Top 5 3PL Trends to Watch in 2021

Update: 2022 3PL Trends to Watch

Here’s an updated article on 2022 3PL Trends to Watch.

At the beginning of 2020, there was a lot of optimism about the overall health and growth with third party logistics providers. We were coming off an all-time high in total US retail sales and ecommerce sales was growing at a steady pace. However, a few short months into the new year, the global economy was turned on its head by the COVID-19 pandemic

Logistics and supply chain businesses had to quickly adapt their operations and strategies to meet the ever-changing demands of retailers and consumers. As some retailers were forced to close and customer foot traffic declined, ecommerce sales skyrocketed. Ecommerce sales increased an estimated 45% in the second quarter of 2020 compared to the same period in 2019. While some 3PLs struggled due to operational challenges or lack of expertise in growing sales channels, others seized the opportunity and experienced record growth.

The last year has reshaped and in many cases accelerated many 3PL trends.

1. Fulfillment as a Service

Over the last few years, the number of ecommerce stores have exploded. Shopify, one the largest ecommerce platforms, grew 71% in Q2 2020 compared to the previous quarter! The growth has largely been driven by consumer demand for fast, convenient ways to shop and receive their goods while never leaving the comforts of their home. On the flip side, the barriers for sellers to cost effectively and quickly open a digital storefront has never been easier. Platforms like Shopify allow any seller in the world to launch a fully functioning web store in less than 30 minutes.

The fulfillment industry has followed closely behind, making it far easier for sellers to outsource their fulfillment with little to no capital investment. It’s become the norm for shopping platforms to offer APIs for partners, including fulfillment companies, to build inventory management apps and custom connections to bridge the gap between the shoppers site and the fulfillment of their orders. In addition, it’s common for these new direct-to-consumer brands to have small teams, relative to their overall sales, so they lean heavily on outsourced fulfillment to support their business.

Last year alone, the industry saw large investments in fulfillment companies, like Shipmonk ($400M), to keep up with the acceleration of ecommerce sales and growth of digital storefronts. Other companies, like Deliverr and FlowSpace, tap into a network of warehouses to leverage unused space to provide sellers with an easy and cost effective way to fulfill their products.

While cost, speed, and convenience have been the core selling points for many of these businesses, they can be at the expense of service, flexibility, and quality.