Why a 3PL Can Help with eCommerce Growth
Ecommerce and retail sales have been on the rise for the last several years, and we saw a substantial increase last year as lockdowns pushed companies to shift to work from home. It’s estimated that US ecommerce grew 44% in 2020. It was the largest registered ecommerce growth in the last 20 years. Businesses who had never foreseen themselves moving online were forced to pivot from the traditional retail brick-and-mortar space. The pandemic was the catalyst that many researchers believe gave us a glimpse into what work life would look like in the future.
Experts are predicting even more momentum towards ecommerce growth for the near term. Most corporations have made it clear that work from home is here to stay even after the pandemic comes to an end. CEOs of some of the largest companies have already decided to move to WFH permanently. As a result, businesses in the ecommerce sector are looking to 3PLs as the core of their businesses. It is estimated that almost 90% of Fortune 500 companies are now using third party logistics companies.
How will businesses keep up with the increase in demand and ensure customer satisfaction?
The simple answer is to partner with a 3PL. You want experts in shipping, logistics, and inventory management to take ownership of the entire process. 3PL’s have a robust network of providers that correlate to a more cost effective, efficient, and scalable approach.
01 Infrastructure
3PLs have the warehouse, equipment, staffing and technology already in place to help businesses scale quickly. With the infrastructure already in place, it gives businesses the ability to focus on their core competencies. For example, if your business were to see average orders go from 50 a day to 5,000 a day, it would add tremendous pressure on your existing processes while it would be business as usual for a 3PL.
Utilizing an inventory management system gives 3PLs a leg up as it allows for shipping high volume faster. The cloud-based order management platforms that companies such as XPDEL offer allow customers to have their orders and returns processed at an expedited pace. Customers can track their orders through the process giving them greater visibility. It also gives the 3PL staff the ability to quantify its performance giving way to higher productivity.
02 Economies of Scale
An advantage of using a 3PL is they are able to scale quickly and economically. As a 3PL continues to purchase more product or equipment, the price per unit decreases. The business partnering with the 3PL and the customer who ordered the item are both able to save costs
On a micro level, that can be applied to items such as shipping boxes and tape. When you’re buying thousands of a specific unit, those costs become cheaper across the board which result in lower shipping costs for the customers. The same cost savings measures work with 3PL partnerships with fleet leasing or partnerships. It’s a domino effect that in the end leads to greater customer satisfaction on both fronts. For businesses, it allows you to allocate the extra funds into other areas of the business.
03 Market Expansion
Looking to expand into a new market? It can be a daunting task for businesses. By using a 3PL, businesses avoid the many pitfalls that arise from expanding into areas where they don’t already have a presence. There is no need to research local carriers or rent space because 3PLs already have distribution networks that give them easier access to customers.
The level of flexibility that your business needs to have in a new market is even greater. Working with a 3PL allow you those opportunities to make adjustments without the potential devasting errors.
04 Faster Shipping
Studies have shown 75% of ecommerce business is lost to shopping cart abandonment. Of the many reasons why customers choose to not continue, not seeing an express shipping option is near the top of the list. That’s why most businesses are choosing to rely on a 3PL to get orders processed quickly and delivered in as short as a few hours. With ecommerce giants such as Amazon and Walmart implementing same day and next day shipping, it has become necessary for businesses to remain competitive. Customers expectations have risen and want their orders to arrive a lot faster and for a lower cost.
05 Customer Experience
Customer experience is at the forefront even more so today than ever before. 3PLs offer the accuracy, transparency, and personal touch your customers are looking for. Studies show that 13% of customers never return if their shipping is not on time. Adding a custom note to a package or ensuring that over 99 percent of your orders are delivered on time can be a decisive factor in customer loyalty.
How XPDEL can help
Backed by years of experience at XPDEL, we know what our customers expect so our focus remains on integrating enhanced technology while maintaining the human touch to reduce operations costs and increase efficiency. With competition getting stiffer by the day, it is important that your business makes the necessary investments to provide the best experience possible for you as well as your customers.