3pl companies are simply third-party logistics providers that help retailers move goods from the manufacturer to the customer.
How do 3PL companies work?
A common issue for eCommerce businesses is how to manage and distribute their stock as well as fulfil their customer orders. Most companies cannot afford to invest in their own warehouse and private distribution network. This is where a 3PL or third-party logistics provider can assist.
3PL companies provide logistics capabilities by outsourcing the roles of warehousing, distribution, and monitoring. The cost of doing this all yourself is often uneconomical or unviable. By working with a quality 3PL provider, you can save a significant amount in costs and enjoy tremendous product efficiencies when it comes to speed of delivery and fulfilment.
What are the benefits of using a 3PL service?
Working with a quality 3PL provider can have many advantages. They excel in warehousing, order fulfilment, shipping, and sometimes even reverse logistics.
The key benefits usually include cost savings, reduced delivery time, improved customer service, efficiency of service, scalability, adaptability, and access to real-time supply chain data.
Rather than having to invest in your own warehouse and hire staff, you can instead outsource your order fulfilment through a 3PL service company. Doing this will significantly reduce your costs and therefore has the potential to significantly increase your business profitability. Imagine having to buy your own warehouse then pay staff to wait for stock to arrive, manage that stock then ship it all out once the orders come in. As you can imagine, these costs would likely be too much for the average eCommerce retailer, especially those that are just starting out or are keen to keep their fixed costs to a minimum.
Reduced delivery time
Once a customer has chosen their preferred item and purchased, they expect to receive their product within a reasonable time frame. By tapping a 3PL service provider, you can reduce the time it takes to deliver the order due to the process efficiencies associated with this type of service. 3pl companies are adept at moving goods in a seamless and efficient manner. This can help to avoid unnecessary delays and ensure that stock is shifted without unnecessary handling or bottle necks in the supply chain.
Improved customer service
3PL providers not only help you deliver the right product, at the right time to the right address, they can also minimise the chances of breakage and spoilage of products. This will ultimately lead to better customer satisfaction and therefore improved reviews and ratings for your brand. If improving customer service is something that is important to you and your business, then using a 3pl company is likely the right way to go.
Efficiency of service
Outsourcing your logistics can boost the efficiency of your whole supply chain as you no longer handle the product yourself. 3PL warehouses are specifically designed for maximum efficiency and use barcodes and scanners to ensure customer supply chains can flow as efficiently as possible. This also applies to more complex orders. Logistics providers use data management systems to optimise their fulfilment. This means that orders that might have been difficult to fulfill by a retailer can be more easily met at the warehouse.
eCommerce entrepreneurs who are seriously thinking about scaling their business should look closely at 3PL companies. By “plugging in” to their distribution systems and infrastructure, you can scale your business much faster than if you were trying to fulfill your own orders by hand. Once you have streamlined your sales logistics process, this frees you up to explore other valuable tasks such as expanding into new markets. Working with 3pl companies can be an exciting step in the evolution of your business. They enable you to accelerate your delivery systems at a rate that would never have been possible if you had to do everything yourself.
In an ever changing and tech driven world, things can change on a regular basis. By partnering with a 3PL company, you can benefit from their knowledge and expertise on new technological advancements. Smart business owners acknowledge that what has worked today might not work in the future therefore, they are keen to remain adaptable and nimble in the marketplace. Since established 3PL companies have a lot of experience, they can share with you the knowledge and lessons they have learned over the years in order to streamline your own supply chain.
Access to real-time data
Most quality 3PL companies provide real-time access via a web portal or mobile phone app. This enables you to both monitor your stock levels with real-time reporting and, enables oversight over valuable statistics and metrics. Features that you should be looking for include the ability to view your inventory on hand and amounts available, order processing status, receipt processing status and delivery exception reports for parcels not yet delivered. Other useful metrics to look out for include SKU demand profiling and days on hand reporting, shipping recovery reporting, per item logistics pricing reports and total net cost per item delivered trend data.
If you are looking for a 3pl company to take your business to the next level, then call Invenco today.