The Covid pandemic, however unintentionally, created the perfect conditions for an eCommerce boom. Lockdown orders, self-quarantines, and social distancing forced consumers and businesses alike to adapt and take things online. Over the course of a single year, eCommerce revenue soared by an additional $219 billion just in the US.
Of course, behind the scenes of this eCommerce revolution was 3PL fulfillment getting products from online sellers to buyers. At this point, 3PL fulfillment companies are experts at helping online businesses wrangle their supply chains.
Still wondering what you get by working with a technology-forward 3PL fulfillment company? Not sure what 3PL fulfillment services even do? Keep reading for a breakdown of 3PL and its benefits
What Are 3PL Fulfillment Companies?
One of the big advantages of eCommerce businesses is that they require no physical location. You don’t invest in a brick-and-mortar storefront because your website is your storefront. The catch is that you also don’t get the inventory storage space that goes along with a physical location.
Some eCommerce business owners run their businesses out of their spare room or their garage. They have all of their merchandise shipped to their homes, package it, and ship it out to their customers. That can work for a while, but it’s not a long-term strategy.
What if your online store gets popular? The amount of inventory you’d need could easily overwhelm your available space.
Competing retailers began to invest in creating shipping advances, and the pandemic hit. More people around the globe had no other choice but to order from home. Last-mile delivery got tested to its limits.
This is where third-party logistics or 3PL fulfillment services enter the picture. Rather than you sorting, packaging, and shipping, the 3PL company does it for you.
What Types of Services Does a 3PL Company
The exact set of services offered by any given 3PL company will vary, but there are some common threads that you see. As a general rule, 3PL services will take possession of shipments for you.
Services that offer warehousing will store your merchandise for you. When orders come in, they’ll package the appropriate item and label it. Then, they hand it off to a local delivery service for last-mile delivery services.
These services typically take place in a 3PL fulfillment center.
Benefits of 3PL Services
Even average 3PL services offer some real benefits to eCommerce businesses and offline businesses. Let’s explore some of the major benefits.
One key benefit of outsourcing to a 3Pl service is that it lets you stay focused on core competencies. Odds are good that shipping isn’t your main business. Without shipping expertise, spending a big chunk of any given week dealing on shipping is ultimately time that you misuse.
Your business will function better with you and your employees focusing on selling more of your products. Your company will absolutely function better if you spend your time thinking about ways you can improve the business.
3PL fulfillment companies also deal in volume shipping. That lets them negotiate better rates with major shippers that last-mile delivery.
Big shipping services will typically cut the prices for a company they know will ship thousands of packages every month. All of that volume gives the 3PL company leverage that you cannot match with dozens or even hundreds of packages per month.
A 3PL service also lets you reduce costs by redirecting employees you had tasked with shipping duties onto more profitable tasks.
A 3PL service can also make it easier for you to expand into a new market. For example, let’s say that your eCommerce business is U.S.-based. Since you’re located in America, you’ve limited your business to U.S. customers.
It simplifies shipping, taxes, and customs because it’s all familiar to you. If you think about expanding your offerings even to Canada, though, you have to worry about building an infrastructure there. Those costs can make the project an automatic non-starter.
If you work with a 3PL company that has a presence in Canada, you get to bypass all of the costs that prevent expansion. The 3PL service already invested in infrastructure.
You can even leverage those facilities into selling in a new market without necessarily exporting from the U.S. into Canada. Your vendors can ship directly to one of the 3PL company’s Canada locations.
Better Delivery Options
Last-mile delivery began with improving the customer experience. Technology advances gave shoppers the visibility to track shipments. The customer got to see where their package was in the delivery process.
Customers on the move can change delivery options at the touch of a button. They can also send instructions to drivers about where shipments can be left.
The information showed expected delivery times or any reasons for delays. Transparency in the tracking also created a better image for the retailer, and new technology advances give companies more shipping options for routing. Shippers avoid elements that prevent prompt delivery with the ability to alter routes.
Shippers have consistent access to weather and traffic conditions. With data, they can ensure the delivery of products on time and without damage.
Another solution to better delivery options is the use of urban warehouses. Larger retailers are testing the tradition of bringing goods closer to the consumer. Having products on hand nearby will reduce delivery times and save operating costs.
A benefit to retailers is a larger pool of labor to draw from in urban areas. Companies like IKEA and Walmart have been urban warehousing for years.
Working with a 3PL fulfillment company can even improve your risk management. The 3PL service takes on responsibility for most of the things that can go wrong, such as misdelivery, product damage, and even incorrect product delivery.
Granted, you need to work out the exact details in your contract, but it does take a big chunk of risk management off of your plate.
Not all 3PL companies put the same level of effort into their technology game. In some cases, that likely boils down to a lack of ready cash. Nobody saw the pandemic coming, so nobody anticipated the need for major capital investment in IT infrastructure.
In other cases, there is the age-old problem of companies seeing the way they do things as good enough. It got the job done in 2015, so it should still work in 2022.
Technology forward 3PL companies don’t take that attitude. They see new technology investments as both necessary and critical for survival. Some common examples of technologies and technical innovations adopted by forward-thinking 3PL companies include:
- Scalable networks
- Geo Tracking
- Real-time visibility
- Transportation management systems
- Process automation
All of this technology helps ensure that you and your customers know where a parcel is at any given moment. It also boosts efficiency at almost every step of the process. That means that parcels arrive faster, leaving customers happier.
Technology-Forward 3PL Fulfillment and You
3PL fulfillment has a lot to offer, particularly to eCommerce businesses with limited space. You get to hand off an entire area of your business to people who understand it better. That limits risks, lowers costs, and leaves you free to work on your business instead of in it.
Technology-forward 3PL takes all of that up a notch. Continuous technological
improvement allows for heightened efficiency, real-time tracking, and faster delivery. All of which benefit you and your customers.
ACI Logistix specializes in technology-forward 3PL services for US businesses. For more information on our services, contact ACI Logistix today.
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