Retailers are looking to third-party logistics (3PL) providers to ease the strain of increased ecommerce demand and customer expectations.
As more consumers expect deliveries within 1–2 days, a quicker turnaround is essential. Where and how the items are picked and packed, how and when they are collected from the distribution centre and delivered to the final customer, as well as how returns are handled, all matter. Every step needs to be cohesive, and this is where 3PL providers can help.
Industry knowledge and expertise
With their breadth of experience dealing with supply chain logistics, 3PLs often have a wealth of industry knowledge in logistics and supply chain management. By having a deep understanding of potential issues and tried-and-tested ways of working, businesses that don’t have in-house expertise can benefit significantly.
Cost efficiency
By outsourcing fulfilment and logistics operations to a 3PL provider, companies can often reduce their costs compared to managing logistics in-house. As 3PL providers have economies of scale, they can often negotiate lower rates with carriers and other service providers, which retailers can benefit from.
Flexibility
3PLs can quickly ramp up or down their services to meet changing demand, which can be especially useful for businesses with seasonal or irregular shipping needs.
Risk management
Third party logistics providers can help their clients to mitigate a number of risks across the supply chain. This includes:
- Diversified transportation with multiple carriers to help with the risk of relying on a single mode of transportation
- Robust contingency plans to help companies prepare for disruptions, such as strikes, to minimise the impact on business operations
- Customs and compliance management to assist with customs clearance and reduce the risk of delays or penalties
- Insurance coverage to protect against the risk of loss or damage to goods
How do 3PLs help retailers to grow?
In a world where online shoppers choose convenience over brand loyalty, where and how orders are picked and packaged, delivery costs and timings, and ease of returns all matter. In fact, according to Retail Insight Network, 78% of consumers say they value convenience more today than they did before the pandemic.
Nowadays, many 3PL businesses have evolved their offerings by transitioning into tech first entities. Choosing a 3PL which has invested in technology to provide automated processes can have many benefits for online retailers, including enhanced customer experience.