Are you feeling overwhelmed as your eCommerce business grows? Can’t quite keep up with the demand but don’t have the capital to invest in a massive supply chain infrastructure of your own? You don’t need to. With a 3PL (third party logistics), you can access sophisticated systems, warehouses, and transportation networks that provide unmatched customer service and cost savings. In this blog post, we’ll explore how tapping into 3PL infrastructure may be just what’s needed for growing eCommerce businesses to weather even the stormiest market.
What is Third Party Logistics?
3PL warehouses provide businesses with access to infrastructure and technologies they wouldn’t be able to obtain on their own, enabling them to reduce friction and deliver value efficiently to customers. 3PL companies have become invaluable tools for eCommerce businesses by expertly handling inventory management, warehousing, order fulfillment, and other logistics services. 3PLs are undoubtedly revolutionizing the world of eCommerce — it’s no surprise that 3PLs are the way of the future when it comes to optimizing supply chain processes for maximum efficiency.
When Do Businesses Need a 3PL provider?
If you’ve never seen the impact of third-party logistics providers, you may be under the impression that it’s an expense you can do without. But trust us when we say that it pays off a lot more than doing all your fulfillment in-house! 3PL companies can help merchants – from small businesses to eCommerce empires – with their scalability needs. When faced with unforeseen order growth or a spike in customer demand, working with a third party warehouse and its services can save you time and money in the long run. After all, nothing’s worse for your brand than breaking promises to customers, especially in an era when 60% of global consumers expect same-day or two-day delivery.
How 3PLs Bring Technology to Infrastructure
3PLs have come a long way since the days of organizing physical products in dusty warehouses – they’ve brought technology to infrastructure! Online merchants are all too aware that keeping up with the big retailers means implementing advanced 3PL tech, such as their warehouse management system (WMS). A WMS allows 3PLs to connect data from various sources, enabling end-to-end visibility into every single order. Wherever you send it, you can track it! So what exactly does this mean? In short, online merchants can more easily compete with larger retailers by turning to technology-enabled 3PLs for services.
- Automating the 3PL Automating the 3PL process isn’t just for robots, it’s for people too! By automating processes, businesses can save precious time and effort. Ordering and tracking become an effortless breeze. With real-time updates in your online store, warehouse staff is updated on orders as soon as they’re placed. Furthermore, various parameters allow you to quickly search and find exactly what you need. And that’s not all – fulfillment software also ensures optimal inventory management, so reordering is quick and efficient. Automation leads to reduced delivery times so customers can receive their packages faster.
- Data Moves Freight Whether it’s to shave off delivery time or reduce inventory costs, data can help get freight moving in the right direction. Fulfillment software can use past data to ensure you’re sending your products to the best possible locations. No more guesswork! With built-in metrics focusing on peak times, revenue, by channel, and quantity orders by USPS zone, you’ll have unbeatable insight to optimize your supply chain. Plus, data logs only get more accurate as time goes on and you gather increasing amounts of order history – it’s a win-win!
- Reduce Errors 3PL technology is here to make our lives easier, especially when reducing errors in order fulfillment. By automating the shipping process with connected technologies, 3PL infrastructures eliminate duplicated work and human error that can cost customers time, money, and an overall bad experience. What’s more, 3PL technology offers insight into the 3PLs performance with complex data like accuracy levels and delivery timelines that demonstrate how orders are being handled every step of the way.
- Meet Customer Expectations Customers today expect lightning-fast delivery within the same day or two days, which can only be achieved if the right technology is in place. That’s where a tech-enabled 3PL comes in; they can help you optimize your storage and shipping to meet customer expectations. With their system, your inventory will be distributed to warehouses closest to your customers. Each time an order is placed, algorithms select the courier providing an efficient, cost-effective solution.
How to Tap into 3PL Infrastructure
Partnering with 3PL services can help give you a leg-up in today’s competitive world, but it’s essential to be sure the 3PL infrastructure can keep up with your business growth. Before signing on, evaluate the 3PL’s existing logistics operations—are they set up to store, pack, and efficiently pick orders while accommodating a rise in inventory? Additionally, ask about the cost and if any steep start-up fees come into play. While upfront costs may seem high, future savings may be unlocked when you consider what is included in the quote – from less overhead to lower labor costs down the line. Ask your 3PL vendor what reporting capabilities they offer; this allows you to track areas such as order accuracy and timeliness of deliveries, along with any potential risks or liabilities associated with broken or lost items. You’ll also want to confirm that 3PL integrates well with your existing inventory, order management, and warehouse management software for a smooth transition into 3PL services. Are you looking for warehouse software that works for 3PLs? ShipHero’s warehouse management system comes with integrations plus real-time reporting, the perfect combo for staying ahead of the future of your business!
