand, 300 orders a month: In-house often wins on cost if space is free or cheap and a founder packs orders. A 3PL provides better consistency and frees up time, though per-order costs can feel high at this volume.
• Mid-market, 1,500 to 5,000 orders a month: 3PL pricing often catches up or beats in-house once you price rent, staff and wastage properly. Negotiated carrier rates improve as volume rises.
• High volume, 10,000 plus orders a month: Either can work. In-house can shine if you run a tight ship and lock in very strong carrier contracts. A 3PL can match or beat those rates while removing fixed risk.

Service, speed and the UK delivery promise
UK shoppers love speed and clarity. Next-day by 10 pm cut-off is now common among larger retailers. Meeting that consistently requires:

• Reliable cut-offs with carriers. DPD and Royal Mail Tracked offer late collections in many areas for the right volume.
• Accurate picks. Mis-picks drive re-shipments and erode trust.
• Strong address validation. Bad postcodes cost time and money.
• Weekend options. Saturday delivery still delights.

In-house teams can run late shifts in peak and build carrier redundancy. 3PLs usually have larger manifesting windows and multiple carriers on tap.

Control, brand and the unboxing moment
Your box is a marketing channel. In-house gives you full control of packaging spec, inserts and seasonal variations. You can test new wraps tomorrow, then roll winners into standard ops.

3PLs support brand control in different ways:

• Use of your branded mailers and boxes, stored as inventory.
• Insert rules by SKU, channel or promotion.
• Kitting for gift sets or subscription collections.
• Photo proof for VIP orders.

Check print lead times, storage allowances and any change fees. A great 3PL can feel like your own team. A poor one can make simple changes feel slow and costly.

Returns under UK rules
UK consumers buying online have a 14 day window to cancel under the Consumer Contracts Regulations, with a further 14 days to return goods. That means your returns process must be simple and predictable.

In-house returns strengths:

• Quick inspections for resale, direct stock updates.
• Easy to add gestures, for example upgrades or hand-signed notes.

3PL returns strengths:

• Structured grading, photos, reason codes and instant refunds via integration.
• Refurb flows for fashion, electronics or cosmetics with clear quarantine steps.
• Capacity for peaks in January and after big promotions.

International shipping from a UK base
Selling outside the UK adds paperwork and tax decisions. The practical points:

• EORI and HS codes are essential. Keep a clean product database.
• CN22 or CN23 forms for postal services, or paperless trade with commercial invoices for couriers.
• EU VAT collection choices. Many UK sellers use IOSS for consignments up to 150 euros via an EU intermediary to charge VAT at checkout and speed delivery. Without IOSS you ship DAP, and the buyer pays VAT and fees on arrival, which can dent conversions.
• DDP options to charge tax and duty at checkout for non-EU countries, managed by certain carriers or 3PLs.
• Northern Ireland has special rules under the Windsor Framework. Check carrier guidance if you move goods GB to NI.
• Channel Islands are outside UK VAT. Labelling and customs differ, even though they are close.

3PLs often bake these flows into the tech stack. In-house teams can manage them too with discipline and a good shipping platform.

Scalability, seasonality and risk
Sales are lumpy. Black Friday, press coverage, TikTok virality or a big retail deal can triple your daily orders.

• In-house: you need a hiring plan, cross training, shift patterns, extra stations, extra collections and floor layouts for peak. You also need to unwind that cost when the peak ends.
• 3PL: capacity flex is a core feature, backed by temp labour pools and extra shifts. Expect peak surcharges and longer lead times for packaging changes during November and December. Clarify SLAs and contingency plans for carrier strikes or weather disruption.

Tech and data: the quiet difference maker
Whether you outsource or not, software makes or breaks fulfilment.

Must-haves for in-house:

• Order management and a WMS with barcode scanning to cut mis-picks.
• Real-time stock sync to sales channels like Shopify, WooCommerce, Amazon and eBay.
• Label printing that supports multiple carriers, rules by weight, value, destination and SLA.
• Cycle counting and audit trails.

Must-haves for 3PL users:

• Native integrations to your channels and marketplaces.
• Clear portal for inventory, orders, backorders, returns and SLA metrics.
• Webhooks or APIs for custom workflows and analytics.
• Sandboxes for testing new bundles and promotions.

Ask for live dashboards with shipped on time, mis-pick rate, dock to stock time and returns turnaround. If the data is slow or opaque, issues will hide.

