A third-party logistics (3PL) provider typically handles your end-to-end order fulfillment, right from managing your inventory in warehouses, handling incoming orders, and receiving and packing goods, all through to delivering the goods to your customer’s doorstep. Different companies and industries can benefit from 3PL applications, including wholesale, retail, pharmaceutical, collateral distribution, eCommerce, subscription box services, and more.
Generally, 3PL providers take care of complicated and strenuous order fulfillment to make your supply chain smooth and profitable. Whether you are a small business with space constraints or an established organization with large volumes of orders, a professional 3PL company can simplify your order fulfillment process, reduce inventory shortage, and improve your bottom line.
Today’s 3PL service providers don’t just offer a pick-and-pack service but deliver highly streamlined and unified order fulfillment. Whether you need just a few orders every month or several orders each day, working with an experienced 3PL offers multiple economic benefits to your business including:
1. Reduced Shipping Costs and Time-To-Customer
Currently, Amazon can ship to 72% of the US population in just a day. Over 40% of the USA population is less than four hours with supply chain facilities in major hubs in each state. Major eCommerce companies and retailers are following suit to expand their fulfillment capabilities from multiple distribution centers and stores.
Since customers are highly influenced by delivery timelines and shipping costs, working with a 3PL with strategically located distribution centers can give your business competitive delivery and cost options.
2. Bulk Shipping Rates
Global shipping rates often fluctuate based on fuel prices, accessorial fees, and other market forces of supply and demand. Consequently, eCommerce players looking to have some level of stability in shipping costs may be negatively impacted.
A reliable 3PL provider can help you attain more stable shipping costs by offering bulk shipping rates based on quantitative or periodical calculations. For example, an eCommerce retailer can engage a 3PL provider for a flat shipping rate for specified volumes of inventory or number of transacted orders, ensuring long-term cost efficiencies. Low shipping costs and speedy delivery times from a 3PL helps online retailers offer dependability and consistency in a sustainable way.
3. Changing Fixed Costs to Variable Costs
When it comes to internal fulfillment, labor accounts for over 50% of the total cost. Typically, there is a fixed investment in facilities, IT systems, and material handling and conveyance, irrespective of the transactions processed. By using 3PL services, the cost of transaction processing will rise and fall based on volumes processed. You will only pay for the cost of product storage space and specific services for orders and return management, saving you money in the long run.
4. Flexible & Scalable Services
Working with a 3PL provider allows you to effectively scale labor, transportation, and space according to your business’s unique inventory management needs. Seasonal businesses can particularly benefit from seamless transitions between market lows and highs. You can also utilize extra warehouse space and logistical resources as needed.
Besides, working with a 3PL provider makes your business better equipped to grow into new territories with fewer barriers. As your company grows, your 3PL service provider can help you scale accordingly by offering resources and capabilities to support your growth into new regions and markets.
5. Expanded Distribution Network
Experienced 3PL companies can seamlessly receive and distribute tens of thousands of items through a network of major cross-dock distribution facilities. Regardless of the volume of goods you want to ship, 3PLs provide faster time-to-implement and much lower costs than undertaking the task on your own.
Also, most 3PL companies offer a vast resource network that provides significant advantages over your in-house supply chain. By leveraging the resource networks of your 3PL provider, you can optimize and execute steps in the supply chain more efficiently and cost-effectively.
6. Strategic Expansion of Geographic Footprint
To ensure faster deliveries, particularly on-demand, your online business would need multiple distribution centers located as close to your customers as possible. Unfortunately, renting or leasing warehouses in each major suburban location or urban center would be extremely expensive. The ROI on such an investment will even be negative if you have inadequate order volumes.
The wide shipping zone of 3PL providers could be a game-changer in such situations. A dependable 3PL provider can help serve customers in far-flung places fast and in an affordable way. In other words, 3PL providers will help you stretch your geographical footprint without the need to spend a fortune in leasing warehouses and maintaining them even when order volumes are fluctuating.
Improving your eCommerce fulfillment is a guarantee of reaping the best of a successful sales season. All the odds are on your side if you start the preparations today and avoid past mistakes.
This guest blog post was provided by Jason Chan at Rakuten Super Logistics. Rakuten Super Logistics is a 3PL service provider with 12 warehousing and fulfillment centers throughout the United States. Looking for a new 3PL partner? Visit https://www.rakutensl.com/ or click this link to get a quote.
