As we’ve come to expect in the 21st century, online shopping gives consumers instant, on-demand access to goods and services nearly anywhere in the world. As online shopping has now replaced almost every aspect of traditional brick-and-mortar retail, it’s essential for the business owners behind these operations to keep up with demand.
Keeping fulfillment and logistics operations in-house for most companies isn’t viable, especially in a world of one-day shipping to anywhere in the US. Enter the 3PL (third-party logistics) company: the answer for many businesses struggling to keep up with their orders.
Why is it that 3PL companies are so essential to doing business these days? And how can they help e-commerce companies launch their business in a scalable, value-adding way? Let’s dig in.
What is a 3PL?
Let’s break it down. 3PL stands for third-party logistics. “Third-party” means it isn’t your business; the service is being outsourced to another company with the necessary equipment, personnel, and other capital infrastructure to handle this aspect of your business for you. “Logistics” is just a term referring to a broad scope of warehousing and fulfillment operations. These services can include:
- Warehousing
- Inventory Management
- Shipping & Receiving
- Pick & Pack
- Custom Kitting and Other Packaging
- Transportation (LTL & FTL)
The purpose of these providers is to manage and optimize supply chain operations for the businesses they work with. E-commerce business requires more specialized 3PL services, which may include:
- Specific Infrastructure & Fulfillment Technology
- A Network of Warehouses for Dropshipping
- Additional Inventory Management Controls
- Expedited and Efficient Order Processing
- Qualified Staffing for Assured Turnaround
E-Commerce Growth
As technology improves and consumer demand grows, e-commerce operations have accelerated to meet the opportunity. Above and beyond the normal growth, COVID-19 added an extra 19% boost to e-commerce revenue in 2020. The pandemic created a larger emphasis on e-commerce, which became vital for companies to capitalize on.
Considering the growth of e-commerce, it’s more important than ever to consider how a 3PL provider can help ensure a company can meet the increasing demands of consumers.
How a 3PL Helps Fill E-commerce Orders
With the preponderance of fully-online businesses, it’s critical that a company creates winning experiences for potential customers right out of the gate–or risk being abandoned quickly for a more contemporary substitute. E-commerce is a completely digital experience, and it only takes a single poor experience to turn a customer away. A satisfactory ordering process is necessary to make a good first impression, and this often comes down to the logistics technology available to the company. Details like available inventory and shipping times are important to help your business convey credibility to consumers in the world of e-commerce.
Working with a 3PL will provide a number of benefits to a company’s operations, such as warehousing, order fulfillment, and inventory management capabilities.
E-commerce Warehousing
E-commerce businesses need to hold enough inventory to meet consumer demand. But storage quickly runs out. Working with a third-party logistics provider keeps inventory organized and accounted for. 3PLs have large warehouses to ensure safe and efficient storage for all of their partners’ products.
E-commerce Order Fulfillment
3PLs are fulfillment experts, and make sure that all orders get carried out quickly and efficiently. This frees the company up to focus on its core competencies and drive more sales.
When an order is placed on your e-commerce site, it’s automatically pushed to the 3PL through software. From there:
- A 3PL company employee gets a picking list to collect the items that have been ordered.
- The items are packed in boxes with the receipt and order details.
- The 3PL company prints the shipping label and the shipping carrier delivers the package to your customer.
- Tracking information is uploaded to the 3PL software.
E-commerce Inventory Management
For an e-commerce business, it can be difficult to predict order volume. Keeping track of inventory is essential to your business, and partnering with a 3PL gives you access to an inventory management system with real-time updates on inventory counts to make sure your business runs smoothly. A 3PL company will use an inventory system called a Warehouse Management System (WMS), a software system that tracks and manages nearly all warehouse activities.
Key Factors in choosing a 3PL for E-commerce
When considering the right 3PL for your business, there are several factors to consider. You should evaluate a 3PL company to make sure it has the right capabilities to meet your growing business needs.
Experience and Competencies
Working with an experienced and established 3PL is important to ensure that the fulfillment and logistics needs will be taken care of without issues. If your business operates in some part through e-commerce activities, the 3PL you select will need to be capable of processing e-commerce orders and returns in a timely manner.
Scalability and Flexibility
Making sure your 3PL provider has the ability to scale with your business needs is important–as your order volume grows, the 3PL will need additional staffing to guarantee delivery promises. An e-commerce business must make sure that the 3PL partner they choose is equipped to service them for the long haul.
Pricing and Fees
Naturally, pricing is often the largest factor. Taking services into consideration when comparing fees is important, as not all 3PLs provide the same level of service and extras that could make the difference for your end user.
Working with Nautical
Nautical is a centrally-located 3PL provider in the United States. We specialize in helping e-commerce businesses streamline their fulfillment operations. Our newly-upgraded warehouses, experienced team, and advanced technology enable us to handle everything from inventory management to shipping and returns.
By partnering with us, you can focus on growing your business while we take care of the logistics. Our flexible solutions can be tailored to your specific needs, ensuring that your orders are delivered on time and your customers are satisfied.
