eCommerce fulfillment partnerships are not for every e-commerce business. Some businesses have the capacity to handle their own logistics, while others require a strategic partnership with a third-party logistics provider (3PL) to sustain and grow their business. If your e-commerce business is ready to take things to the next level, partnering with a 3PL can help you scale faster and more cost-effectively. As an e-commerce entrepreneur, there are plenty of operational demands placed on you as an individual business owner. There’s the constant search for new suppliers, managing logistics with vendors, shipping orders directly to customers, managing customer service inquiries...the list goes on and on. That’s why it’s important to understand which aspects of your business can be improved through partnering with a 3PL partner.
What is a 3PL and Why Does My Business Need One?
The 3PL industry has grown exponentially over the past decade. According to the latest figures from the U.S. Department of Transportation, the air cargo industry generated over $900 billion in 2017 alone. The air freight logistics industry handles the air transport of goods, documents, and samples. So what is a 3PL? A 3PL is short for 3rd party logistics provider. Simply put, a 3PL is a company that partners with multiple e-commerce businesses to manage large-scale logistics operations. They assist with warehouse management, inventory management, transportation management, e-commerce fulfillment, and other supply chain logistics services. As an e-commerce business owner, you face a number of challenges when it comes to logistics. You’re likely sourcing products directly from suppliers, fulfilling orders, and shipping items to customers yourself. Eventually, doing this yourself becomes unsustainable. You’re putting unnecessary pressure on your internal resources, and you’re not utilizing a strategic partner that has the expertise required to scale your business. When scaling your e-commerce business, the best option is to partner with a 3PL.
Improving e-Commerce Supply Chain Operations
When customers place an order with your online store, you have to fill the orders as quickly and accurately as possible. As you’re likely already aware, there are numerous inefficiencies that may arise while navigating the supply chain:
Issues with inventory - Products may be out of stock, causing delays in shipment to customers. Inventory may also be overstocked, which results in wasted capital.
Issues with transportation - Transportation issues may include delayed shipments, shipment damage, and theft.
Logistical inefficiencies - Transportation delays may cause inventory issues, which may lead to logistical inefficiencies, such as out-of-stock situations and missed sales opportunities.
A 3PL can help to address these issues by managing the entire supply chain process for you. They’ll ensure your products make it to the warehouse, manage your inventory, and handle the entire fulfillment process from start to finish.
Warehousing and Inventory Management
One of the most important aspects of e-commerce logistics is proper warehouse management. After all, warehouses store your inventory, which makes up the backbone of your entire operation. When managing your own warehouse, you’re required to invest heavily in infrastructure and equipment. You’re also tasked with hiring and managing a team of employees to oversee operations. It’s not uncommon for e-commerce entrepreneurs to warehouse their own products... at first. While it may seem like a viable option in the short term, warehouse management is incredibly expensive and time-consuming. You’re likely paying much more per square foot than you would if you partnered with a 3PL. You’re also responsible for all the issues that come with owning or leasing a warehouse. Why do that to yourself?
Shipping orders from the manufacturer and losing track of your products? Ouch.
As e-commerce businesses grow, they’re often required to store product inventory in several locations. This includes manufacturer warehouses and distribution centers spread across the map. Since you’re managing these locations directly, it’s easy to lose track of how much inventory you have and how much space each product is taking up. Plus, you're losing money on shipping charges. That’s where automated storage management comes into play. ASM is a service that’s commonly offered by 3PLs. It helps to track product inventory, space utilization and involves repacking products for more efficient space utilization. Automated storage management also includes repackaging oversized shipments for more cost-effective, efficient storage and shipping.
3PL Partnerships in E-Commerce: Conclusion
As an e-commerce business owner, your time is best spent cultivating relationships with customers and employees. You should be focusing your efforts on product development, marketing, and customer service. Not logistics. A 3PL can help to alleviate the pressure of managing your own logistics operation. They can handle the warehouse operations, inventory management, and transportation management so you can focus your efforts on what matters most: growing your business.
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