When Should Your Ecommerce Business Outsource Logistics?

One of the most exciting things about growing your business is seeing the orders pour in week after week. But as your online venture gains momentum, managing order fulfillment while working to grow your business further can quickly become overwhelming. Many ecommerce businesses that fulfill orders in-house will need help with inventory management and fulfillment strategies as their order volume grows. Faced with this challenge, many businesses decide to outsource logistics – with Third Party Logistics (3PLs) providers supplying the perfect solution.

As a company grows, ecommerce business owners may find themselves spending more time packing boxes, coordinating shipping logistics, and managing inventory than developing new products, marketing strategies, or any of the other activities that grew their business so much in the first place. The new operational and fulfillment demands taking up so much time might mean your business is unable to capitalize on the growth you’ve worked so hard for – potentially leading to a plateau. Outsourcing your company’s logistics allows you to continue scaling your business without being stalled by the complexities of fulfillment.

This article explores how partnering with a 3PL can help you grow your business even further by handling your fulfillment and giving you back the time you need to focus on business growth activities. We also explore the key indicators that your business is ready to outsource your logistics, from struggling to ship orders on time to needing more advanced technology for inventory management. 

Why Might You Need To Start Outsourcing Logistics?

When you run an ecommerce business, the logistics involved in getting your products to consumers is crucial to your success. As your business expands, these operations grow increasingly intricate and demanding. Thankfully there are different logistics outsourcing solutions that ecommerce companies can use. One of the most popular solutions is partnering with a Third-Party Logistics provider.

3PLs work alongside your business to optimize your fulfillment. With an in-depth understanding of supply chains and logistics, 3PLs seamlessly navigate the more challenging aspects of fulfillment. 3PLs can take over the end-to-end operations of your fulfillment or help your business with certain aspects, depending on what you need. This includes everything from managing the storage of your inventory and picking, packing, and shipping your orders to creating custom projects and helping your business navigate complicated shipping logistics and customs requirements.

Overcoming Complex Logistics Management As Your Business Takes Off

Growing an ecommerce business involves a lot of complex, moving parts, and logistics management is no exception. A growing, successful business also comes with growing, complex logistics needs. 

For example, as your order volume rises and your product offerings expand, you might find that bundling or kitting orders could make sense. While this does make for more efficient order fulfillment, it also means creating and implementing a new fulfillment process. Shipping more and more orders out also means receiving more product returns. As a result, you could need to revamp your existing reverse logistics strategy to handle the increase.

Now that your business is becoming popular, you’ll find you’re acquiring customers from new places. A growing geographic customer base also means shipping across the country or internationally, which can significantly add cost. Not to mention that the regulatory and legal details of shipping across borders can add yet another layer of complexity to your logistics! 

Implementing all of these processes in-house can be challenging and resource-draining for your business. Partnering with a 3PL means having access to knowledgeable fulfillment experts, reducing the stress placed on your team. These experts help you navigate your growing logistics needs as your business expands. Choosing the right 3PL means selecting a partner who will collaborate with you to create a customized solution for your company and your specific fulfillment needs.

When is the Right Time to Outsource Logistics? 

As a young, growing business, it is difficult to know if you’re even ready to start outsourcing logistics. If your ecommerce business identifies with the following key indicators, it’s time to partner with a 3PL.

Expanding Geographic Reach

As your ecommerce business gains popularity, you’ll likely see orders arriving from regions you’ve never shipped to before. The success is great! But it means taking into account new considerations that come with shipping across borders. Shipping orders internationally can introduce new challenges, such as shipping regulations, taxes, and customs (e.g. DDP shipping). These issues might be time-consuming and costly for an in-house team to figure out for the first time.

3PLs are well-equipped to help you overcome these challenges. Trustworthy 3PLs employ supply chain experts who will help your business effortlessly navigate product distribution logistics, expanding to new geographic locations, unfamiliar shipping regulations, and any other logistics challenge that comes up.

