10 Signs It’s Time to Outsource Fulfillment to a Third-Party Logistics Provider (3PL)
Is your eCommerce business growing? To inspire growth, you need a strategy. Talented marketers can enhance your SEO and outreach programs, increasing traffic to your site. However, what do you do when all this new business arrives at your doorstep?
Have you thought about the consequences of stifling business growth as you fail to expand at the same pace as new orders? As an eCommerce business owner, it’s your dream to have orders flying into your inbox.
However, that new sense of victory at your orders will soon pass when you realize you have to get them to your customer. Moreover, you’re going to have to sustain your fulfillment to meet the new demand. What happens if you can’t deliver to your customers in line with their expectations?
Many eCommerce businesses go under because they can’t handle the influx of new growth. They fail to delegate the company’s functions to service providers or employees that help drive the new growth into sustainability.
What if you can’t afford new employees? What if you’re a new business, and yet to develop the capacity to meet your current demand? Fortunately, there is help for your situation.
A 3PL provider can assist with your eCommerce fulfillment, ensuring that you get your orders out on time.
In this post, we’ll help you identify the right timing for hiring a 3PL partner. We’ll discuss ten strategy points you can use to ensure your business grows sustainably, managing the growth with proactive measures to enhance your company’s performance and service offering.
1. Fulfillment is a Distraction When Your Business is Growing
If your business is growing, that’s a great thing. Growth means your company is taking off, and you are well on your way to reaching your business goals. However, trying to manage this growth while running your business is challenging. You need to keep your head in the game, running all the functions of the business yourself.
Eventually, this strategy will fail. You are only one person, and even if to start working 16-hour days 7-days a week, and bring your partner into the fold, you’re probably not going to handle the influx of new sales volume. The new set of challenges it brings to logistics and inventory management can surprise you if you’re not ready to increase sales.
Failing to plan for the growth in your company can result in you having to close your doors. If you can’t handle your deliveries, your customers will get annoyed at your slow service and leave you for your competition.
There are so many aspects to running an eCommerce company. You have to deal with sourcing products, creating marketing plans, steering the ship, and a host of other functions. Trying to do all this yourself is already taxing on your resources. When the orders start rolling in, it could leave your business paralyzed and unable to move in line with the new growth.
By taking the time to design an eCommerce fulfillment strategy early on, you prepare yourself for the influx of orders when they arrive. It pays to forecast into the future and create a growth plan. Hiring a 3PL partner for your business is the best way to take care of the expansion in your logistics.
A 3PL partner takes control of your logistics process, allowing you to scale. By delegating your fulfillment to a 3PL, you can survive the growth period in your business.
2. When Ecommerce Fulfillment Costs Start to Escalate
When starting your eCommerce business, chances are you’re going to bootstrap your finances. Taking a loan to cover your financial needs might be a possibility, but then you’re stuck owing money and interest to the bank. Bootstrapping is the preferred method for most startups.
With bootstrapping, you raise the finances to run the company yourself. Most eCommerce entrepreneurs start their ventures while still maintaining a full-time job. Therefore, they don’t put themselves out there on a limb financially while starting the business.
Using a 3PL service helps you stop the rising costs of your eCommerce business while also allowing you the free time to focus on your other responsibilities or growing your brand. With a reliable 3PL partner, you get an account manager, and some services may offer you 30-day terms. Taking a 30-day terms account with a 3PL helps your cash flow recover from the ebb and flow of receiving income and making expenditures.
3. You’re Overpaying for Your Logistics
However, if the venture succeeds, you’ll find that your costs start to spiral out of control. The prices of your packing supplies like tape, bubble wrap, and boxes will increase, as does your postage. If you don’t have the cash flow to support this new growth, it’s going to ruin your company and the brand you’re building online.
By working with an eCommerce fulfillment company, you get to take advantage of its economies of scale. 3PLs pack thousands of boxers every day. Therefore, they get significant discounts on packing materials, which they pass onto clients. The 3PL also gets discounted rates from freight forwarders and couriers, allowing you to reduce your shipping costs and conserve cash.
Why pay more for your logistics when you can work with a 3PL? Many entrepreneurs think that they’ll be adding to the costs of doing business by working with a 3PL partner. However, the reality is that an eCommerce fulfillment company can save you money and time on your business.
4. You Start to Experience Mistakes in Your Logistics
With today’s instant gratification on-demand with online retailers, customers won’t give your company a second chance. If you fail to deliver an order, you can expect to lose that business. When you’re growing a company, you can’t afford to lose customers. There’s no reason why you should be losing clients if your logistics are sound.
However, when orders start flowing, many eCommerce entrepreneurs insist on doing everything themselves. As a result of this haphazard strategy, they end up stretching their resources too thin. When you’re overworked and stressed, accidents happen.
