Tommy, this question is near and dear to my heart.
I recently started a second test business just to see if the idea would gain any traction, and forgot how horrible it was to pack orders, print labels, go to the post office, etc.
For Hotwicks, we did our own fulfillment for a few years. Burned ourselves out, and then decided our margin could support a third party fulfillment service. A few things to consider:
- If you're evaluating cost, make sure to include your time as a cost in fulfilling yourself. I personally would spend about 3 hours a day on fulfillment, which ended up being much more costly than a third party provider.
- A fulfillment provider allowed me to completely un-tether physically from my office and still fulfill demand. Previously, I could not travel anywhere that would prevent me from meeting a 2 business day shipping service level. Now I can, and do, process orders from anywhere.
- Warehousing is another huge bonus. We used to have inventory stacked everywhere and keeping an accurate count was difficult. Now that's all done for me.
The service we use now is Adeptiv Solutions (http://www.adeptivsolutions.com). I found them through a friend referral and we've used them since May of 2012. I highly recommend them, and will be using Adeptiv for another much larger business shortly. They're smaller than some of the other providers, but that's translated into really active service for my account. They're also completely integrated into Shopify so setup was quick. I'd be happy to answer other questions about them if you'd like, just email me at email@example.com.