The Hidden Costs of In-House Fulfillment: Is It Hindering Your Growth?

A recent survey by Radial reveals that a whopping 70% of rapidly expanding retail brands are still managing their fulfillment processes in-house, despite the growing challenge of meeting customer expectations. Radial, which specializes in e-commerce logistics, surveyed 200 retail executives and discovered that many find it tough to scale operations while relying solely on internal resources.Tom Schmitt, CEO of Radial, noted, “As retailers grow and face evolving customer demands, they frequently enough realize that handling fulfillment internally isn’t feasible and can overextend their capabilities.”

Interestingly, most brands—especially those earning less than $50 million annually—operate from just one warehouse for their fulfillment needs. However, the landscape shifts considerably as companies expand. Once they surpass the $50 million mark in revenue, many begin to partner with third-party logistics providers (3PLs) for order management. In fact, among businesses generating between $50–100 million in sales, 57% have turned to outsourcing fulfillment.This figure climbs to 76% for those making between $150–200 million.

So what challenges are these retailers facing? Nearly half (47%) identified scaling as a significant hurdle. Others pointed out issues with rigid technology (40%) and difficulties in integrating new sales channels (44%).

The survey also highlighted that brand websites remain the primary sales avenue—especially for sectors like home goods and apparel—but many are exploring popular marketplaces such as Amazon and Walmart. These platforms come with their own set of challenges due to stringent regulations and hefty fees. Emerging platforms like TikTok Shop or Temu are gaining attention but haven’t yet made a substantial impact.

Delivery expenses pose another major concern; around 45% of retailers reported unexpected charges from shipping carriers as a frequent issue—a number that jumps to 53% among larger firms. Smaller businesses frequently enough grapple with high base rates coupled with limited negotiating power.

while many fast-growing retail brands initially try to