The COVID-19 pandemic caused an unexpected boom in the e-commerce sector that accelerated the consumer shift to e-commerce by about five years. While this has been good for online sellers in a lot of ways, many were wholly unprepared for this rapid increase in sales. Plenty of in-house e-commerce fulfillment operations have been strained well beyond their capacity, resulting in lower on-time delivery rates and negatively impacted customers.
With the e-commerce sector expected to continue its strong growth in 2021, many e-Tailers are looking for more sustainable alternatives to their fulfillment challenges. Partnering with a third-party logistics (3PL) provider is one of the best options for establishing long-term fulfillment capabilities.
The Benefits of Using a 3PL for e-Commerce Fulfillment
Finding a good 3PL to take on the burden of fulfillment offers significant advantages for an online seller. Some of these include:
- Leveraging expertise. A 3PL with experience in e-commerce can bring their previous experience and logistics industry knowledge to the table to help you streamline order fulfillment. A good partner will understand best practices that can help you cut costs and improve key performance metrics.
- Better parcel rates. A fulfillment provider ships parcels on behalf of dozens or hundreds of clients. As a result, your 3PL can often leverage their high shipment volumes to lock in lower parcel rates than you could secure on your own.
- Scalability. If you outgrow your in-house fulfillment center, then it’s up to you to locate new real estate and establish a new operation that can handle your growing needs. This can take well over a year in many cases, which can make it difficult for a rapidly growing business to keep pace. Using a 3PL with a national footprint can help you expand more quickly into new markets to accommodate your expanding sales.
- Investment. Owning your own fulfillment center requires significant upfront investment in equipment, technology, and real estate. When you sign on with a 3PL, you don’t have to do the heavy lifting when setting up a new operation. This can save e-commerce businesses a lot of money over time.
- Improved customer experience. Improving your on-time delivery rates will ultimately improve the experience for your customers. A better customer experience results in repeat business and a positive brand image.
Finding the Right Fulfillment Provider for You
There are thousands of fulfillment 3PLs out there and not all of them are the same. Follow these three tips when sourcing a 3PL to make sure you find the best partner for you.
- Figure out what you need. Before you do anything else, identify your specific wants and needs. While you obviously need a provider that can handle your current order volumes, make sure to consider your growth projections for the next several years as well. This information will help you determine what you need out of a logistics partner.
- Narrow down your request for proposal list. Include as much detail as you can in your RFP and send it out to 10 or less 3PLs that seem like they would be a good fit for you. Many of the best 3PLs don’t respond to general RFPs that were sent out to hundreds of potential providers because competing with that many bids can often be a waste of time.
- Scrutinize each contender carefully. Make sure you take a very thorough look at each prospective provider and what they bring to the table. Ask for references and check them. When you sit down with representatives from the 3PL, ask pointed questions about everything you need or want to know. Also, make sure that they have the capacity to scale up as your business grows so you don’t have to repeat this process in a few years.
Your fulfillment 3PL will be an extension of your business, so it’s essential that you find one that syncs with your culture and goals. It’s much easier to find a new provider than it is to change providers, so take your time and find the right fulfillment services provider for your unique business.
About Phoenix Investors
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.