Outsourcing various operational activities is not uncommon for e-commerce businesses. Sometimes, it’s a matter of in-house capacity: many simply can’t handle it in-house for the best results! In other cases, outsourcing is driven by a need for expertise, and a desire to have work completed by the very best. One such activity that is frequently outsourced is distribution.
Even if an e-commerce business is able to manage its own distribution, it can be difficult to maintain a high-quality fulfillment experience for customers without a larger distribution network. Especially in the era of two-day shipping, e-commerce businesses need to have a sustainable and easily scalable distribution strategy. The best way to achieve this is by partnering with a 3PL for your distribution needs.
A “third-party logistics” provider (3PL) is a company that specializes in fulfillment and logistics, outsourcing these services to various product-based businesses to do the heavy lifting of supply chain management. These services can include warehousing, shipping and receiving, inventory management, picking and packing, and everything else a business requires to efficiently move their products.
3PLs are often used by e-commerce businesses to manage the distribution of their products, as working with a 3PL can significantly ease the strain of financial and operational limitations.
When a business outsources their distribution to a 3PL, they are delegating the processing, fulfillment, and shipping of orders to the 3PL. Here is how a good 3PL manages distribution for their e-commerce customers:
At this stage of the distribution process, inventory is received at the warehouse and processed in preparation for incoming orders. This step is crucial to the success of the following stages of distribution, as the way products are stored and organized within the warehouse can speed up or hinder the picking and packing process.
3PLs typically utilize a warehouse management system (WMS) that automates this process and tracks inventory levels and locations in real-time, providing data that can be used to further optimize the entire process.
When an order is placed, it needs to be fulfilled before it can be delivered to the customer. Order fulfillment is when orders are received, processed, and prepared to ship to a customer. After an order is received and sent to the distribution center, the order must be picked and packed by warehouse personnel according to the items listed on the packing slip.
There are many different methods of picking, and a good 3PL will know the best method for your business to achieve best results. They should also be able to pack orders in a way that will protect and preserve the products inside and also put your brand at the forefront of the packaging—a must for e-commerce fulfillment.
Once an order is processing, packed, and picked, it’s ready for shipping. This is where working with a 3PL can really come in handy for getting those rapid shipping times, as they should have strong ongoing relationships with last mile carriers like UPS, Fed-Ex, and USPS. Because 3PLs specialize in distribution and bring last-mile carriers a lot of consistent business, they will be able to get better shipping rates and expedited timelines compared to what a small e-commerce business could achieve in-house.
There are many benefits to using a 3PL for your e-commerce business, especially if you are a direct-to-consumer (DTC) brand like many e-commerce companies. In addition to streamlining your fulfillment and shipping processes, here are a few highlights of working with a 3PL that your customers will feel the positive impact of:
While the technology involved in distribution remains largely behind the scenes, the ability to track inventory levels and utilize automated logistics and data tracking can greatly enhance the customer experience.
Rather than manually tracking low inventory levels and only sending more product to the warehouse when it’s dangerously low or even out of stock, an automated warehouse management system can immediately notify brands when products are low on stock with ample time to replenish in accordance with consumer demand.
One of the most common causes of shopping cart abandonment for e-commerce businesses is when high shipping costs are tagged on at checkout. This can immediately send a product out of the customer’s price range and send them looking elsewhere. 3PLs are able to provide significantly reduced shipping costs, creating savings that can be passed directly on to customers.
With excellent visibility and reliable picking and packing, 3PLs give e-commerce brands a reputation for accurate order fulfillment. When your customers receive exactly what they ordered and in perfect condition, this reflects well on your business. All that accuracy is much more achievable with 3PL technology.
With our nationwide footprint, Smart Warehousing provides e-commerce businesses with 1-2 day shipping across all of the United States, as well as complete inventory transparency so you always know what orders are coming in, what products are on the shelves, and what orders are going out. Plus, with over 200 integrations, our SWIMS technology connects with your storefront no matter where you’re selling your products. Contact us to learn more about distributing your products the Smart way.