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Key Takeaways
1
Third-party logistics (3PL) providers offer essential services like order fulfillment, warehousing, and inventory management, enabling ecommerce businesses to scale efficiently.
2
Small to Fortune 500 companies benefit from 3PLs by reducing logistics costs, improving supply chain efficiency, and offering competitive shipping options like 2-day delivery.
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Industries such as apparel, electronics, and cosmetics leverage 3PLs to streamline operations and focus on core business activities, enhancing customer satisfaction and brand loyalty.
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Companies like Taste Salud, Bloom Nutrition, and Touchland have successfully scaled by partnering with ShipBob, utilizing its nationwide fulfillment centers and technology-driven logistics solutions.
There has never been a better time to start and grow an online store. From product sourcing to digital marketing services, there are a wide range of resources that help ecommerce companies get started and succeed.
But one of the most valuable ecommerce resources is the ability to outsource fulfillment to a 3PL. Whether you’re a small biz or a fast-growing company, partnering with a 3PL has proven to help fulfill orders faster, save on logistics costs, and ultimately scale at an incredible rate.
What is a 3PL?
3PL is short for “third-party logistics.” A 3PL partner offers ecommerce logistics, including order fulfillment, warehousing, and inventory management.
Not all 3PLs are created equal, but some of the services they may provide include:
- Picking and packing orders
- Kitting and assembly
- Inventory management
- Returns management
- Distributed inventory
- 2-day shipping
- And other logistic-related services
A 3PL provides more than just logistics services, but also strategies to drive revenue. For instance, many 3PLs offer 2-day shipping options that help small businesses compete with Amazon and larger, more established ecommerce brands.
Without the need to increase marketing spend, if your ecommerce business is equipped to offer 2-day shipping, it can reduce cart abandonment rate, increase average order value, and ultimately build brand loyalty and keep customers coming back.
Who’s using a 3PL?
Although 3PLs take care of logistics behind the scenes, a surprising amount of ecommerce brands partner with a 3PL, from small ecommerce shops to Fortune 500 businesses selling a variety of products. A 3PL should be agile enough to grow with you as your business scales, and at any level of growth, provide an array of services that help you succeed.
Small ecommerce shops
When small ecommerce companies first launch, self-fulfilling orders every day can be manageable. But once a business starts to see an increase in orders each month, spending too much time on packing orders and taking care of shipping in-house (tasks that you likely didn’t start the company to spend time on) can hold small businesses back from scaling.
At this point, they may even need to seek out help from friends or family, or even hire workers. They also run out of room in their home or apartment and may need to rent a storage unit or small warehouse.
Between over-spending on storage costs and hiring employees to fulfill orders and manage inventory, in-house can get costly and time-consuming. That’s why small businesses outsource fulfillment to focus more time and attention on product design, marketing, and other business development tactics, while also saving money in the long run.
If you’re a small business that is currently spending too much time (and money) on retail fulfillment and struggling to scale, the right 3PL will take order fulfillment off your hands and provide all the services you need, plus introduce you to new ways to reduce shipping costs.
Medium-sized companies
Companies that have grown to the next level and/or employ between 15 and 100 employees also benefit from using a 3PL. Many 3PLs provide fast-growing companies support in changing their fulfillment strategy once they reach the next level of growth.
For instance, many companies start out storing inventory in one warehouse but soon grow out of it as their business begins to flourish. They’ll be tasked with either finding a new ecommerce warehouse and making new key operations hires, or getting outside help. At this point of growth, planning demand becomes unpredictable and keeping up is challenging, often leading to delayed orders.
If you’re currently at this stage, a supportive 3PL partner will work with you to identify where most of your customers are located, then help you forecast demand, effortlessly scale up as order volume increases, and even strategically split inventory across multiple fulfillment centers to reach more customers faster and at an affordable rate.
Fortune 500 companies
According to Armstrong and Associates, 90% of Fortune 500 companies use a 3PL. Given the size of these companies, it is typically unlikely to have a 3PL that services small Shopify websites also be the 3PL of a Fortune 500 company. That’s because many of them have a tremendous brick-and-mortar presence as well, and need a 3PL that can track inventory across multiple channels in one place.
