If You Run an Online Business, You Need a 3PL!
In 2018, online sales accounted for 14% (up from 12.9% in 2017) of all retail sales in the U.S according to the U.S. Commerce Department. The revenue generated by online retailers reached $504.6 billion for that year alone. Best of all, this growth is not expected to slow down anytime soon, with some experts forecasting online retail revenue to reach roughly $730 billion by the year 2023.
This probably goes without saying, but, there has never been a better time to be an online business owner!
However, there is also quite a lot of fierce competition in the e-commerce space. With giant corporations like Amazon making up about half of all online sales, keeping an online business afloat is no simple feat. And that’s not even to mention everyone else fighting to dominate their niche. It can be a bit of a struggle if you are not on top of your game at all times.
Unless you are Amazon, you are a little fish in a big, overcrowded sea.
The solution? Partner with a 3PL company that has the network and skills to give your customers the experience they deserve.
The Role a 3PL Plays in an Online Business
Third-party logistics (3PL) companies serve a rather large role in the logistics world. They are the wheels that keep business flowing and goods going to where they need to go in a timely and efficient manner.
When companies do not have the capabilities or resources to fulfill certain aspects of their supply chain, they hire a 3PL to get the job done. And with services that are scalable, customizable and designed to improve the efficiency of a supply chain, a 3PL is capable of helping you with tasks including:
- Order processing
- Drop Shipping
- Carrier Network Retention
- Software and Hardware solutions
- Supply Chain Management
- Invoicing and Auditing
- …and much more.
In addition to all of these value-adding roles, a solid 3PL is backed by a network of reputable carriers, uses the latest tech, and can even handle all of the paperwork involved in transporting your freight.
How Does an Online Business Benefit From a 3PL Partnership?
Well-rounded 3PL companies offer a variety of custom-tailored solutions to fit all kinds of business models. Aside from that, they have access to networks and rates that most companies simply do not.
Because of this, third-party logistics companies benefit businesses of all kinds in a variety of ways. Yes, we said all businesses. While all businesses models can benefit from partnering with a 3PL, these benefits are almost triple-fold to online businesses who may not have those physical partnerships. E-commerce can often feel a bit restricted in that way when everything is done purely online, there can often be those real-world relationships that are simply missing.
And this is where having a 3PL comes in handy…
Most online companies operate their businesses with razor-thin profit margins. This is due to the competitive nature of pricing and combined shipping costs, which is also a service that your customers demand.
Because of their partnerships with carriers and distributors, and their repeat business, 3PLs can often offer you lower rates than you are able to get on your own. By helping you reduce operating costs, a 3PL increases your profit margins and your bottom-line.
Improved Customer Service & Experience
The best 3PLs use advanced technology solutions that send instant updates for every order you process.
For example, if a customer in Maine orders a product from your online store, a third-party logistics company can pick it, pack it, ship it and send an alert to the customer directly to their mobile device. If they prefer email communication, they can receive updates via email, instead.
This type of instant notification is a service that today’s customer expects. And who can blame them? Have you ever waited anxiously on a large shipment? Knowing exactly where goods are at all times simply improves the customer experience.
All the Best Connections
A proven 3PL is known to maintain solid relationships with multiple carriers in different modes. However, the pool of carriers that they have access to is vetted for high-quality and proven track records. Doing that on your own is actually a lot harder than it sounds. Every business owner understands that a missed delivery or delivery error can make or break their business. Using the right carriers that are consistent, ethical, and deliver superior service to their customers benefits your business significantly.
Arguably the best feature or benefit that a third-party logistics company can provide an online business is flexibility. Each service that is provided by a 3PL can be scaled back or expanded based on volume periods of the year. If your company is extremely busy during the holiday season, the 3PL can ramp up their operation to fit your growing volume needs. When business slows down, they can scale back the operation.