Going to a mall is fun. Browsing through shop windows, trying on new clothes, getting discounts and coming home with a big bag of our favourite goodies. Exciting, right?
Now let’s take one small element out of this equation.
Browsing through shop windows, trying on new clothes, getting discounts and coming home with a big bag of nothing. Shocking, right?
That’s what happens when you set up an e-commerce store without thinking about 3PL – third party logistics. More so, it’s a feeling your customer will experience if you don’t think beyond your website.
What is third-party logistics?
Here is what Google says about third-party logistics: They’re companies that oversee and manage the supply chain of e-commerce businesses, so that e-commerce merchants can focus on marketing, advertising, etc.
Here is what you should understand from the definition: When a customer places an order on your website, third-party logistics make sure that the order is picked up from your warehouse or manufacturing unit, taken to the fulfilment centre, processed, packaged and delivered to your customer. One must also note that third-party logistics also provides storage solutions in the absence of their own warehouse. They perform all those tasks that the customer cannot see on your website.
- Different services offered by a 3PL
- Advantages of a third-party logistics service provider
- What To Consider Before Hiring A 3PL?
Different services offered by a 3PL
E-commerce businesses take pride in offering not one, not ten but hundreds of products on their website so that the customer enjoys a variety and makes an informed buying decision. However, keeping an inventory of all those products can seem difficult with small warehouses or in the absence of a warehouse. This is where third-party logistics saves the day.
If you’re not the manufacturer but simply sell their products, third-party logistics procures the products from the relevant manufacturer and transports them to the fulfilment centre to be processed, packaged and shipped. In case you are the manufacturer of the products as well, third-party logistics help procure raw materials and machinery too.
One of the biggest hassles of running an e-commerce business is processing order. Customers can order one or more items together that are sourced from different manufacturers and need to be packaged accordingly. Fragile items need to be packaged with extra caution.
More so, the package needs to be weather-proof and tamper-proof in order to deal with unforeseen circumstances. A third-party logistics firm usually has its own fulfilment centre to pick up the order, process it, package it well, and finally ship it to your customer.
Listing your products on an e-commerce website is one thing. Delivering them to the customer’s doorstep is another. From the most populated city in the country to small towns and even villages sometimes, no matter where your customer stays, third-party logistics makes delivering to them possible. With a fleet of vehicles and a large team of delivery personnel, they ensure quick pickup and delivery, making your lives easier.
Delivery is a much easier process when the products listed on your website are stored in a safe place. In other words, when your inventory is kept in a warehouse. However, not everyone has a warehouse, to begin with, or more so, doesn’t have a big enough warehouse to store the large stock. In the case of perishable commodities and medicines, cold storage may again come with its own hassle of special machinery and personnel.
So in such situations, storage facilities owned by third-party logistic companies come in handy. More so, it’s easier for them to manage the pickup and processing of products in the supply chain when it’s their own storage facility and own fulfilment centre.
Transportation with respect to freight forwarding, picking, packing, and shipping costs money. And if not monitored, it can create a huge dent in your profits. Many third-party logistic providers also offer auditing solutions with proper accounting, and techniques to manage and monitor the inventory.
Third-party logistics also looks after reverse logistics that is when the product is undelivered or return from the customer back to the Warehouse/manufacturer.
Advantages of a third-party logistics service provider
Reduces Infrastructure Cost
As previously stated, as an e-commerce business owner, you can enjoy not maintaining/renting/purchasing a physical store. But, the backend of the business involves a lot of physical infrastructures that comes into play the moment the customer places an order.
From warehousing to transportation to packaging to finally order fulfilment, every aspect requires its own space and trained staff which can be a huge cost to incur especially for small/new players.
So, we recommended going to a third-party logistic player who already has a huge network of existing/owned warehouses and fulfilment centres. More so, since they deal with a lot of clients, the cost of dealing with your products reduces considerably. And with trained personnel working alongside machines, chances of errors are greatly minimized.
Huge Network of 3PLs
Setting up a third-party logistics business not only involves massive investment but also a lot of contacts and relation-building. Since the business closely works with other businesses across cities, states and countries while adhering to the norms of each place, 3PL players are able to build big networks and gain benefits like reduced overhead cost, less hassle, faster delivery, and more.
