In the current scenario, consumers require quick and fast product deliveries. Optimizing the supply chain process is the most important step in delivering products quickly and accurately. Hence, most ecommerce businesses outsource third-party logistics companies for their order fulfillment process.
Choosing the right 3PL for ecommerce can bring many benefits like faster order fulfillment, reduced operation cost, and enhanced customer satisfaction. 3PL companies have years of experience in supply chain operations, and they manage diverse orders volume efficiently. This allows businesses to effectively focus on core activities like new developments or exploring new markets.
What is 3PL?
3PL or a Third-party logistics specialist in various aspects of supply chain processes. The 3PL service for ecommerce includes warehousing, inventory management, shipping, order fulfillment, and returns. 3PL companies use advanced technology like automation and AI to manage warehouses and transportation. This allows them to forecast product demand accurately and track inventories in real-time.
The Indian 3PL market is expected to reach 53.02 billion by 2028. The market is rising rapidly, mainly because of the growth in ecommerce businesses.
An Overview About 3PL For E-commerce Businesses
An online business can initially store its products at home or in a store. However, when the company grows, finding storage space and efficiently delivering products to customers is challenging.
It can lead to errors or delays in order fulfillment, which negatively affects brand reputation 3PL for ecommerce can manage various supply chain processes and allows the e-commerce business to focus on marketing, sales, and other core activities.
For example, an individual is selling custom hats online. Initially, it stored hats at home and personally managed packaging and shipping operations. However, as custom hats were in demand, individuals struggled to package and ship them on time. This leads to a delay in order fulfillment.
It has a partnership with the 3PL company. The individual shipped all its customized hats to its fulfillment center. When a customer places an order, the company receives it and picks up unpackaged tipping. Ships it, the company delivers customers’ orders on time, which enhances customer satisfaction.
Different Types of 3PL Services For Ecommerce
A third-party logistics provider provides various logistics services according to the requirements of an ecommerce business. Different types of 3PL services for e-commerce businesses include the following.
1. Warehousing And Inventory Management
A reliable 3PL warehouse for e-commerce efficiently stores products and manages inventories. The warehouse is leveraged with advanced technology, such as a warehouse and inventory management system, which can track products in real time and avoid overstocking and out-of-stock problems.
2. Picking And Packaging
When a customer places an order on an ecommerce website, the 3PL Company receives the order. The warehouse staff picks up the ordered product from its designated shelf and does packaging. The staff does good packaging to ensure the product is not damaged during transportation.
3. Shipping
Shipping and logistics is another 3PL service for e-commerce businesses. The 3PL company chooses the best carrier based on shipping speed and cost. 3PL partners with various top transport companies to offer the best rates and services. Some 3PL logistics for ecommerce manage international shipping and handle customs clearance and documentation.
4. Order Tracking
3PL provides shipment tracking services to the customer. It allows customers to track products in real-time and get updated information regarding the product’s location.
5. Returns
The customer sometimes does not line up the returned product and places a return request. The shipper picks the product; the 3PL company thoroughly inspects the 3PL company. It then decides to restock based on product condition. A smooth return process leads to a positive brand image.
Benefits of Outsourcing Third-Party Logistics Services For E-commerce Business
3PL service for ecommerce brings various benefits. Here is a list of them below.
1. Fast Order Fulfillment
A third-party logistics company has numerous warehouses in various parts of the Country. Hence, it can deliver orders faster and enhance customer satisfaction.
2. Reduces cost
Outsourcing supply chain solutions to a third-party logistics Company can reduce a business’s costs. For example, building a warehouse requires a large investment of money. Companies must purchase land, construct equipment like forklifts, and manage staff. A large investment is not possible for small and medium enterprises. They can store their products in 3PL warehouses, where they do not need to spend much money.
3. Access to Advanced Technology
3PL for ecommerce is a boon and can bring numerous advantages. One of the benefits is they have access to advanced technology like WMS, OMS, inventory management systems, and transport management systems. They streamline order processing and reduce errors in warehouse and transport operations.
4. Scalability
3PL service for ecommerce provides scalable 3PL solutions, which means they can adjust storing products in the warehouses whenever the business grows.
Again, certain businesses experience sudden spikes in product demand during holidays or seasons, which requires more storage space. 3PL Companies provide flexible warehouse storage space at these times.
5. Focus On Core Activities
3PL for e-commerce manages various aspects of the supply chain and allows ecommerce businesses to focus on core activities like product development or sales and marketing. This led to better business development.
6. Risk Mitigation
E-commerce 3PL are experts in risk management and disaster recovery planning. They provide backup plans or alternative transportation routes during strikes or bad road conditions.
What are The Challenges e-commerce companies may Face While Working With 3PL Logistics?
There are specific challenges that ecommerce companies face while working with 3PL logistics. Here is a list of them below.
- Lack Of Control Over Operations: When a business outsources its logistics activities to a third-party logistics Company, it loses control over various operations like inventory management, warehousing and logistics. Any inconsistencies in 3PL operations can adversely affect customer satisfaction.
- Communication Gaps: Miscommunication between e-commerce and 3PL can delay order fulfillment or cause wrong product shipments.
- Important Data Sharing: When ecommerce companies integrate with 3PL companies, they share customers’ data that people can misuse.
How to Choose the Right 3PL Partner For Your Ecommerce Business?
Choosing the right 3PL partner is crucial for e-commerce business. But there are numerous 3PL companies in India. Businesses need to select the best one among them.
Here is a list of a few factors that ecommerce businesses should consider while choosing a 3PL partner.
1. Access Business Requirements
Businesses must first access their requirements, i.e., order volumes, product type, and many more, and then choose the 3PL partner accordingly.
2. Technology
The 3PL partner should have access to advanced technology, such as a real-time warehouse management system tracking inventories.
3. Fulfillment Network
The 3PL company’s fulfillment centers should be located in the business’s target market. This will allow the company to deliver products faster to the customer.
4. Analyze Scalability
3PL e-commerce companies should provide scalable warehouse operations and the capacity to accommodate goods when a business expands.
5. Check Reviews And Testimonials
Businesses need to check the reviews and testimonials of the clients of 3PL Warehousing Company. It should select the one that has positive reviews or good testimonials.
Conclusion
Third-party logistics Companies offer comprehensive warehousing solutions for e-commerce companies’ logistics requirements. They can reduce costs and provide scalable warehouse solutions. These Companies are even leveraged with technology that manages inventory better and avoids the problems of overstocking and understocking.
AAJ Supply Chain Management
