A third-party order fulfillment service can warehouse products for a business, pick and pack their orders, and handle the shipping of those orders to the customers. These services, of course, are not free, but utilizing a third-party order fulfillment service can help an ecommerce business to scale and grow.
Utilizing a fulfillment company can decrease shipping costs while speeding up delivery times. It can also improve the overall efficiency of the fulfillment process and free up quite a bit of time.
What is third party order fulfillment?
By “third-party”, what is meant here is that the order fulfillment service is not the one doing the actual selling, but rather they are handling all of the other work.
A business will list their products on an ecommerce platform like Shopify or BigCommerce, then utilize a third party to handle all of the other aspects of their business. This includes product storage and shipping to customers after they place their orders online.
What are the benefits of using third party logistics?
Improved customer service
One of the biggest benefits that a business can experience from using a third-party logistics company is improved customer service. As an ecommerce business grows, it becomes more difficult to handle all aspects of order fulfillment on its own. This can lead to mistakes and delayed shipments as well as lost or mishandled packages.
By using a third-party order fulfillment service, shipping mistakes are much less likely to occur. This is because the logistics company has a team of people who already handle these types of issues regularly.
Third-party fulfillment companies can also handle customer returns and reshipments for a business. This can lead to an improved customer experience and will likely increase customer loyalty.
No Leasing Warehouse Space
Another benefit for an ecommerce business to utilize a third party order fulfillment service is the ability to use that company’s warehouse. This completely removes the need to lease warehouse space or hire employees who can work in that location.
This eliminates the risk of renting too much warehouse space for a business at its current size, which can be a big expense, while also making it easy to grow without having to worry about moving into a larger warehouse.
No Need to Hire Employees
As briefly touched on in the last point, a big benefit of using a third party order fulfillment company is that you don’t need to hire employees to handle the work they take on for your business, like picking and packing orders.
This allows a business to grow without having to worry about whether or not they will have enough employees in the future, or to easily downsize without having to layoff employees.
Manage Seasonal and Sales Fluctuations
Another benefit is that a third-party logistics company can help an ecommerce business to manage seasonal and sales fluctuations. This means that the logistics company can store more products when there are increased sales, or scale back when it looks like there might be a lull in sales ahead.
This allows businesses to grow without worrying about having too much inventory available when sales are slow, while also allowing them to limit their costs during seasons when it looks like there will be lower than average sales.
Reduce Shipping Costs
An ecommerce business who utilizes a third party logistics company can save quite a bit of money on shipping. Shipping costs are often the largest part of the operating cost for many ecommerce businesses.
This is because they need to charge enough to make their products competitively priced with other similar companies online, but at the same time cover all of the shipping fees that are associated with getting the products out to their customers.
When a third party logistics company is utilized, it can reduce shipping costs because they often have bulk rates with all major carriers like UPS and Fed Ex. This allows businesses to pass along these savings to their customers through lower prices than if they were doing the order fulfillment themselves.
This results in a win-win situation for both the logistics company and your ecommerce business. The logistics company can handle all of your shipping needs, while you can focus on running your business and increasing sales through marketing and other initiatives.
Better Technology and Inventory Management
When you work with a third party logistics company to handle your order fulfillment, it is possible to gain access to various technology features that may not be available on the ecommerce platform that you are currently using.
This could include software integrations, automatic inventory management and more. These types of technology can help an ecommerce business to really grow because they make the fulfillment process easier and less time consuming.
For example, if you don’t have an integration between your warehouse management system (WMS) and your order management platform (OMP), it will probably take you a lot of time to match products from your WMS with orders in the OMP.
Focus On Growing Your Business
Ecommerce business owners discover that it’s a lot easier to focus on growing their businesses when they aren’t bogged down with order fulfillment, the day-to-day operation of running a warehouse, or hiring employees to operate the warehouse.
This means that you can spend more time working on marketing initiatives which result in more sales, or putting more time and effort into creating a better user experience.
These types of things are crucial for a business’ growth because you need customers to not only discover your products, but also to come back again an again. This is something that traditional brick-and-mortar stores have been doing for years.
These are just a few of the benefits that businesses find when they start to use third party order fulfillment companies instead of doing it all in house.
Using a third party logistics company can help you provide better customer service, negate the need to lease or purchase warehouse space, save you from having to hire employees to handle order fulfillment, manage seasonable fluctuations, save money on shipping costs, utilize better technology, and give you more time for growing your business.
3PLs handle everything for you so that you can focus on growing your business rather than worrying about how to manage your warehouse. They make sure that all of the right products go to the right customers at the right time.
If you would like additional information on third party order fulfillment services, speak with one of our representatives by filling out the form here.