When considering a 3PL provider to partner with, remember to check the location of their warehouses and their experience with shipping to the regions your orders are coming from. If your chosen 3PL operates multiple fulfillment warehouses in strategic locations, you’re more likely to benefit from faster delivery for your customers and reduced shipping costs for your business.

Difficulty Handling Peak Seasons and Volume Spikes

Popular holiday or shopping seasons like Black Friday-Cyber Monday can strain your in-house fulfillment operations. If your team has problems with orders, shipping delays, or stockouts during the holidays, it’s time to switch to a 3PL.

3PL providers have the capabilities to scale their operations and ensure order accuracy during peak shopping seasons. Account managers play a crucial role in helping your business meet order demands. Depending on the 3PL, your account manager will be able to reallocate resources to keep up with growing order volume. If you choose a 3PL with account managers that are actually in-warehouse rather than outsourced, you’ll have a reliable partner that can spot or solve problems first-hand – which is crucial during peak seasons.

Need for Advanced Technology and Analytics 

It can be hard to track inventory accurately with a busy in-house team. If your business is constantly dealing with inconsistent and incorrect stock levels or continuously out-of-stock items, you’re likely having some issues with your inventory management. This can lead not only to unnecessary expenditure on excess inventory but also to lost sales due to stockouts. Furthermore, if you find it challenging to implement more efficient shipping solutions, you risk failing to meet customer expectations and incurring excess shipping costs. 

Too many inventory mistakes can lead to an inconvenient experience for your customers – which can directly impact your brand reputation and, ultimately, your profits. Ecommerce businesses grappling with any or all of these issues are ready to overhaul their logistics with an experienced partner.

If your company wants to optimize its inventory, look for a 3PL that offers inventory management, forecasting, and reporting. Not only does this provide your business full transparency into your fulfillment, you also receive real-time stock updates and back order notifications, so you can always plan for future inventory. By enhancing these aspects of your operations, your customers will receive an enhanced experience with no out-of-stock products or order delays. 

Expanding into B2B/Wholesale Markets

Selling wholesale or to other businesses is an excellent opportunity for your company to get your product in front of a broader audience. However, expanding into B2B/Wholesale markets requires a different fulfillment process than selling direct-to-consumers.

In the majority of cases, fulfilling wholesale orders means setting up EDI integration, which takes up time and resources. Not to mention shipping wholesale orders properly means knowing a retailer’s unique receiving guidelines inside and out – even down to what specific type of pallet that particular retailer accepts!

Your business will also require additional storage space and an inventory management system to manage both your DTC and B2B inventory. Plus, delivering bulk orders can be a logistical challenge, often involving specialized transport and handling.

Fortunately, many 3PL providers already have these logistics capabilities. However, not all 3PLs are equipped for both direct-to-consumer and wholesale fulfillment, and splitting your inventory between 3PLs can get messy. Make sure you choose a 3PL that has both direct-to-consumer and wholesale capabilities, experience with EDI integration, and are knowledgeable about retailer receiving guidelines to ensure efficient and error-free fulfillment. 

Addressing Apprehensions About Outsourcing to a 3PL

Outsourcing to a 3PL may raise concerns about relinquishing control or deviating from the quality standards you’ve set for your business. Finding a logistics partner that not only shares your values but understands your expectations is important in negating these worries. The right 3PL partner will enhance your business’s strengths and help pave the way to new growth opportunities. 

Potential Additional Costs

While outsourcing to a 3PL comes with associated costs, it’s crucial to consider the efficiencies these providers bring to the table. 

Think about your current in-house fulfillment team. Now visualize what expanding that team would look like. What resources would you need to achieve that? How much of your time would it take?

It can be both challenging and time-consuming to achieve the same results and cost optimization with an in-house team. Partnering with a 3PL also comes with the added bonuses of being able to negotiate better shipping rates with their carrier network, reduce overhead costs, and eliminating the need for your own investment in warehousing and technology. As a result, the long-term cost savings and benefits of their advanced technology, and extensive networks, outweigh the initial investment.