Third-party logistics players are well aware of international compliance, economic regulations, the required documents for transport, and more because of the nature of the shipping business. This knowledge comes in handy especially when expanding into new territories and dealing with fewer legal issues when running your business. More so, third-party logistics players can offer greater volume discounts and save you a considerable amount of money.
Improved Chance at Success
E-commerce is booming, but also very expensive to run in terms of time and money. We’ve already established the need and the cost for physical units in the above points. Coming to time, time is more crucial than you think. With popular products getting sold in under a minute, deals changing, varieties coming and ads running, an e-commerce merchant has much to focus on in order to make the customer experience better.
Therefore, outsourcing everything from storage to order fulfilment not only saves money but also leaves you with more time to focus on more critical aspects of your business. Another big benefit is zero wastage of resources and money. In case of downtime in business, you will still have to pay your staff at the warehouse and fulfilment centre, not to forget the rent if you don’t partner with a third-party logistics player.
During sale times, overtime pay will be another cost. All of this can be completely out of the picture when you outsource the job to a third-party logistics player. More so, third-party players’ networks easily allow you to upscale your business.
The goal of every business is to have happy customers. But the emotion experienced by an eagerly waiting buyer can go from excited to angry real quick, especially when the order is delayed. Missing products, delays, wrong products, tampered packages and more hassles can be greatly minimized if not eliminated when you partner with a third-party logistics player.
Their extensive fleet of vehicles allows the merchant to deliver quickly. Their expertise ensures resistant packaging. Their experience provides reduced costs for all the post-ordering stages.
Third-Party Logistics uses the latest technology which you can take advantage of.No no need to set up your own team to create such technology as it will be time taking and expensive to create.
What To Consider Before Hiring A 3PL?
When you receive an order on your e-commerce store, you see five stages – accepting the order, picking it up, processing it, packaging it and delivering it. However, when a customer places an order on your website, they see only two stages placing the order and getting it delivered. Hence, it’s no surprise that they expect a seamless experience from shopping to delivery.
Parcels that are delayed, mixed up with another order, tampered with, or worse, ‘lost in transit’ make them angry enough to never trust you again. So when you finalize a third-party logistics company make sure that you see how quickly and efficiently they complete the end-to-end cycle.
Range of Offerings
Warehousing, transportation, packaging, and shipping are the four main stages your product goes through before and after an order is placed by your customer. However, not all third-party players offer every kind of service.
While some may have large fulfilment centres, they may not provide warehousing solutions.
In the case of perishable commodities, you need a 3PL that offers cold storage. Also check, how well they are connected in the defined radius as well as how big is the radius of delivery in the first place. If your product is particularly fragile and requires only a certain kind/customized packaging and transportation, you must not rush into choosing the cheapest or nearest third-party logistics player.
When we look at the records of our employees in so much detail, one must also check on the companies that will drive a major portion of their e-commerce business. Check for how quickly and efficiently they conduct their deliveries.
Positive customer testimonials will speak for their strong packaging and untampered products. Fewer complaints will establish their customer service skills. Also, reviews from other e-commerce players will tell you how reliable they are, especially during sales and expansion to bigger areas.
Technology and Manpower
When your delivery radius isn’t much and your product doesn’t require special handling, technology may not be that important. But when you offer a variety and deliver to bigger areas or for that matter pan-India and even internationally, the load of order fulfilment may be too much. Check for the strength (total number of employees) of the manpower, automation technology in their centres, the vehicles in their fleet and the delivery radius they offer.
One of the most important things that often ecommerce businesses miss out on is checking the customer support of Third-Party Logistics. They realise that when it’s too late that customer support is not good. So it is very important to check the customer support review the client testimonial or contact sellers in your circle who are using that company. Before getting attracted to cheap shipping costs check out the customer service so you and your customer both enjoy a smooth shipping experience.
If you’re already an e-commerce player in the market, we hope this article helps you re-evaluate your third-party logistics partner for more scalability and more efficiency. Whereas if you’re thinking of entering the world of e-commerce or in the process of setting up, we hope the article helps you make an informed and successful decision in choosing the right 3PL for your business.