Third Party Logistics Advantages and Disadvantages
The 3PL infrastructure, which is tailor-made for the e-commerce industry, makes it easy for small to medium-sized businesses to launch their products worldwide and scale up their operations on demand. However, 3PL isn’t entirely sunshine and rainbows – there can be hiccups ranging from extra fees to lags in shipping standards. As always, it’s important to weigh the advantages and disadvantages of 3PL in your decision-making process before investing time and energy into outsourcing logistics.
Advantages:
1. Better Shipping Rates
When many brands join forces and leverage the volume of their orders, they can negotiate better rates from carriers. That’s why 3PL providers are so great: You may be small in number alone, but together you’ll get heard loud and clear for discounted prices that lead to greater profits per order.
2. Decreased Shipping Time
So how do you compete with Amazon Prime to get packages to customers? Building tons of warehouses across the country might be expensive, but you can hit that two-day mark without breaking the bank by using a 3PL.
3. Real-time Transparency
Real-time transparency gives brands the advantage of being in direct control: accurately stocked shelves and order status updates that come lightning fast. With paperless warehouse operations and Tier 1 WMS data at your fingertips, you can keep a refreshed eye on every detail – from macro to micro!
4. Strategic Partnership Networks
Instead of relying on a go-it-alone approach, tap into 3PLs strategic partnership networks to get your hands on solutions specifically made for you. From integrated tools and offers to highly customized experiences—you can make it happen with these trusted partners!
Disadvantages:
1. Upfront Investment
It’s clear that when it comes to 3PL providers, there’s no free ride – you’ll have to pay the piper for setup costs such as software integration, SKU uploads, and account access.
2. Hours or Workflow
Instead of packing your orders, wouldn’t it be nice to have a third party do the job for you? But beware – working with 3PLs means relying on their hours and workflow. It’s best to plan ahead when engaging such services, as any disruption could lead to hiccups in delivering your goods.
3. Finding a 3PL You Can Trust
Choosing the right 3PL partner isn’t just about getting a good deal – although that doesn’t hurt. You’ll have to put in some homework and carefully vet reviews, size, reach, and service offerings before you can confidently shake hands with your ideal 3PL provider!
ShipHero is a Shopify Third Party Logistics Partner!
ShipHero, with 3PL infrastructure and software that seamlessly integrate with Shopify and Returnly (to name a few), is undoubtedly a 3PL partner you’ll want to know about. With ShipHero’s one-stop shop for 3PL services, you can rest easy knowing that your inventory will always be on track. And saving money? That’s a no-brainer! Thanks to real-time ship rate shopping and built-in reporting features that cover COGS, picker/packer efficiency, replenishment, and more… we might be the best 3PL for Shopify you have ever tried!
3PLs: The Backbone of Supply Chain Management
3PLs are often the unsung heroes of a shipper’s operations, providing an invaluable infrastructure to help them track inventory, orders, and logistics with greater precision and certainty. Their solutions offer robust analytics, machine learning capabilities, and automated toolings for pricing, booking, and documentation, allowing shippers to make better decisions backed by fact-based data quickly. Despite the apparent advantages 3PLs present to businesses of all sizes, many fail to take advantage of 3PL tech solutions. As 3PLs have become essential in managing supply chains, it is time for shippers to reevaluate 3PL advantages and disadvantages and prioritize using their 3PL business relationships more effectively to stay one step ahead of their competition. 3PLs are the future of eCommerce. By tapping into their infrastructure, you can level up your customer service while saving money on warehousing and transportation. If you’re feeling overwhelmed as your business grows, consider using a 3PL to take some of the pressure off. At ShipHero, we can help you find the right 3PL for your needs and our software will manage everything for you so you can focus on running your business. Contact us today to learn more! —
About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With thousands of brands and 3PLs relying on us daily, we’re here to help with all your logistics needs. Stay informed about everything in third party logistics by following ShipHero on LinkedIn and subscribing to our newest blogs and updates.