Loss of Control Over the Fulfillment Process

Concerns about handing the reins over can be common when contemplating outsourcing any aspect of your business. However, partnering with a 3PL doesn’t mean giving up control. It means trusting industry experts to handle the day-to-day tasks you might not have the time for while still maintaining oversight of your operations.

Most 3PLs prioritize transparency by offering tailored inventory reporting, real-time tracking, and open communication. Reputable 3PLs go the extra mile by providing insights into their operations. They often offer cloud-based dashboards that allow you to track your inventory and shipments in real-time. This should include a breakdown of costs per shipment, ensuring you retain the insight into operations your business needs.

Flexibility and Adaptability

You might have concerns about how well your provider meets your company’s distinct fulfillment requirements. The right 3PL not only possesses the adaptability to accommodate these challenges but also the flexibility to tailor their services to meet your needs.

One major advantage of partnering with an established 3PL is its extensive network and tools. Their adaptability allows them to navigate unforeseen obstacles. For example, if a disruption occurs in your usual shipping route due to unforeseen circumstances, a 3PL can utilize its partnerships with multiple carriers to find an alternative solution. This ensures your products arrive on time, preserving the reliability of your brand. 

An experienced 3PL will also be able to adapt its internal resources to accommodate any changes – such as scaling its operations up or down to accommodate any fluctuations in order volume. A 3PL’s existing infrastructure and manpower can be adjusted to your needs, making it easier to manage costs and maintain efficiency. 

Then there are your business’s unique requirements. For example, you might want to add marketing inserts when customers order a specific item, or for only a specific promotional period. Your chosen 3PL provider should be able configure a process to seamlessly integrate this into your order fulfillment. 

The adaptability and flexibility of a 3PL goes beyond overcoming challenges for your business – 3PLs can tailor solutions to meet the unique intricacies of your business, adding another layer of value to your operations. 

Quality and Performance Concerns

You’ve invested countless hours to ensure that every order your business sends out meets your high standards. You might wonder if a 3PL can match the same level of care and attention to detail.

Your 3PL should be deeply committed to delivering top-notch service, which includes upholding your company’s and customers’ expectations. When partnering with a 3PL, Service Level Agreements (SLAs) are established to set clear performance expectations for crucial aspects of logistics like on-time delivery, order accuracy, response times, and packaging quality. By meeting or exceeding these SLAs, 3PLs demonstrate their dedication to maintaining the high standards that you’ve worked hard to establish.

It’s essential, however, to choose the right 3PL partner. Trustworthy 3PLs, like those with glowing reviews from satisfied customers, will work to understand your business and its specific fulfillment needs fully. These customized solutions should show that your fulfillment strategy is in capable hands.

Integration Issues

Your ecommerce platform is integral to your business, and it can cause a huge headache – and a serious delay in order fulfillment –  if your 3PL can’t integrate with it right away.

A quality 3PL will provide effortless integration with all leading ecommerce platforms. 3PLs that offer popular services like Amazon or Shopify fulfillment will take care to synchronize your ecommerce operations, ensuring uninterrupted data flow and streamlined ordering processing. This integration guarantees accurate inventory tracking, efficient order processing, and real-time updates on stock levels. Some 3PLs even extend dedicated IT support to assist you with any of your ecommerce platform’s needs.  

However, not all 3PLs offer such comprehensive capabilities. It is important when selecting a 3PL to check if the provider offers personalized assistance and a white-glove onboarding process to ensure you can begin error-free order fulfillment without delay. 

Managing the logistics of your ecommerce business is no small feat. It gets even more complicated when you’re trying to grow your business while managing your fulfillment in-house.

Shipfusion offers turnkey fulfillment solutions that can take the pressure off while you focus on growing your business. With seamless platform integrations, a white-glove onboarding process, and dedicated Account Managers, we’ve got your logistics covered every step of the way. 

If you’re ready to learn more about finding a solution that optimizes your order fulfillment, book an appointment to speak with a Shipfusion fulfillment specialist today.