Who tends to do better with in-house

• Early stage brands with a tight catalogue and a few hundred orders a month, especially where the founder values full control of packaging and personalisation.
• Heavy or awkward items where you can negotiate strong one-off carrier deals and design bespoke packing methods that would be expensive at a 3PL.
• B2B and wholesale orders that involve pallets, ASN requirements or retailer compliance that you already manage well.
• Products with complex regulations where you want close oversight, for example aerosols, batteries or temperature sensitive SKUs, provided your site is set up for them.

Who tends to do better with a 3PL

• Fast-growing D2C brands aiming for late cut-offs, weekend service and consistent next-day delivery without building a warehouse team.
• Multi-market sellers that need IOSS, DDP and paperless trade flows set up quickly.
• Subscription and kits where kitting at scale, lot control and QC photos reduce errors.
• Brands with spiky demand that prefer variable costs and guaranteed capacity.

Compliance, packaging and sustainability in the UK
A tidy warehouse is only part of the story. UK rules and customer expectations keep rising.

Key points to cover:

• VAT on shipping charges. Decide whether you treat shipping as a supply of goods or separate service, and price VAT correctly.
• Plastic Packaging Tax. If you import or manufacture 10 tonnes or more of plastic packaging a year, registration and reporting apply, with cost flowing through the supply chain. Many 3PLs can help track metrics but legal responsibility rests with the liable entity.
• Packaging waste and EPR style rules are expanding across Europe. If you sell into France or Germany, you may need local registrations and eco-fees. Ask your 3PL what reports they provide.
• Sustainability preferences. Right-sized packaging, paper void fill, FSC materials and kerbside recyclability matter to customers and can reduce damage rates.
• Dangerous goods. If you ship perfumes, batteries or aerosols, check your carrier and 3PL capabilities for ADR and IATA.

A quick calculator you can run today
Use this to compare apples with apples. Numbers are placeholders, swap your own.

In-house per order estimate

1. Monthly fixed costs: rent and rates 2,000, energy 250, insurance 100, software 200, equipment lease 150. Total fixed 2,700.
2. Labour: two pick pack staff at 11.50 per hour, 160 hours each. Monthly 3,680 including NI and pension at 15 percent uplift.
3. Materials: average 0.45 per order.
4. Carrier: average 3.70 per parcel with mix of Royal Mail Tracked 48 and DPD Next Day.

If you ship 2,000 orders per month:

• Fixed per order: 2,700 divided by 2,000 equals 1.35
• Labour per order: 3,680 divided by 2,000 equals 1.84
• Materials: 0.45
• Carrier: 3.70
• Estimated total: 7.34 per order

3PL per order estimate

• Receiving and putaway: 0.15 to 0.30 per unit inbound
• Storage: 10 pallets at 10 each per week equals about 400 per month
• Pick and pack: first item 1.10, extra items 0.20 each, average basket 1.3 items equals 1.16
• Packaging: 0.30 per order for standard mailer
• Carrier: 3.50 per parcel at 3PL rates

If you ship 2,000 orders per month:

• Storage per order: 400 divided by 2,000 equals 0.20
• Pick and pack: 1.16
• Packaging: 0.30
• Carrier: 3.50
• Allow 0.20 for receiving amortised
• Estimated total: 5.36 per order, plus account management and any extras

Your numbers will vary. The method will not.

Operational risks to weigh

• Staff sickness and turnover. In-house plans need cross training. 3PLs need clear SLA penalties and response plans.
• Carrier disruption like strikes or weather. Multi-carrier routing reduces exposure. Ask how a 3PL switches volume if one network is constrained.
• Stockouts from slow dock to stock. Measure inbound receiving time in hours, not days.
• Shrinkage. Barcode discipline and CCTV in-house, cycle counting and audit reports at a 3PL.

Red flags when reviewing 3PL proposals

• Vague storage definitions, for example pallet size not specified, or partial pallets charged as full.
• Oversized minimums that dwarf your volume.
• No transparency on surcharge pass-through, for example fuel, remote area, address correction.
• No cut-off for guaranteed same-day dispatch.
• Weak integration support or long ticket response times.
• No named implementation manager or go-live plan.

