Estonian e-commerce businesses are increasingly looking for ways to reduce fixed costs and focus on their core business. According to SmartPosti, the number of customers using the company’s e-fulfilment service grew by 50% over the past year, while revenue from the service increased by more than 40%.
While many online stores and small manufacturers still managed their own warehouses just a few years ago, warehousing is now increasingly seen as a service that can be outsourced.
According to Raivo Roolaid, Head of Contract Logistics at SmartPosti, companies are rethinking which activities truly create value and which simply consume time and resources.
“More and more e-commerce businesses have realised that their competitive advantage does not come from managing warehouses, packing products, or dispatching shipments. Their strength lies in their product offering, product information, marketing, and customer experience. The rest is increasingly being entrusted to specialist partners,” said Roolaid.
E-fulfilment means that a logistics provider takes responsibility for the entire order fulfilment process, including receiving goods, storage, picking, packing, and shipping orders to customers. This allows online stores to focus on their core business without investing in warehouse space, equipment, or additional staff.
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Erki Laansalu, CEO of health products e-shop Elusväli, describes a similar experience. According to him, the decision to outsource logistics was driven primarily by the desire to focus on growing the business rather than managing a warehouse.
“Our warehouse had simply become too small, and we had to decide whether to invest our next euros in concrete or in business growth. More importantly, warehouse management was taking too much attention away from our core business. Even though we had a warehouse employee, every holiday or sick day meant I had to step in and pick orders myself. Instead of running the business, I spent my days thinking about whether all orders would be dispatched on time,” said Laansalu.
According to him, outsourcing warehousing was not only about reducing costs but also about using time more effectively.
“Entrepreneurs often underestimate the value of their own time. Once logistics no longer required daily attention, I was able to focus on marketing, exports, and business development. Only then did I realise how much energy warehouse management had actually been consuming.”
Laansalu believes that such a solution depends on well-functioning IT processes.
“If orders move automatically from the online store into the warehouse management system and the processes work as they should, it is a highly efficient solution. If a company’s IT processes are not yet mature enough, it is worth fixing that first. But once the foundation is in place, I would definitely recommend using an e-fulfilment service.”
Scaling logistics capabilities without major investments
According to Roolaid, the demand for outsourced warehousing is being driven primarily by e-commerce businesses, small manufacturers, and companies with seasonal sales.
“For many companies, the biggest challenge is fluctuating order volumes. Before Christmas, warehouse space requirements may be several times higher than in the weeks following Midsummer. When logistics is managed in-house, this often means paying for unused warehouse space and resources. With outsourced logistics, companies can use exactly the amount of capacity they need at any given time.”
In his view, the growth model of e-commerce businesses is also changing.
“Ten years ago, growth often meant renting a larger warehouse and hiring more people. Today, companies can grow much more flexibly. As sales increase, logistics capacity increases alongside them, without requiring major investments from the business itself.”
A good option for small and medium-sized businesses
According to Roolaid, the rapid growth in both customer numbers and revenue shows that e-fulfilment is no longer a solution reserved for large companies. Recent developments in the logistics sector have also encouraged many e-commerce businesses to review their existing logistics arrangements.
“When a company is already looking for a new logistics partner, it is a good opportunity to review its entire logistics model. It is worth asking whether operating your own warehouse is still the most sensible solution or whether time and resources could be better invested in the core business. Quite often, companies discover at that point that outsourced warehousing gives them greater flexibility and enables faster growth,” said Roolaid.
“While these solutions used to be mainly adopted by larger market players, we are now seeing more and more small and medium-sized companies using them. For them, outsourcing logistics provides the capabilities of a much larger business without the need to own the entire infrastructure themselves.”
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