All it takes is a few improperly addressed packages or incorrect items shipped and you’re throwing money out the window. If you fail to deliver for your clients, they’ll stop supporting your business and find someone who will complete their orders correctly and efficiently. Working yourself to the point of exhaustion, only to see your customers leaving in droves is a demoralizing event no entrepreneur wants to happen to their business.
By working with a 3PL, you get multiple SKU management and effective shipping and distribution. The 3PL is a professional organization, and they remain accountable to you.
3PLs want to keep your business, and most of them run a professional operation. Therefore, you’re not going to get the same mistakes you would make trying to do everything yourself.
5. Storage Space Is Running Out
When eCommerce entrepreneurs start, they often use their home as a base of operations. All you need is your laptop and an internet connection, and you have everything you need to start an eCommerce company.
There’s only one flaw with this strategy. You need somewhere to hold your merchandise. Most eCommerce entrepreneurs managing a startup prefer to use their home as a warehouse. However, there’s only so much you can pack in your garage or spare room.
If you don’t accommodate the boom in sales you’re experiencing, you will run out of storage space in your home. Chances are your partner won’t be thrilled when you start piling up inventory in the bedroom or dining room.
With an eCommerce fulfillment company, you get to remove this problem from your home. 3PLs can do all your warehousing for you at affordable rates.
6. You’re Thinking About Starting an In-House Fulfillment Strategy
When things start picking up with your online business, you’re going to find it tempting to manage the process yourself. Most entrepreneurs that bootstrap businesses are control freaks.
The thought of handing over control of your logistics to another person makes you feel nervous. So, you keep persisting with your home-based logistics, hoping you can develop your in-house system to manage your company’s growth.
The reality is you’re not superman or superwoman, and no-one can handle rapid growth alone without making a ton of mistakes. By working with a 3PL eCommerce fulfillment company, you can avoid the hassle of starting an in-house logistics department.
Why go through the problems involved with payroll, managing employees, and hiring and firing, if you don’t have to bother? With a 3PL partner, you never have to worry about managing employees. You get access to a proficient team that gets training from the employer without needing to contribute anything.
7. You’re Considering International Expansion
There comes a time in eCommerce where you need to take your company global. If you need to expand internationally, you’ll need to work with a 3PL partner. By working with an eCommerce fulfillment center, you get access to warehouses all around the world, as well as international shipping networks.
Your 3PL partner specializes in logistics, and they spend years developing an intricate network of couriers and freight forwarders to manage the needs of the business. Your 3PL partner has the connections you need to move your goods between countries fast, reducing the time in your international shipping.
Trying to deal with international expansion yourself is a nightmare waiting to happen. You’ll have to deal with the complexities of declared values, customs, and tariff codes. Nobody wants these headaches in their business. You can rely on your 3PL partner to handle all these issues for you.
8. Managing Your Inventory Is Starting to Present a Challenge
When eCommerce entrepreneurs start their venture at home, they have no issues with pulling a box from a shelf, addressing it, and sending it to a customer. The first two or three hundred times you do it bring a mild dopamine rush that helps you realize you’re on track to success.
However, as your business and your product line expand, you’re going to have to develop an inventory management system. That means allocating SKU codes, knowing how much stock you have on hand, and when it’s time to order new inventory.
As a result, you’ll end up mismanaging your inventory – after all, you’re not a store manager, are you? However, by signing up with an eCommerce fulfillment service, your 3PL partner handles all of that.
You get a software program linked to the internal processes of your 3PL partner. The system allows you to track your inventory, and every step of the logistics process, ensuring you never have to deal with inventory mismanagement.
9. You’re Missing Orders or Shipping Late
If your business is growing and you have no help – you’re going to struggle to fill your orders on time. Imagine the effort it takes to package 50-boxes in one day, and manage the other components of your business. There simply isn’t enough time in the day to get everything done.
As a result of spreading yourself thin, you’ll end up missing orders or shipping them late. As mentioned, your customers won’t give you a second chance. You’ll lose their business to your competitor all because you didn’t have an eCommerce fulfillment partner.
With a 3PL partner onboard, you’ll never have to worry about missing orders again. The 3PL can ship thousands of boxes to nearly any destination, allowing you to scale your online business seamlessly.
10. Handling Customer Complaints
Working with an eCommerce fulfillment company has plenty of advantages. However, the most significant benefit we see is working with your customer service. Do you wish you could avoid the hassle of customers complaining about your product or damaged packaging in transit?
If a disgruntled customer decides to slate your company on Twitter, what will it do to your brand and your social marketing strategy?
Dealing with customer complaints and returns is never a rewarding experience. By signing up with a 3PL partner, you circumvent this part of your business. The 3PL partner takes care of all your customer returns and customer service. As a result, you have more free time to work “on your business” than “in your business.”