Dropshipping has become an increasingly popular method of moving products from a digital warehouse to the customer’s front door. Independent platforms, such as Shopify, are quickly disappearing because eCommerce businesses are starting to realize the power of a simple website combined with a robust 3PL.
Third-party logistics companies have been working with retailers for decades, helping them improve their supply chain operations across the board. Furthermore, as technology has improved, so have third-party logistics service offerings.
Today, several large asset-based third-party logistics companies maintain warehouses that receive products, store them, inventory, pick, package, and drop ship their products to customers across the globe. They never have to touch any of the products they sell and their 3PL can handle all the usual tasks at a fraction of the cost of operating an actual fulfillment center.
Third-party logistics companies are not one-hit wonders.
In fact, within the supply chain and logistics space, they are the Jack of all trades. Various industries such as manufacturers, carriers, and retailers work with 3PL companies for specific tasks including:
Companies that exclusively operate online typically use a 3PL as a dropshipping partner. 3PL owned and operated warehouses accept the goods and hold them until orders roll in. Received orders get inventoried, stored, and prepared for shipment. A 3PL can also help facilitate positive carrier relationships, contracts for volume shipping, and negotiate all surcharges on behalf of their clients.
How eCommerce Companies Benefit from 3PL Partnerships
Since a third-party logistics company offer services that are scalable and unique, it provides an eCommerce business with multiple benefits. Some of the most impactful for any sized eCommerce business includes:
Most online companies operate their businesses with razor-thin profit margins. This is due to the competitive nature of pricing and combining shipping costs, which is a service that today's customer demands. Basically, if Amazon.com is offering it, your business needs to match it.
Overall, 3PLs offer multiple services that are aimed at helping businesses reduce their operating costs and improve their bottom line.
Improves Customer Service
The best 3PLs implement advanced software for sending instant updates to clients. When a customer orders a product from your online store, a third-party logistics company can pick it, pack it, ship it and communicate with the customer via their platform of choice, even SMS. This type of instant notification is a service that today's customer almost expects.
Finding the Right Carriers
A leading cost for all drop shippers is the shipping of merchandise. This is second only to their website.
A proven 3PL maintains solid relationships with multiple carriers in different modes. Additionally, they can negotiate exceptional shipping rates on behalf of their clients, which again helps them to reduce their overhead expenses and increased profitability.
Arguably the best feature or benefit that a 3PL can provide an eCommerce operation is flexibility. Every service that is provided by a 3PL can be scaled back or expanded upon based on the volume of demand throughout 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 with as much ease.
If you would like to learn more about partnering with a 3PL for your eCommerce solutions, contact the experts at Redwood Logistics today.