In the logistics industry the phrases warehouse management and inventory management are sometimes confused and often misused interchangeably. They can…
Online shopping is quickly becoming an everyday task for most people, and ecommerce is now one of the fastest growing industries. You can buy everything from electronics to groceries, to pet supplies, to plants, and these are all just a few clicks away.
With this boom comes increased competition among ecommerce businesses, more and more online retailer sites and platforms, plus consumer demands for efficient ordering systems and expedited shipping times are on the rise. As a result, many online stores have started providing same-day delivery. For an ecommerce business to keep up, they need to handle their inventory management, packaging, warehousing, shipping, and tracking carefully; any issue along the way could cost a repeat customer or even worse, a bad online review.
A trusted 3PL (third-party logistics provider) can provide resources, support, expertise and guidance to navigate the many decisions that need to be made to keep end-customers happy and coming back. Here are five major ways that a 3PL can help an ecommerce business keep up with these increasing demands of our growing online habits.
If you are an ecommerce business, your products are the most important part of your business; you’ll need somewhere to receive inventory from your manufacturer (or production facility), store it, and then ship it out to customers. Setting up a complete warehousing and shipping system from the ground up—and keeping it running smoothly every day of the week—is a major operational job and costly as well. It includes infrastructure costs, insurance, 24/7 utilities, advanced technology and communication systems, transportation, storage equipment, employee training and compensation, and much more. By outsourcing this work to an established 3PL, you will save both time and money.
Most third-party logistics companies will have processes and overhead that includes all warehouse support in one simple line item. They will have streamlined the most efficient ways to get your products into their facilities, get you hooked into their technology platforms, and have your product shipped out to customers on time. They might also charge you based on your usage only, so if you know summer is a slow sales cycle for you, lowering your inventory levels might save you extra charges that you might otherwise have to eat if you run your own warehouse facilities.
Plus, if you run your own in-house inventory and warehousing, you will be paying for all the tracking technology and employee time, irrespective of the amount of product you need to me or the actual usage of the warehouse. Hiring a 3PL service provider is the best way to save substantial money and time.
Setting up comprehensive inventory management and shipping systems requires you to create a network of warehouses, couriers, and shipping centers across the globe, especially if you are going to serve an international clientele. This is not only expensive but also time-consuming.
A third-party logistics company should have access to a vast network of resources to meet the needs of your broad-reaching customer base. It’s ideal to work with a 3PL that has experience in the region where there are a majority of your customers. Chances are the 3PL will have warehouses in areas that serve your customers which will help give you the coverage you need and reduce shipping costs. Likely they will also have relationships with local brick-and-mortar retailers who might be a good fit for your brand. And lastly, that 3PL will be well-versed in any regional-specific regulations or compliance needs that may come up to import, export, or package and transport your products. .
Working with a 3PL provider in a strategic location can quickly integrate your products into the markets where your business will thrive the most.
Higher Consumer Satisfaction
A 3PL service provider can increase consumer satisfaction in two ways: ensure efficient delivery, and allow you to focus on your core business activities.
Efficient delivery is what all ecommerce businesses are after these days. That’s the number one demand from customers: quick and accurate delivery. A 3PL service provider can ensure risk-free and timely deliveries, every single day, by providing extensive infrastructure, resources, and a staff to execute. Many 3PLs also offer value added services, such as repacking, gift-wrapping, and sub-assemblies, to improve your consumer satisfaction considerably.
If all your time is taken up by in-house warehousing activities, shipping issues, and managing return logistics, you won’t have time to work on your product, your marketing, or your long-term business goals. By doing in-house logistics, you will ultimately undermine your abilities to deliver core services and the best possible products. Your customers will notice the difference, and if you cannot keep up with new iterations and products, your retention and customer satisfaction will drop.
In the early days of ecommerce, consumers used to buy online to avoid standing in a long queue at stores, avoid rush-hour traffic or finding parking at the nearest mall. It was all about convenience shopping from the comfort of your coach. Before same-day delivery was an option, using postal delivery services worked just fine, but today customers need ecommerce retailers to provide much more. Most customers demand same-day delivery or express delivery. A third-party logistics company is the best way to provide these.
An established 3PL will already have a network of warehouses, advanced technology, and trained staff to execute quick and efficient delivery. They can keep track of a package from start to end, and readily overcome any shipping issues. Plus, their credibility depends on delivering packages to the right place, at the right time, and in proper condition.
Flexibility and Scalability
Many online businesses have to scale up and scale down their operations according to the market fluctuations. Your business will experience many busy and slow times during the year. For example, your orders will pick up during the holiday season.
Usually, a 3PL service provider will allow you to scale space, labor, and transportation according to your current inventory. Thus, you can rent out more warehouse space during the holiday season and less during off-seasons. They might also offer freight or cargo consolidation: if you have several small packages to be shipped to the same location, a third-party logistics provider can lump them into one big package—this lowers the cost of shipping significantly. By partnering with a 3PL you can get access to several logistics efficiencies to improve your scalability.
In recent years, the demands of online businesses has grown exponentially. Third-party logistics companies can provide you with the support and leverage to keep your business competitive in this growing ecommerce environment, at a fraction of the cost that in-house logistics would be.
If you’re looking for help with outsourcing your order fulfillment, send us a note to connect about how we can help your company grow. 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.