March 16, 2023
Many eCommerce brands begin life with the owner receiving goods from their supplier, storing the goods wherever they can, and packing orders themselves – quite often from their kitchen counter! Although this approach works in the start-up stages, it simply does not scale and can stunt your growth when order volumes start to increase. This is where a third-party logistics (3PL) provider can bring enormous value to your business, helping you save time and costs whilst streamlining your eCommerce operations.
That said, you never want to enter a business relationship without knowing whether it’s the right move for your brand. To support your decision-making, we have covered the 7 signs that it may be time for you to outsource order fulfilment to a 3PL company.
Launching a business is notoriously challenging, let alone scaling it up. As more customers fall in love with your products and spread the good word about your brand, you may find yourself receiving much higher order volumes. Fulfilling a handful of orders per day is manageable – especially for small businesses – but when you start receiving 30, 50 or 100+ orders per day, the demand on your time and resources becomes far greater.
Many eCommerce brands experience such rapid growth that they simply do not have the operational capacity to consistently fulfil hundreds of orders a day. In contrast, a 3PL provider has the infrastructure and experience to fulfil high order volumes at the desired speed, accuracy, and cost-efficiency. No matter whether you are receiving 1,000 or 10,000 orders each month, the right 3PL can grow as your business does without a decline in service levels.
As your order volumes increase, your operational resources will become more stretched, which is when delays and errors can creep in and detrimentally impact the fulfilment experience for your customers. Whether it’s orders with incorrect addresses, slow shipping times, or customers receiving the wrong products, mistakes can cost you repeat business and a hard-earned reputation. According to one study, 62% of consumers will not buy from a brand again after a poor experience. So, if you find customer retention and loyalty starting to decline, it’s a telling sign that your business can no longer continue self-fulfilling orders.
It’s basic math: if your order volumes are rising but the size of your team remains the same, each staff member will need to work longer hours or multitask to manage the increased demand. Not only does this mean your team spends more time on operational tasks, but also puts them at risk of burnout from being overworked. This is one of the quickest ways to lose loyal and experienced employees, who are ultimately your most important asset.
By partnering with a 3PL provider, you alleviate the stress and pressure of fulfilling orders from the shoulders of you and your team. This leaves you free to focus on projects that are important to growing your business, such as finding new markets for your products or building vital relationships with new suppliers.
As you know, shipping costs account for a substantial portion of an eCommerce company’s expenses and can thus impact your profit margins, especially if you are offering discounted, expedited, or free shipping. Working with a 3PL provider enables you to leverage the benefits they offer over most eCommerce brands, starting with the ability to negotiate and secure lower shipping rates than you would otherwise do alone.
The other benefit is that a 3PL’s entire operation is optimised to cost-effectively ship products. If you account for packaging, postage and storage alone, you may already save costs on outsourcing to a 3PL company. Factor in labour costs and you will most certainly make savings as you won’t have to handle recruiting and managing dedicated warehouse staff. Partnering with a 3PL becomes even more cost-effective if you are consistently fulfilling a high volume of orders.
Storing your own products places a further drain on your business costs. As your product range expands and the need to hold more inventory grows, you will probably find yourself running out of storage space. This is when managing your inventory can become more chaotic, resulting in potential damages and shrinkage or – worse still – stockouts. Under an economy where the cost of warehouse space is increasing as much as demand, you could end up forking out a substantial sum in order to expand your storage space.
A far simpler and less stressful alternative is to outsource fulfilment to a 3PL provider that will take product handling and storage out of your hands at a fraction of the cost of managing your own warehouse. Third-party logistics companies also have a far greater capacity than any small business to manage thousands of products with differing storage requirements. The right 3PL provider will ultimately be able to accommodate your growing product range and support a more cost-effective inventory management process.
Although frustrating and time-consuming, customer returns are unavoidable in eCommerce, where 22% of all online orders are returned. However, issues can occur when your returns rate climbs above 30% and your team becomes swamped with the quantity of items being returned and requiring processing. Although the returns rate can vary between industries (fashion, for instance, has the highest rate of return), a high return rate can indicate a more significant problem with your order fulfilment process.
So, if your business is spending a lot of time and manpower managing returns, refunds and exchanges, it may be time to seek support. Not only can a 3PL provider optimise fulfilment to minimise the risk of returns, but it also has the infrastructure to streamline the returns management process, making it more cost-effective for your business and leaving your team free to focus on growth.
If you’re struggling to keep up with demand, it’s more likely that your service levels are not up to their usual high standard. As a result, you are receiving more customer complaints and, consequently, more negative reviews – both of which can be a drain on your Customer Service resources. When online reviews affect nearly 9 in 10 of consumer’s purchasing decisions, you can’t afford to neglect the fulfilment experience. Working with a 3PL provider means you can maintain a consistently high-quality service so that your customers receive the right products on time and in perfect condition.
Rapid growth and increasingly complex operations can hamper your ability to deliver an exceptional fulfilment experience, which can ultimately impact your brand reputation and your bottom line. A reliable 3PL partner like Zendbox can relieve the stress, cost and time pressures of self-fulfilling orders, and is one of the best ways to address issues across various areas of your business, from warehousing and inventory management to shipping and returns. Nevertheless, not all 3PLs are created equal, so it’s vital to do your research in order to secure a fulfilment provider that aligns with your business needs, values and goals.
For more information on how Zendbox can catapult your growth with game-changing fulfilment, request a demo today.
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