The supply chain that provides goods to customers entails logistics, including the purchase of raw materials, manufacturing the product and delivering that product to the customer. Third-party logistics (3PL) is the process of turning at least some part of this supply chain over to another company. And spoiler alert: there are a lot of benefits of 3PL services to help your e-commerce company run better.
The following seven benefits of 3PL services for your e-commerce business generally streamline your business and provide it with logistical assistance.
1. Elimination of Warehouses
Using the best 3PL provider for all of your order fulfillment requirements eliminates the need to secure and rent warehouse space. That is a major investment for most businesses. This benefit includes reductions in the liability, cost and time needed to operate your business.
For example, if you don’t have your own warehouse, you don’t have liability for accidents that occur in them or damages that occur to your inventory or the facility itself.
The cost of renting warehouse space is usually a flat rate, regardless of how much space you use. This pricing structure can be particularly wasteful for an e-commerce business that doesn’t use a warehouse space’s maximum capacity.
The savings in the time needed to locate, select and move into a warehouse is another benefit of a third-party logistics provider.
2. Shorter Shipping Distances
It’s unlikely that a single warehouse will place your e-commerce business near the majority of customers, no matter where it’s located. Growing your business in today’s online economy requires a distribution network that allows you to get closer to customers, thus saving shipping time and costs.
E-commerce businesses that want to use a 3PL company should look for a provider that offers fast fulfillment services, typically no more than a couple of days. A 3PL provider should also have multiple fulfillment centers in large cities throughout the United States to further reduce shipping times.
The ability to distribute inventory across locations increases the probability that a product will be physically close to a customer placing an order. These benefits of 3PL services help deliver the order more quickly. And that means better customer service, and a fast supply chain.
3. Maintain Your Branding
Companies that outsource any part of their business are naturally concerned about customers losing sight of their branding. A third-party logistics provider that suddenly begins stamping its own branding on packages can confuse customers, so it’s essential to provide seamless continuity when using a 3PL.
E-commerce businesses should look for a 3PL provider that uses its client’s own branded packaging or plain packaging without the 3PL’s branding. Either way, customers should never know that there’s another party involved in the delivery of their orders.
4. Leaner Workforce
Employee-related tasks such as managing payroll, benefits and taxes are some of an employer’s most time-consuming activities. And that’s especially true for small businesses. Each employee that a company adds to its roster requires additional work in all of these areas.
Staffing a warehouse or fulfillment center also increases the complexity of a business’s hiring process and operations. Assume for this example that a company builds high-tech products, resulting in a staff largely composed of engineers. Adding warehousing staff requires a change in workforce strategies and a long-term investment to implement those changes.
Using a 3PL company shifts the work of maintaining a workforce over to a company that specializes in those tasks. Furthermore, a 3PL already has the workforce, especially the warehousing staff, needed to meet logistics needs.
5. Reduced Backorders
An e-commerce business can become more difficult to manage as its sales grow, resulting in an increasing number of back orders. This is a supply chain management nightmare, and can greatly impact customer satisfaction.
A small business typically has limited facilities for storing inventory. so it will often have to scramble for additional space to keep up with demand.
A 3PL can manage these logistical constraints with their own warehouses. In this scenario, a sales spike becomes the desirable event that it should be.
6. Integration with E-Commerce Platforms
E-commerce businesses typically use platforms like Amazon, Shopify and more, so a 3PL provider must work with these existing solutions. Their software should be able to seamlessly integrate with the most popular e-commerce platforms, eliminating the need to hire experts to get this interface working.
This capability allows businesses to begin realizing the advantages of a high-tech 3PL solution right away.
Businesses routinely benefit from an economy of scale, especially when it comes to shipping. The rates that carriers like FedEx and UPS charge their large customers are substantially less than their advertised rates. Major players in the shipping industry can thus save money due to the volume of packages they send through these carriers.
Similar businesses can enjoy a similar advantage by outsourcing their logistics to 3PLs. Their total shipping footprint allows them to negotiate volume discounts. 3PLs can then pass that on to their clients. Businesses can then maintain a competitive advantage by passing these savings to their customers.
8. Data-Driven Insights
Some e-commerce businesses may still analyze their sales offline, often in an Excel spreadsheet. However, connecting an online store to a 3PL service allows businesses to derive useful data-driven insights from their sales.
A 3PL provider that offers a complete solution rather than just fulfillment services can thus provide its clients with real-time metrics on inventory, orders and sales. Make sure you look into providers that have the types of 3PL reporting you want and need for your business.
9. Greater Focus on Logistics
3PLs have greater expertise in logistics than most e-commerce businesses. Even in cases where a company is experienced with packing and shipping orders, they must still prioritize these tasks with everything else they do.
A 3PL can focus on helping its clients fulfill orders and connect with customers by providing services such as same-day turnaround. Most small businesses are unable to offer these services in-house.
Consider 3PL Services for Your E-commerce Business
Businesses often feel constantly stretched to perform all aspects of e-commerce. Outsourcing your logistics process allows your business to focus on what it does best, which is increasingly important for remaining competitive in today’s business environment. At the same time, outsourcing to a 3PL allows it to perform the aspects of your business that it handles best.
If you’re interested in learning more about 3PL services, you can reach out to Tradefull.