How to set up in-house the right way

• Layout: fast movers near pack stations, clear aisles, logical bin locations, good lighting.
• Process: barcode scan at pick and at pack, no paper pick tickets if you can avoid it, weigh parcels automatically to catch mis-picks.
• Stations: consistent tools, pre-built box stacks, label printers at each station.
• Cycle counts: weekly for A items, monthly for B, quarterly for C.
• Carrier collections: book fixed daily windows, keep a backup label account for emergencies.
• Health and safety: manual handling training, PPE where needed, fire exits kept clear, PAT testing done.

How to onboard with a 3PL without drama

• Scope: document SKUs, dimensions, weights, special handling, kitting rules, inserts and any compliance needs.
• Data: agree SKU IDs and barcodes. Fix duplicates before inbound.
• SLAs: ship on time, receiving time, accuracy, returns turnaround, cut-offs, dispute process and credits.
• Packaging: decide what the 3PL provides and what you supply. Send samples and pack templates.
• Test: run a pilot with 50 to 200 orders. Measure speed, accuracy and customer feedback before full cutover.
• Communications: give the 3PL your promo calendar and expected spikes. Share product roadmaps that may affect handling.

Case snapshots

• A skincare brand at 400 orders a month: Founders handled in-house, using Royal Mail Tracked 48 and a simple WMS. Cost per order looked low because the founders did the labour. After raising prices and moving to next-day for top customers, evening cut-offs were tough. A small 3PL cut the per-order carrier rate by 10 to 15 percent and freed 25 hours a week for marketing. Net margin improved despite higher pick fees.
• A home fitness brand at 5,000 orders a month: Big and heavy parcels meant surcharges and damage risk. They stayed in-house, negotiated a palletised next-day service for certain SKUs and built custom foam inserts. Damage claims fell 60 percent and per-order cost beat 3PL quotes by a clear margin.
• A fashion label with EU growth: IOSS and paperless trade were headaches in-house. Moving to a 3PL with an EU hub halved delivery times to Germany and France and cut failed deliveries tied to duties. UK orders still shipped from a Midlands site for speed.

Questions to decide your path

• What is your realistic 12 month order forecast by month, and how spiky is it?
• Do you need 9 pm cut-offs or Saturday dispatch, and can you staff that?
• How much value do you place on full control of the unboxing moment?
• How complex are your orders: kits, bundles, subscriptions, personalisation?
• What is your international mix and do you need IOSS or DDP?
• What fixed cost can you stomach if sales dip for three months?
• Which KPIs do you want to watch daily, and who will act on them?

A quick decision heuristic

• Under 500 orders a month, simple catalogue, UK only: in-house often wins on cost and control.
• Between 500 and 3,000 orders a month or fast growth: a 3PL is often cheaper per order and gives you scale.
• Over 3,000 orders a month: run a head-to-head model with your real data. Run pilots and pick the better net margin and SLA performance, not just headline price.

Carrier choices and UK quirks to factor in

• Royal Mail Tracked 24 and 48 are cost effective for small parcels with good coverage. Tracked returns are easy to set up.
• DPD is strong for next-day predictability and one-hour windows. Excellent for higher value items.
• Evri is price friendly and has decent coverage for lighter goods. Watch address data quality.
• Highlands, Islands and certain postcodes carry surcharges or longer transit times. Bake this into your checkout promise.
• BFPO and PO boxes have special rules. Some carriers do not deliver to them.
• Channel Islands require customs data and are outside UK VAT.
• Same-day in cities can be booked through specialist couriers, a good add-on for VIPs or urgent replacements.

Service levels you should demand
Regardless of model, set the bar high and measure it.

• Ship same day for all orders placed by your cut-off, five or six days a week.
• Pick accuracy above 99.8 percent, measured daily.
• Dock to stock under 24 hours for standard inbound shipments.
• Returns processed and refunded within two working days of receipt.
• Customer queries on delivery answered within one working day with tracking events included.

Where most brands find success
Plenty of UK brands run a hybrid. Keep a small in-house space with a lean team for special projects, influencer kits and experimental packaging. Push the bulk of standard orders through a 3PL. This guards brand craft where it matters while keeping operations scalable and cost stable.

If you prefer a single path, make it a deliberate choice backed by numbers. Run the calculator with your data, request 3PL proposals that itemise everything, and measure during a pilot. Then pick the setup that delivers the fastest consistent delivery, the lowest true cost per order and the least stress for your team.

Keep revisiting the decision every six months. Your product mix, customer locations and carrier markets will shift. The right answer this summer may not be the best fit next spring.