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8 Myths about partnering with a 3PL: A fact-proof view

Versha Kamwal
March 10, 2021
mins read

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Outsourcing directly impacts a business's top and bottom line and has become a key component of defining how successful ecommerce businesses are run. It's a popular way to get expertise, resources, infrastructure while reducing operational costs and streamlining operations.

In simple terms, outsourcing is the process of using a third-party service provider to handle certain business operations. Earlier, outsourcing was limited to a few industries and multinational corporations. But today, it has dwelled deep in almost every industry and businesses of all sizes.

Just like any other industry, ecommerce has also embarked on this journey. The need to constantly innovate leaves ecommerce businesses with no time to concentrate on other essential tasks such as fulfilment.

Since ecommerce businesses are juggling between too many processes with limited resources at hand, outsourcing fulfilment is not just a part of an optimisation strategy —it's now a necessity.

What is a 3PL?

A 3PL is an abbreviation for Third-party Logistics. It is a service that allows ecommerce businesses to outsource operational logistics from warehousing, fulfilment to delivery. Thus, ultimately enabling ecommerce businesses to focus on other parts of their business.

3PL service providers help ecommerce businesses meet their specific needs while maintaining a seamless supply chain with their ability to customise and scale their services. 3PLs can streamline complex processes and bring considerable expertise and knowledge to the table.

3PL's can enable you to save on money and time by providing a ready infrastructure to manage your business, including technology, storage space, staff, and transportation. Moreover, they can help you gain a geographic footprint with multiple fulfilment centres across the nation, thereby allowing you to be closer to your customers.

The most common myths about outsourcing order fulfilment

By now, you may have a clear idea about a 3PL and a few benefits of outsourcing fulfilment. Unfortunately, there are a lot of misconceptions about third-party logistics that hold brands from partnering with a 3PL. Let’s debunk the most common ones here:

Myth #1: A fulfilment centre is just for storage

3PL providers offer a multitude of services in addition to the storage of products. This means warehousing is one of the many components of a 3PL’s fulfilment centre.

Here are some of the other services offered by a 3PL provider:

Picking, packing and shipping in a fulfilment centre

Myth #2: Getting orders is more important than fulfiling them

While every business's ultimate goal is to get more and more orders, it is equally important to have a fast and seamless order fulfilment process. However, many small and new businesses believe that having a good product is all they need to achieve success.

But a negative shipping experience can have an irreparable impact on your relationship with customers. Factually, 84% of consumers say that they won't return to a brand after just one poor delivery experience.

This is where 3PL providers play their parts with a cost-effective and fully optimised approach. By ensuring a delightful fulfilment experience, 3PL providers help you build customer loyalty and increase your revenue.

Myth #3: Outsourcing fulfilment to a 3PL is an expensive investment

At first glance, outsourcing fulfilment to a 3PL provider may seem like a costly undertaking. But once you consider all the factors and services it entails, you will find out that this investment will save you a lot more down the road.

For example, doing everything in-house might sound like a great idea. But you end up spending more than you save as you have to hire in-house staff and storage space.

You also have to invest in a warehouse management system (WMS) which can be quite costly, considering the total cost of the software and training. On the other hand, 3PL providers have a robust WMS to drive maximum storage and picking efficiency. They simply divide the cost of the system across many ecommerce businesses, making it very affordable for you to access their superior technology.

Moreover, if you're shipping orders yourself, it is unlikely for you to get access to discounts and negotiated shipping rates due to your low order volumes. On the contrary, 3PL providers have warehouses spread across the country, allowing you to split your inventory and take advantage of bulk delivery discounts. That means, outsourcing your fulfilment to a 3PL provider can save you around 15%-30% off published shipping rates.

Thus, working with a 3PL provider is a long-term investment that will ultimately help you save time, money, and resources. This kind of partnership can enable you to streamline day-to-day operations and increase efficiency in the long run. Instead of worrying about higher upfront costs, you must look at the long-term value of partnering with a 3PL provider.

Myth #4: A 3PL service provider cannot understand your business needs

You cannot let this fear resist you from partnering with a 3PL provider as it boils down to your choice. An experienced 3PL will understand your needs to come up with a solution tailormade for your business.

Additionally, many 3PL providers excel at working with specific industries. For example, some cannot handle refrigerated, frozen or temperature-controlled products. Whereas, other 3PL providers may only manage consumer packaged goods. Thus, when you choose a provider, you get access to a wealth of knowledge that they possess and years of experience in providing solutions for specific business requirements.

Myth #5: Outsourcing only works if you have a sizeable ecommerce business

A 3PL service can benefit ecommerce businesses of any size and scope. It's true that not every online store requires it, but every business requires a proper order fulfilment mechanism in place.

Let's take an example, small businesses often go through fluctuations in their sale volumes due to promotions. Flash sales can sometimes provide a massive spike in order volume, making it very difficult to manage on-time order deliveries and maintain a consistent branded experience. Having a fulfilment partner allows you to focus on scaling your business while managing order fluctuations without increasing your fixed costs or losing market credibility with poor deliveries.

Myth #6: Partnering with a 3PL means giving up control of your ecommerce business operations

Ecommerce business owners worry that outsourcing their fulfilment may lead to losing sight of their product and control over their fulfilment. However, the truth is quite the opposite. 3PL providers offer better control and supply chain visibility.

Tech-enabled 3PL providers maintain full visibility of your inventory levels via real-time updates across all sales channels. Moreover, they give you access to actionable dashboards, which provide key insights such as:

  • Real-time inventory and orders view
  • Inventory forecasts to schedule replenishment
  • Zone-based sales data to plan inventory splitting
  • Sales performance reports for identifying aspects of product development

Access to an abundance of tools, periodic inventory reports and key metrics can help you make informed business decisions.

Although the 3PL provider maintains the fulfilment planning, the business owner and managers are still in full control of all processes.

Myth #7: A 3PL can degrade the quality of customer service

The truth is, any misstep can be a nightmare. Inexperience can create more opportunity for error. So, this ultimately depends on the 3PL provider you partner with. If you partner up with a company with less experience and expertise, it's certain that your customer service will suffer. Ideally, you should vet the 3PL service provider to ensure it offers excellent customer support by setting the right expectations with your customers and notifying them throughout the order fulfilment process. Moreover, a good 3PL will ship your orders faster by splitting your inventory across the country with impressive order accuracy. So, a 3PL provider that does the job right will always elevate the experiences of your customers.

Myth #8: 3PLs require long-term commitments

This myth is partially correct as many 3PL providers require a commitment of at least one year to get started. However, there are other 3PL providers that do not have such rigid requirements and will gladly offer fulfilment services on a short-term, seasonal, or month-to-month basis.

Bottom line

When you are evaluating a 3PL provider for outsourcing fulfilment, it is crucial to keep your long-term business health in mind. By dispelling some of the myths about how a 3PL partnership might affect your company, you can go a long way in meeting your ultimate goals: delighting your customers with speedy deliveries, saving time, effort and costs, and maximising your profit margins.

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