It has never been easier to create a successful eCommerce company. And you don’t need hundreds of staff members to reach your goal. The key is to utilize services that will take care of the logistics, while you focus on your core business. One of the most important aspects of your eCommerce business is fulfillment and logistics. Not everyone can afford to fund a whole warehouse and run the logistics of order fulfillment, whether you are selling B2B or B2C. That’s where 3rd Party Logistics Companies or 3PL’s come into play.
By using a 3PL provider that specializes in one aspect of eCommerce, you can significantly lower your overhead. It will reduce storage and labor costs, lower packing material costs (since these companies get better rates with bulk orders) and cut shipping costs due to volume and warehouse location. They can take care of the headaches of order fulfillment and make the process from order completion to delivery to your customer seem effortless. However, it is important to know what your requirements are before you select your 3rd party fulfillment company for custom fulfillment services.
Order fulfillment step-by-step
- Receiving: When working with a 3rd party fulfillment company, your inventory needs to be sent to their warehouse to be stored.
- Inventory Storage: Accurate inventory storage will keep you updated on your stock levels and simplify the process of sending out an order. Use an inventory management system to keep track of your inventory.
- Order processing: Once a customer has placed an order, that unit needs to be picked off the shelves and packed to be sent out. This step involves getting the right packing materials and attaching shipping labels to the shipment.
- Shipping: This is where the shipment is given to the carrier that will deliver it to the customer. Tracking information is provided to both the seller and the customer.
- Returns: The advantage of online sales is the ability to return an item without having to go to a physical location. The seller can either choose to receive the return themselves, or to send it to the 3rd party fulfillment center for processing. The item will either be discarded if it is defective or placed back on the shelf to be sold once again.
Fast. Flexible. Scalable.
What should you look for in a 3rd party fulfillment company? Speed. Flexibility. Scalability. Not only does fulfillment influence how satisfied your customers are, it also directly impacts how quickly your business can scale. And when something unforeseen happens, or a customer has a very specific request, your fulfillment company should be able to adapt to your requests.
Important considerations when choosing a fulfillment partner
- Customer Service: Working with a company that specializes in eCommerce logistics de-risks you a great deal. Decide on a company that offers excellent customer service so that you stay informed during the whole process.
- Inventory Management: Most 3rd party fulfillment companies have an inventory management system. To truly have all the information at your fingertips, consider one with a cloud-based inventory management solution. This will give you information in real-time. It will help you solve any problems that arise much quicker.
- Pick and Pack rates: If the pick and pack fees are very high, your margin shrinks. Compare rates from different fulfillment companies to find a service that fits your budget. However, make sure that their service is on par. You don’t want to skimp on cost to the detriment of your customers. A good way to determine what their satisfaction rate really is, is to interview some of their existing customers. A company that is proud of the service they provide will be transparent about their satisfaction rate.
- International Shipping: The world is getting smaller, and your customer base is growing. Your reach will be impacted by the type of shipping your fulfillment company can supply. Make sure that they can meet your requirements in terms of domestic but also international shipping when you take the steps to go global.
- Warehouse and Storage: Depending on what you are selling, you might have special requirements for your warehousing. If you are selling perishable items for example, or items that needs to be kept in a climate-controlled environment, make sure that your fulfillment partner can take care of your stock. Mitigate the risk of losing your inventory due to warehousing issues.
Benefits of Third-party fulfillment
- Cheaper shipping: Due to the high volume of shipments completed by fulfillment partners, shipping costs go down considerably.
- Quality packaging: Bulk packaging orders reduces the cost and will get you better quality packaging for cheaper, delighting your customers with perceived value.
- Faster shipping: Let them do what they do best. Your own fulfillment will likely not be as streamlined as that of a fulfillment partner who specializes in perfecting this part of the process, bringing with them years of expertise and experience.
- Lower overhead: The overhead required for a fulfillment service is lower than that incurred when outfitting and maintaining a fulfillment center of your own. Use this to your advantage to have better cash flow and predictability.