Third Party Fulfillment
Updated by Neil
We previously read about the advantages and disadvantages of Direct Fulfillment and Outsourcing. Here we cover switching to 3PL providers.
Fulfillment by a third party comprises giving out tasks like inventory management, packaging, and shipping orders to a 3PL. On choosing to work with 3PLs, the third party puts your inventory in a fulfillment center. When you get an order, the third-party does the job of picking the order from the fulfillment center, packaging the order for the customer.
The Decision to Switch
The clear sign that tells you that it is time to switch to a 3PL is when your business is growing at a high rate, and the scope of operations is getting bigger. As the quantity of sales increases, it can become harder to keep pace with the work. Eventually, the operations need more labor, more time, and more capital invested as managing all the logistics yourself means a requirement for a larger space for storage, software for management of the warehouse, more staffing, equipment for delivery, packaging, insurance for liability, etc. The time spent on keeping pace with the fulfillment of large scale orders would be better if spent on growing your market, making new products and services, and building a better market presence for your products.
Suppose you decide to collaborate with a 3PL. In that case, it will aid your enterprise with shipping orders more efficiently and do so without compromising other aspects of ensuring growth in your business. You will no longer have to deal with the costs of the in-house management of inventory. You will be in collaboration with experts who have good work experience, worldwide presence, and necessary resources to ensure a quicker, cost-efficient mode of order fulfillment.
The factors that should be considered while hunting for a 3PL:
- Tailored levels of support: You must first make sure you would prefer if the third-party managed all of the customer-supplier processes or worked with the back-end operations. As appealing as the former option may sound, you must first consider whether or not the supplier is capable of matching your level of experience in handling your products, your customer base, and your suppliers.
- Sales Channel Integration: The capacities features differ for different third-party fulfillment providers. You should try to search for 3PLs that connect directly to the platforms if you are working with big e-commerce platforms like Shopify. The syncing of data and orders between the third party’s technology and your store can be conducted efficiently. This will consequently help you reduce delivery times, prevent running out of stock, and improve the process’s general efficiency and accuracy.
- Location(s): Before choosing a location, you can look into the areas where the third-party’s fulfillment centers are set. A third-party with various fulfillment centers spread across the country will be a better choice for you if you have a broad customer base. This will help you to fulfill deliveries with lower shipping costs and quicker deliveries by practically reducing the length the products have to travel before being delivered.
- When you deliver the products out of one center, it entails the risk of shipping the products across long distances at some point and more so if the fulfillment center is located in some remote area.
- International Shipping: You should make sure that the 3PL you choose to work with offers shipping internationally if you have customers across borders regardless of their warehouses’ location.
- Transparency: The 3PL you choose must give importance to transparency throughout the process. You should ensure that the pricing they offer is mainly made according to your business and its requirements and that there are no hidden charges or any useless fees.
- The third-party should also be transparent when it comes to the position of your products while shipping. For example, You must always choose a provider who gives you full access to the information related to the tracking of your products, which you can, in turn, give to your clients.
- It is a good idea to opt for third-party fulfillment if your business is growing and the magnitude of orders is outgrowing your fulfillment capacity.
- The correct partner for your enterprise is one who offers services that help your business grow more, increase efficiency, and help you cut costs.
- The services that the third-party offers must contain support tailored to your business should be well integrated with the e-commerce platform you choose, a widespread network of warehouses for fulfillment and transparency.