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How a third party logistics provider can power your online business

Words of wisdom | Jul 3, 2020

Have you seen a steady increase in online sales? Are your e-commerce logistics keeping pace with this growth? 

  • Are you able to deliver your products quickly? 
  • Have you negotiated the best rate with your carrier? 
  • Do you have the time to manage returns properly? 
  • Do you have enough space to store your merchandise year-round? And how much does this space cost you? 
  • Are you able to respond to a sudden increase in the number of orders while keeping your promises to customers?

Find out how to transform your operations, reduce operating costs and build customer loyalty with a third party logistics (3PL) provider.

What are e-business logistics? Read this article.

What services are offered by a 3PL provider?

A 3PL provider manages the entire chain of e-commerce logistics, i.e.:

  • Receiving and storing goods: counting and quality control of incoming goods and storage space that adapts to fluctuations in your sales.
  • Preparing, packing and shipping orders: track orders, provide different box sizes to protect products and reduce transportation costs, as well as ensure efficient delivery.
  • Managing inventory and merchandise returns: sell available products and provide excellent after-sales service.

3PL providers offer other services related to e-commerce logistics. This article will focus on the three main activities listed above. 

When to call in a logistics expert 

You are:

  • A retailer who has a warehouse separate from the stores
  • A manufacturer in the growth phase
  • A startup selling exclusively online 

And:

  • You ship more than 10 orders per day
  • You're thinking about getting new technology or a new warehouse
  • You no longer want to manage the logistics of your online business internally
  • You have a finished product or a product that requires little handling
  • You often sell products that are no longer in stock, or make errors that are harmful to your reputation because you do not have inventory management software. 
This decision to outsource logistics activities allows companies to focus on value-added activities and reduce the complexity of managing logistics activities.

Source: CEFRIO

How a 3PL provider can really help you 

1. Competing against the e-commerce giants 

The e-commerce giants have created high expectations among consumers. Your online shoppers want the same quality of service when they buy your product: order tracking at all stages, short preparation and delivery times, product availability, easy returns and personalized after-sales service. 

39% will avoid future purchases with a retailer due to lengthy order processing times.

Source: Habits and Preferences of Online Shoppers by Canada Post

A 3PL provider is an expert in logistics operations. They simplify your operations to achieve this quality of service. As Canada Post points out: “Many logistics service providers offer to respond to your customers' requests, online or by phone, both day and night.”

2. Access to technology for fast delivery

A good 3PL provider is familiar with the technologies required for online commerce logistics management. Among other things, the provider will use a WMS (Warehouse Management System) and a TMS (Transport Management System). These systems:

  • Allow you to have a real time inventory of the stock and to track its movements
  • Reduce the time spent searching for goods in the warehouse
  • Increase efficiency and reduce errors through a centralized management system
  • Allow you to properly plan transportation and choose the carrier based on the best rates or quality of service

3. Turning fixed costs into variable costs

Think of all the costs and management time involved in building or renting a warehouse: electricity, storage equipment, technology, labour, having to move due to lack of space and much more. 

Space management is simple with a 3PL provider. It adjusts to your needs. Your sales are higher during the holiday season? Reserve more space. You have a temporary drop in sales? Take less space.

4. Benefit from the best transport rates

A 3PL provider is also an expert in negotiating transport rates, as it takes advantage of its total volume of customer orders. The service provider chooses the best carrier for you based on your product and shipping price. The savings you make on your transportation costs can pay (in part) for the costs related to order preparation.

5. Process more orders 

If you are a manufacturer selling for large chains and online at retail, which sale should you prioritize in your warehouse: a $2,000 pallet or a $50 online sale? You don't have to make that heart wrenching choice anymore with a 3PL. It can prepare and deliver both types of orders in the same day. 

6. Better merchandise management

A 3PL provider will notify you if there are any dormant stocks, so you can create promotions to liquidate them. As an expert in logistics, your provider also helps you anticipate peak periods so that you always have enough product to meet demand. A 3PL provider is an extension of your company that owns and operates the logistics function and is able to advise you.

Get informed before you call a 3PL provider.

Before using a 3PL provider, make sure you are well prepared and understand the costs involved. These companies charge warehousing, pick up, order preparation (pick/pack), packaging and shipping costs.

Draw up a list of questions to ask the provider beforehand, for example:

  • The number of years of experience in e-commerce 
  • The percentage of its sales related to e-commerce 
  • The average size of its clients 
  • The business sectors of its current and recent clients
  • The kinds of technologies used 
  • KPIS and dashboards they can share with you
  • The waiting time required when responding to high demand

To learn more, read this checklist from Shopify.

Don't know who to contact and need help making the leap to a 3PL provider? Our team can recommend recognized 3PLs and help you define your needs. Our services are free of charge. 

Make a comparison before choosing your partner

You must share control of the execution of your operations with your 3PL provider. This is your partner, more than a supplier. Choose the one that will be able to provide a service that reflects your company's image.

Before choosing your partner, best practice recommends that you:

  • Draw up a specification citing your needs and including a response template to obtain comparable bids (so you can compare apples with apples) 
  • Obtain at least three quotes from potential candidates 
  • Visit the facilities to meet the team and see if the technology is being used properly and the space is suitable: cleanliness of the warehouse, organization, high enough ceilings and type of automation
  • Negotiate the right price and a solid contract

Benefit now from the logistics experience of a 3PL provider

Don't waste another minute managing your inventory, negotiating your shipping costs and forming a team to pick and pack your orders. And above all, don't risk losing your customers due to order errors. 

Contact your expert at PME MTL to find the perfect 3PL provider for your business!

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This article was written in collaboration with Souad Laidi and Alexandre Skerlj, experts in e-commerce logistics at PME MTL. 

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