By 2026, the global e-commerce market is expected to top $8 trillion. Simply put, your business can’t afford to ignore your website as a sales channel. Just having a website that drives sales, however, is not enough. You need a space to store your company’s merchandise and processes to pack and ship them.
But you don’t have to do all of this on your own. Outsourcing your company’s fulfillment operations to a third-party logistics (3PL) provider can help your company keep up with a growing volume of orders as online shopping continues to increase in popularity.
Here’s why you should explore outsourcing your fulfillment.
1. You Can Save on Shipping Costs
Generally speaking, e-commerce shipping costs will always be higher for a customer living far away from a warehouse facility than for someone nearby.
Companies such as Amazon understand this. Their warehouse locations are strategically located near major population centers worldwide to minimize shipping costs. Shortly after a customer places an order, it arrives at their home.
Fortunately, companies of any size can store their merchandise near customers when outsourcing their fulfillment services. Many 3PL providers have multiple warehouse locations. As orders come in, they are directed to facilities near the customer who placed them to ensure speedy deliveries and low shipping costs. Some companies have even managed to save 10 to 15 percent in shipping costs by outsourcing their fulfillment rather than handling it in-house.
2. It Provides Your Business with A Clear Focus
In the past, many companies were considered vertically integrated. A single corporate entity oversaw a range of activities, from extracting raw materials from the ground through all stages of production.
Recently, however, companies have realized that trying to be the best at every step in the value chain is impossible. They have instead chosen to focus on what they do well and outsource the rest. Storage and fulfillment are often among the activities companies outsource.
By outsourcing your fulfillment function, you can focus on the parts of your business that set you apart from your competitors, whether it’s your marketing, innovative products, or exceptional customer service. It lets you run a leaner and more effective business.
3. You Can Better Handle Seasonal Fluctuations in Sales
During the holiday season, sales skyrocket nationwide. Warehouses are highly active during these boom periods.
If your company manages its own warehousing and fulfillment, the end of October through December can be chaotic—and costly. To keep up with demand, you may need to hire additional staff or pay existing staff members overtime to keep up with the volume of orders. All of these extra costs can cut into your company’s margins during what should be its most profitable time of the year. This can also help in avoiding the staffing challenges during the peak season. With the right resources and expertise, the increase in orders is handled efficiently without much additional costs. You do not need to worry about ballooning staffing costs when outsourcing fulfillment. 3PL providers typically only charge customers based on how much space their inventory takes up. This keeps costs predictable and prevents additional staffing costs from cutting into your profits.
4. You Can Capture New Markets with Greater Ease
Reaching customers in different states and even different countries than the one where your business currently operates can be a formidable challenge. Predicting shipping rates, arrival dates, and times can be difficult when entering a new territory. This uncertainty can leave a negative impression on early customers in new markets. These early impressions of your company among customers in new markets can limit its potential.
Trusting a 3PL provider with your e-commerce fulfillment operations can alleviate many of these concerns. They likely have experience serving customers in the market your company hopes to enter. Providing customers in the new market with an exceptional e-commerce shopping experience from the moment your business arrives will enhance its chances of long-term success. Their relations with reliable carriers and proficient knowledge of local regulations can guarantee accurate and cost-effective solutions.
5. You Receive Unmatched Visibility
Modern logistics are powered by technology. At a moment’s notice, warehouse operators and the companies they serve can access valuable insights in areas such as inventory levels and shipping times. When you partner with a 3PL provider for your fulfillment needs, you gain access to advanced technology and systems that provide unmatched visibility into your logistics operations. Through real-time tracking and monitoring tools, you can easily track the status of your inventory, check order fulfillment progress, and receive notifications on shipping times and delays. This level of visibility allows you to make data-driven decisions, optimize your supply chain, and provide accurate information to your customers regarding the status of their orders. By leveraging the advanced technology solutions offered by 3PL providers, you can streamline your operations, enhance customer satisfaction, and ultimately improve the overall efficiency of your business. Technology integration also helps in seamless communication. By harnessing the power of technology through a 3PL partnership, you achieve greater operational efficiency, improved customer experiences, and increased competitiveness in today’s fast-paced logistics landscape.
When you outsource your fulfillment operations to a 3PL provider, your company can take advantage of the latest warehouse management technology. Rather than having to collect information regarding the status of your inventory and orders, you can quickly access a range of data points, including:
- Product Availability (to avoid stockouts and overselling)
- Order Status
- Product Demand
- Carrier Selection
- Payment Processing
- Analytics (including average delivery times and stock levels)
With all of this information at your fingertips, you will be able to more easily identify areas in your supply chain that need additional attention and continue to improve your customers’ experience over time.
Build a Faster and More Efficient E-commerce Business
If you own a growing e-commerce business, you likely have a lot on your plate. Outsourcing your fulfillment takes one big one off it. Take your time reviewing vendors and find the right one for your business.
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