Some 3PLs only offer pick, pack, and ship, but there are many that offer much more. If you work with a flexible, experienced service provider, they will likely offer many value-added services (VAS) that go beyond the basics. As a growing ecommerce company, you need to know what to ask your 3PL in order to leverage the maximum capacity.
It’s a common myth that VAS are too expensive for growing brands. Yes, they will cost extra, but the adage stands true that you must spend money to make money. Work with your fulfillment provider to come up with the solutions that won’t go over budget but that will help your business grow. You might be surprised that a seemingly small addition could improve customer satisfaction, increase customer loyalty, expand your buyer base, streamline your fulfillment flow, net additional revenue, or yield all the above!
Here are four excellent ways to think about adding VAS. Leveraging your current 3PL’s value-added services will give you a competitive advantage in the market.
Use Kitting and Bundling for Sales and Promotions
You may think it’s your marketing team’s responsible to execute sales and promotions, but that’s not true. Fulfillment has a lot to do with the type of promotions you can offer customers.
Kitting is one of the more popular value-added services that a service provider might offer. You’ll want to ask about it when you’re looking to sell sets or packs of your products together in one box. In fulfillment this requires special set-up—the set of products needs to have a new, single SKU.
Set up a kitting project for your promotions like selling a holiday themed pack or an end-of-season sale when you want to pair items that didn’t sell well with ones that did. It’s a great way to bring in additional revenue.
Bundling is another way to use VAS to enhance your sales and promotions. This is a generic term for adding multiple SKUs to a single package. A good example of a product bundle is a variety flavor pack.
The capacity of your 3PL to run special fulfillment projects is directly corelated to the types of promotions you can run. While bundles are historically complex operationally, a 3PL with modern fulfillment software will be able to integrate a bundling project into their warehouse ERP system to allow a seller to set up bundles virtually. A great service provider will have the capability to do more interesting and complex fulfillment projects.
Both kitting and bundling can help increase your overall order volume if you’re looking to do a short-run project (with or without a promotion). Customers will be incentivized to add products if they go together or are offered at a slight discount.
Use Procurement and Assembly to Streamline Your Supply Chain
There are so many stops along the supply chain that a product makes before it is ready to be packed and shipped to customers. If you can cut any of those stops out, you’ll streamline your supply chain and have a more agile company.
Contrary to common knowledge, a 3PL can help you with this. If your fulfillment service provider offers procurement or assembly as a value-added service, they will be able to take on tasks that cut out some of the middlemen in your supply chain.
Procurement is, very simply and broadly, the act of obtaining products (or raw materials and parts that will become products) from the manufacturer. If your 3PL has the experience, they may be willing to receive your products directly from your manufacturer into their warehouse.
Technically procurement also encompasses sourcing, negotiating finances, quality assurance, and shipping the products. A 3Pl can’t help you with these aspects, but once you set the flow up of inventory into a distribution center, your 3PL can manage the tasks for you. This will eliminate many administrative tasks like daily communication with your manufacturer and export/import paperwork.
While procurement isn’t a common value-added service, assembly is very common. Most products need some configuration before they are shipped to the customer—whether it’s fitting components and parts together or re-flashing software with the latest updates.
While many companies assume these steps need to be completed with the manufacturer, there are many benefits to having assembly outsourced. One major upside of having your fulfillment do assembly is that you’ll cut down on time between when an order comes in to when it can be shipped out.
Here’s a simple example: You sell a device that can be ordered with a red, blue, or yellow cover. You order 100 devices of every color to be sent from the manufacturer to your 3PL’s distribution center. The three colors are not going to sell equally—it’s inevitable that you’ll be stuck with extra inventory of one color. If you order the devices and the color cases separate, you can assemble them as the orders are placed. This way you’ll save a ton of money because you will be able to sell all the devices; you won’t be left with devices with the case that didn’t sell as well.
Use Additional Space for Better Inventory Management
It’s a common misconception that inventory is a fixed, static thing. In fact, for a high-growth ecommerce company inventory is something that is often hard to pin down. Between forecasting, negotiating with your manufacturer, and then shipping products out through multiple sales channels, inventory management should (theoretically) mean you’re constantly moving products through your fulfillment flow.
One way your fulfillment provider can help you navigate the constant flow of inventory is by providing extra storage. Storage is a VAS that many ecommerce companies don’t think to ask their 3PL about.
It may cost a little extra but if you have an overflow of inventory (reasons for this could be issues with shipping or manufacturing, supply chain delays, etc.) your 3PL might be the perfect company for the job. Having your products stored closer to where they are fulfilled will save you money on overall transportation costs.
If you are a growing ecommerce brand, you’ve likely had to coordinate alternative shipping methods for different sales channels. This might include dropshipping to retailers, automating minimums/maximums for an Amazon FBA account, or a just-in-time inventory strategy.
Most of these examples require inventory to get shipped out as quickly or on a very specific timeline. A 3PL with the space and capabilities to execute timing flawlessly will increase your opportunities to work with a wider variety of retail accounts. Ask your service provider what additional services they can provide to help get products to customers on time.
Use Integrations for Complex Order Processing
If your brand sells through Shopify or a retail platform, it’s imperative that your fulfillment servcie provider has deep integrations with these ecommerce sites. Fulfilment integrations may not be technically value-added services, but they are needed for custom projects that go above and beyond generic pick, pack, and ship. You want to ask if your 3PL has any technology add-ons, or how they develop and troubleshoot integrations with other site APIs. A provider who has customized integrations will help you keep a competitive advantage in the market.
Your inventory needs to be accurately reflected for your customers and your operations teams. Inaccurate data that lags will lead to stockouts and grumpy customers.
There are many ways you can make use of robust integrations, two common ones are fulfilling for pre-orders and automating orders for subscription customers.
If you want to incite anticipation for a product, offer pre-orders—you might be able to charge extra if it’s a limited-edition item, plus you’ll be better able to complete all the purchases if you know your order volume in advance.
On the fulfillment end, you need to have a system set up so that when orders are placed, the warehouse knows not to fulfill them yet. A 3PL who can handle complexities like this will be able to code each order in their system with a “Hold code” so that the warehouse knows not to fulfill the products until the “Hold code” is taken off (when your product launches).
Another inventory project you might run into is managing subscription orders. Offering a subscription model is a great way for a consumer packaged goods (CPG) brand to retain direct-to-consumer fans. But executing fulfillment for subscription orders, on top of single-purchase orders can get difficult from an inventory management perspective. If you’re running out of a particular flavor, you need a way to automate the priority of who that flavor goes to first (obviously subscription customers if they already paid and are expecting that flavor!).
If you’re looking for different types of value to give your ecommerce brand a boost, ask your 3PL what value-added services they offer. There are as many VAS as there are ecommerce company needs. By partnering with the right 3PL for your brand, it will allow you to scale or change with market demands in the most efficient way possible.