The e-commerce supply chain can become incredibly time-consuming as your volume expands. This is when using a third-party logistics company (3PL) makes sense for e-commerce stores. A 3PL’s job is to take some of the load off your plate as they can generally handle as little or as much as you need. While their services do come at a cost, there can be discounts for high shipping volume. They can also help your business scale to your busy or slow seasons.
Warehousing and Distribution
If you’re operating out of your home, you’ll need warehousing space to scale as demand grows. Reaching out to a 3PL for storage space relieves the crowding in your home or garage. These companies can also manage inventory control and distribution.
Sometimes your growth patterns can be erratic and unpredictable, so outsourcing warehousing and distribution to a 3PL will provide major benefits. If your company is growing so quickly it’s hard to keep up with demand, a 3PL can provide space and manpower to keep an accurate count of your inventory, as well as pick, pack and distribute your product all in one location. These companies can also help your business expand into different regions. Larger 3PL providers have distribution centers and warehouses strategically located to allow for quick shipping of goods to anywhere in the world. This enables you to expand your reach without significant investment.
Your e-commerce product line can dictate the type of logistics services you require, but a quality 3PL offers multiple transportation options. This is why 86 percent of shippers use 3PLs for domestic transportation. Most 3PLs provide transportation services and will usually offer volume or consolidation discounts if your business is moving a large number of shipments.
Some 3PLs specialize in certain commodities that others won’t. For example, if you sell electronics online, it may be tough to find someone willing to ship them without excessive fees to cover the product value. Meanwhile, 3PLs dealing with electronics regularly will already know all the insurance requirements and procedures to get your product into your customer’s hands without any hiccups.
Technology and Innovation
Most 3PLs will have technology they can implement into your current processes and systems. This helps you and the 3PL keep product SKU numbers, inventory levels and replenishment needs straight. Their systems are accurate and efficient, which limits the number of issues your company will run into when it comes to picking, packing and shipping. Cloud technology used by 3PLs help reduce transportation costs, improve visibility, manage inventory and achieve regulatory compliance, the top challenges shippers face.
Third-party logisticians can also offer innovations to boost your profits, once they’re familiar with your operations. Granted, they may be making more money off of you too, but these new innovations can put your store on the cutting edge. And, while these advances may add more to your bill, they could lessen your costs somewhere else in the supply chain.
Many 3PLs have the ability to essentially take over your supply chain if you allow them to. Or they can be an effective solution to just a single link in your supply chain. There are many situations when using a third-party logistics company makes sense for e-commerce stores. For any business hoping to grow (hopefully a common denominator), it’s definitely a worthwhile exploration.