The fast-paced growth of the ecommerce marketplace has given an immense boost to outsourced fulfillment solutions including third-party logistics providers(3PLs).To many companies, however, the idea of storing products in a warehouse can be intimidating. This intimidation factor isn’t helped by misconceptions that some people have about third-party warehousing and distribution, especially those who’ve never partnered with a third-party logistics (3PL) provider before. In this post, we’ll clear up some of these myths to give you a clearer sense of what a 3PL is, and what it isn’t. Here are six common myths about outsourcing ecommerce fulfillment to a 3PL.
A Warehouse is Just For Storage
Small-to-mid-sized companies that are considering 3PL warehousing services for the first time are often quite surprised by the range of services offered by many 3PLs. In addition to simple storage of products, the 3PL warehouse can act as an ecommerce fulfillment center; an inbound logistics/JIT warehouse for manufacturing companies; a kitting, packaging, and rework facility; an intermodal hub; a cross docking facility; and much more. So, while a warehouse can be a simple storage facility, it can also be a place where products are inspected, picked, packaged, and consolidated with other products.
Order Fulfillment is Simple
While the base of any business is getting more and more orders for your products, it is equally important to have a seamless, cost effective and fully optimized order fulfillment process in place to ensure repeat customers, better revenues and even better profits. Many small and new businesses believe that having a good product to sell is all they need to achieve success. However, what they miss is that order fulfillment is an ongoing issue that will slowly grow so big that it would be tedious and not profitable to do it all by themselves.
Outsourcing to a 3PL is Expensive
At first glance, yes, outsourcing fulfillment can be a costly undertaking. But once you give it a closer, more detailed look you will learn that it’s an investment that will save you a lot more down the road. Many smaller companies assume that the cost of third-party warehousing and distribution is out of their price range. After all, big 3PL fulfillment centers must come with big price tags, right? The truth is quite the opposite: once all factors are considered, partnering with a 3PL is often much cheaper than alternative fulfillment options. If you are an ecommerce business handling your own order fulfillment, you know how high your fixed costs have gone. You can cut them down by outsourcing your order fulfillment to a 3PL. Imagine not having to bear the cost of that warehouse?
If an in-sourced operation is of significant size to warrant a warehouse management system (WMS), such systems can be quite costly when you consider the total cost of the software and training. A professional 3PL will likely have a very robust WMS to drive maximum storage and picking efficiency, and will spread the cost of the system across many clients, making it very affordable to access superior technology.
With a 3PL you pay for your chosen services when they are performed (e.g., receiving inbound pallets to the warehouse, shipping outbound pallets, ecommerce picking and packing, etc).
Outsourcing Only Works if you Have Enough Volume
Smaller businesses often go through fluctuations in their sale volumes. Seasonal demand on ongoing promotions can sometimes give a huge spike in order volume which can become highly difficult to manage in terms of product deliveries. Having a fulfillment partner ensures that you receive the scale up and down of order fulfillment resources without having to either increase your fixed costs or lose market credibility with poor deliveries.
You Will Lose Control of our Company
Business owners worry that having their warehouse stocking, logistics and shipping out of their main system may lead to losing sight of their product and control on their deliveries. However, the truth is that modern 3PLs give better control and supply chain visibility to business owners. With providers offering real time tracking, order fulfillment can simplify your operations.
3PLs Always Require Long-Term Commitments
This last myth is at least partially correct. There are many 3PLs that require a warehousing commitment of at least one year in order to get started. However, there are other 3PLs that do not have such stringent requirements and will gladly take on short-term, seasonal, or month-to-month customers.
When evaluating a 3PL that you are considering outsourcing fulfillment to, it is important to take a close look at how that relationship is going to work. By dispelling some of the myths about how a 3PL partnership might affect your company, you can go a long way in meeting your ultimate goals: making your customers happy, saving you time and effort, and improving your profit margin.
If you are looking for a 3PL partner to work with we would love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.