Managing logistics operations is a huge challenge for ecommerce businesses today. To move products from the manufacturing floor to the customer’s door as quickly and cost-effectively as possible, ecommerce companies must be able to operate with the utmost efficiency.
Many businesses find that – as they scale and the volume and variety of orders they have to handle increases – they struggle to manage their inventory and their order fulfillment operations.
To conquer these challenges, many companies outsource various logistics functions to third-party logistics (3PL) providers. In fact, around 60% of all shipments made by ecommerce companies are handled by 3PLs.
Most 3PL providers offer an a la carte menu of services, allowing you to pick and choose according to your business needs. These 3PL solutions can help you:
- Streamline various areas of your logistics operations – from order fulfillment, to inventory management, expedited shipping, reverse logistics, and more.
- Scale your ecommerce business, enabling you to handle increased order volume and expand into new markets.
All you have to do is choose the right 3PL for your business, and then select from their suite of services.
In this blog, we will provide an overview of the services that 3PLs typically offer, so that – if your ecommerce business decides to engage such a provider – you will be able to choose which services are right for you.
Order fulfillment
One of the fundamental processes in ecommerce is order fulfillment. You receive an order from one of your online sales channels (such as your brand website, an ecommerce marketplace, or a social media store), locate the products in your inventory, then pack those products and ship them to customers. Many small- and medium-sized ecommerce businesses start off handling their own order fulfillment (and many have stories of the early days of their companies, packing their orders from their garages or living rooms!)
But as these businesses scale, many find that they are unable to cope with the complexity and challenges of order fulfillment on their own – and decide to outsource their order fulfillment to a 3PL.
By working with a 3PL, you can:
- Gain access to their fulfillment network and team of experts. Amazon Multi-Channel Fulfillment (MCF), for example, is a 3PL with a global network of over 200 fulfillment centers and more than 1.27 million operations staff and partners that you can leverage to streamline your order fulfillment operations.
- Optimize your end-to-end fulfillment process – from receiving and storing your inventory, to picking, packing, and shipping your orders, and even handling returns.
- Improve your performance in key order fulfillment metrics such as click-to-delivery speed, dock-to-stock time, on-time delivery performance, and undamaged package delivery rate.
- Overcome the challenges of ecommerce order fulfillment such as preventing stockouts, managing multi-unit orders, and handling seasonal spikes and supply chain volatility.
Inventory management
In today’s global economic environment – where the threat of supply chain issues and disruptions constantly looms – inventory management is a balancing act. Keeping too much stock can result in overstocking (and skyrocketing costs for excess inventory), while not having enough stock can lead to stockouts (which can lead to a loss of sales and customer trust). To avoid these pitfalls, ecommerce businesses must be able to maintain the right amount of inventory in the right locations, at the right times – and 3PLs can assist with this.
3PL providers can help you optimize your inventory management by:
- Distributing your inventory across their network of warehouses and fulfillment centers. MCF, for example, automatically distributes your inventory across Amazon’s fulfillment network so it’s a close as possible to your customer base – thereby reducing shipping costs and times.
- Storing your products in their facilities for as long as you need. Some 3PLs require you to enter into contracts for storage, while other providers – like MCF – offer flexible, pay-as-you-go pricing for storage.
- Consolidating your inventory into a single pool, that you can use for orders across all your sales channels. With MCF, for example, ecommerce businesses can tap into the same pool of inventory that they use for their Amazon orders (with Fulfillment by Amazon) and use it for their orders from off-Amazon sales channels (with MCF).
- Monitoring your inventory levels with the utmost accuracy, using state-of-the-art warehouse management systems and other technologies.
- Utilizing your stock in the most efficient and effective possible way to satisfy demand, whenever and wherever it arises.
Expedited shipping
According to the Baymard Institute, 22% of shoppers abandoned their online shopping carts and did not complete their purchases because delivery was too slow. This underscores the importance of being able to rapidly make accurate delivery promises to your customers at checkout and offer them fast delivery options (same-day, one-day, or two-day delivery) – and a 3PL provider can help you in these areas.
Some 3PLs – like MCF – are carriers themselves with their own global network and transportation fleet, while other 3PLs partner with carriers who offer shipping services.
A 3PL can help you improve your order delivery speeds and reliability. With MCF, for example, you deliver your orders to your customers’ doorsteps in as fast as one day, with an on-time delivery rate of >97%.
Reverse logistics
The order fulfillment process doesn’t always end with delivery. Ecommerce businesses must also be prepared to handle product returns or exchanges by customers. Seamless reverse logistics (which is also known as returns management) is a critical component of customer satisfaction and loyalty.
3PL providers can handle your end-to-end reverse logistics process – from customer support, to shipping products back to the warehouse, to assessing the returned stock and determining if it should be restocked or disposed of.
By making the returns process as smooth and simple as possible for consumers, 3PLs can help you maintain a first-class customer experience across all the channels you sell on.
Conclusion
In this blog, we’ve highlighted the main services that 3PLs offer. By engaging a 3PL provider, you can streamline your operations in these areas and others and set your ecommerce business up to succeed and scale in the future.
It’s important that, when you are choosing a 3PL, you select a provider that offers the right suite of services to meet your needs – so that you don’t have to worry about your logistics operations and can focus on building your business.