Industries that use 3PLs
From single products or full catalogs, to subscription orders and hand-made items, a variety of fast-growing industries have found success in partnering with a 3PL, including:
- Apparel
- Accessories
- CBD
- Healthy and wellness
- Vitamins and supplements
- Pet accessories
- General merchandise
- Electronics
- Cosmetics and makeup
- And more!
Why companies love 3PLs
No matter what type of product or industry, by using a 3PL, ecommerce companies benefit from saving time and money with a more streamlined order fulfillment process.
Supply chain efficiency
A 3PL can help you improve supply chain efficiency by taking care of order fulfillment and inventory management for you. By outsourcing fulfillment, the 3PL is automatically notified when an order is placed.
From there, the orders are picked, packed, and shipped to your customer. Most 3PLs provide order tracking that can be shared with your customers, and even process returned items.
Lower logistics costs
Partnering with a 3PL will help you reduce logistics costs in the long run. Unlike hiring an internal team to manage inventory and shipping, 3PLs store your inventory for you and their team of fulfillment experts are trained to keep overall logistics costs down. You don’t have to pay for equipment, certifications, rent, packaging, and other materials you would need to on your own.
Note: Starting in 2021, logistics warehouse tenants can expect to see a 10% rate hike starting in 2021. That’s why more brands are seeing the benefits of outsourcing logistics to a 3PL that can provide more value at a lower cost.
3PLs with multiple fulfillment centers let you split your inventory across locations so you can eliminate shipping to the highest, most expensive shipping zones and keep inventory closer to more customers. 3PLs also negotiate bulk discounts with major shipping carriers to provide better rates for both domestic and international shipping.
Supply chain optimization
3PLs are logistics experts and have developed the best operational practices and even technology to help your business. A tech-enabled 3PL offers automated shipping solutions to optimize many aspects of the order fulfillment process, from easily integrating your online store to inventory tracking, to returns management.
With a tech-enabled 3PL that owns and operates a network of fulfillment centers, you’re given full visibility into the entire order fulfillment process, so you can track orders and manage inventory at any given time. You’re also given access to accurate data and analytics, so you know when to set reorder notifications points, forecast order demand, and more.
3 companies that use a 3PL
ShipBob is a 3PL that has been fortunate enough to partner with thousands of ecommerce businesses across a wide range of industries and sizes that have continued to grow at a fast rate.
Here are a few customer success stories:
1. Taste Salud
Hydration drink mix, Taste Salud, partnered with ShipBob at the beginning of the brand’s conception. Over the course of a few years, they scaled to achieve over $20M in revenue. They attributed outsourcing order fulfillment as a major driver of their ability to grow quickly and profitably.
“Personally, when I hear about people trying to do their own fulfillment, I’m kind of skeptical. Having gone through that experience of packing orders, I would tell anyone that’s thinking about starting a business that it’s really, really well worth your time to consider partnering with a professional like ShipBob.
A lot of people think, “I don’t need that,” or “I don’t want to waste money on a fulfillment provider.” But in reality, partnering with an expert like ShipBob will free up so much of your time, speed up shipping, and lead to a better customer experience.”
Tyler McCann, Co-Founder of Taste Salud
2. Bloom Nutrition
Similar to Taste Salud, Bloom Nutrition tapped ShipBob as their fulfillment partner early in the brand’s journey. Over the course of working with ShipBob, Bloom has become a wildly popular brand that has expanded their product offering and entered into multiple retail channels. As a result, Bloom Nutrition has scaled to achieve over 9-figures in revenue.
“ShipBob has been able to provide the high-quality fulfillment that is expected by premium brands. They definitely gave us the logistics technology to run our business, the requisite ever-expanding capacity and coverage we require, and great service. I’ve worked with a lot of different fulfillment partners in the past, and this is by far some of the most reliable service I’ve seen.”
Neil Blewitt, SVP of Operations at Bloom Nutrition
3. