Outsourcing your fulfillment with 3PL
An increasingly popular approach to fulfillment is outsourcing to a 3PL, or Third Party Logistics company. A 3PL essentially takes the fulfillment process off your hands, freeing you to concentrate on developing your product and building your brand, rather than packing boxes. You will send regular shipments of inventory to your 3PL supplier, and they handle the rest.
3PLs offer a range of services, starting at simple order shipping, to handling returns, freight forwarding and even order processing.
What is the benefit of using a 3PL?
Quite frankly, a good 3PL supplier will be better at running a warehouse than you are.
If your order volume is increasing and the thought of the strain on your current fulfillment process is hard to swallow, consider talking to some 3PL suppliers. A good 3PL supplier is entirely focused on managing your physical inventory and getting orders to customers on time, they have this sewn up.
Finding the right 3PL supplier
The 3PL industry is becoming increasingly competitive. That’s great news for you as a retailer looking to scale without blowing a big chunk of your budget on something you may still be wary off.
You will need to build a strong relationship with whoever you choose to outsource your fulfillment to. That makes trade shows a great place to start your search.
Your 3PL supplier will play a fundamental part in the overall experience your customers receive. If you’ve done it right, you may never see or hear from your fulfillment company, but your customers will. Keep this in mind when choosing a 3PL company - you need to be comfortable that the relationship holds good synergy.
What are the downsides of a 3PL?
You have less choice when it comes to exactly how your orders are delivered. For example, your chosen 3PL supplier may have their own fleet of delivery vehicles or they may have a good deal with a bigger carrier.
You could negotiate exactly who you want to have delivering your orders, while still utilizing third party warehouse and fulfillment expertise, but you may end up paying a premium for it.
Amazon are now offering their own version of 3PL - dispatch your inventory to Amazon Logistics and your orders will be dispatched using Amazon’s own fleet of, mostly contractor-based, delivery vehicles.
One of the biggest pulls of outsourcing your fulfillment to Amazon Logistics is the refreshing speed at which Amazon can get your orders to your customers, such as Same Day delivery.
If you are using omnichannel inventory management software, such as Brightpearl, you will need to utilize shipping software that interfaces directly with the Amazon Logistics system.
You will also need to hold adequate business insurance and keep your customer service game on point. These are requirements put in place by Amazon Logistics directly. Ensuring sellers provide the best possible customer service is a focus for Amazon and not checking all the boxes may result in your removal from Amazon Logistics as a seller.
Online retailers using the drop-shipping approach typically have the lowest overhead. These online retailers are not storing any physical products, maintaining a dispatch process and may not even have to pay for inventory up front.
As a drop-shipper, you will enter an agreement with one or more wholesalers to have products sent directly to your customers as orders are placed.
This removes a number of risks from your business as you do not hold products and do not need to keep such a close eye on your inventory levels. However, you may pay more for your products than you would in a typical wholesale agreement.
Read all about the pros and cons of drop-shipping, and how it works on the blog.
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Dropshipping: The Pros, The Cons & How it Works
4 Reasons Why Retailers Should Consider Drop-Shipping
Shipping from Your Physical Storefront: The Benefits of Incorporating Ecommerce into Your Sales Strategy