The previous chapter compared the benefits and drawbacks of direct fulfillment and outsourcing. This chapter covers making the switch to a third-party logistics provider (3PL).
Third-party fulfillment involves outsourcing tasks such as inventory management, packing boxes, and shipping orders to a third-party logistics provider (3PL). If you choose this option, inventory is sent to a 3PL’s fulfillment center. When a customer places an order on your online store, the 3PL picks, packs, and ships the order to your customer.
The Decision To Switch
There is one major sign that you can tell whether working with a 3PL is right for you. That’s when your business is growing quicker than your operations can scale. As your order volume grows, it can be hard to keep up. It increasingly requires more labor, time and money because managing logistics in-house eventually means larger warehouse space, warehouse management software, packing, and shipping equipment, staff labor, liability insurance, etc. Time spent fulfilling orders yourself might be better spent on growing your customer base, developing new products, and marketing your business.
Partnering with a 3PL can help your business ship orders more efficiently without having to de-prioritize other aspects of growing your business. You won’t have to deal with the expenses of managing logistics in-house. Also, you work with fulfillment experts who have the experience, geographic footprint, and resources necessary to drive more efficient, affordable, and faster order fulfillment.
Here are the most likely factors that you should consider when looking for a 3PL:
- Tailored levels of support. First, consider whether you want the provider to take over all supplier and customer operations or just focus on back-end operations. The first option may seem tempting, but square up whether a 3PL can match your experience working with your products, customers, and suppliers.
- Sales channel integration. Third-party fulfillment providers have differing capabilities and their own unique features and services. If you use a major e-commerce platform, such as Shopify or BigCommerce, look for a 3PL that connects directly with your e-commerce platform. Orders and inventory data can be seamlessly synced between your third-party fulfillment provider’s technology and your online store. This will help you speed up deliveries, prevent stockouts, and improve order accuracy.
- Location(s). You should also consider a 3PL’s fulfillment center location(s) before making your decision. If your customers are spread across the country, a third-party provider with multiple fulfillment centers can help you offer faster, more affordable shipping by shortening the distance that an order has to travel.
Shipping out of one fulfillment center risks a much longer shipping distance for some customers, more so if the warehouse is located in a rural area.
Use this inventory distribution calculator to analyze your order history and calculate the optimal fulfillment center locations for your e-commerce business.
- International shipping. If you plan to ship to international customers, make sure that this service is offered by the 3PL you choose, regardless of where their fulfillment centers are located.
- Transparency. Finally, choose a 3PL that values transparency throughout the fulfillment process. Make sure you receive pricing that is tailored to your business’s specific needs. You should not be beholden to hidden fees or unnecessary costs.
A third-party fulfillment provider should also be transparent when it comes to the status of your shipments. For example, work with a 3PL that allows you to access shipment tracking information in real time so that you can pass that information on to your customers.
- Working with a third-party fulfillment provider can be a great choice for your business if you find yourself outgrowing in-house order fulfillment.
- The right order fulfillment partner for your online store should offer features and tools to help your business save money, become more efficient, and grow faster.
- These features might include tailored levels of support, integration with your e-commerce platform, a nationwide network of fulfillment centers, and transparent pricing.
- 3PLs From A To Z: Definitions For E-Commerce Order Fulfillment
- Self-Fulfillment Vs. Outsourcing To A 3PL: Which Is Right For Your E-Commerce Business?
- Three Misconceptions E-Commerce Businesses Have About 2-Day Shipping
ShipBob offers simple, fast, and affordable order fulfillment. With a network of fulfillment centers across the US, ShipBob lets you split inventory across locations for 1-2-day delivery. ShipBob’s software seamlessly integrates with the leading e-commerce platforms to automatically fulfill orders as they are placed online.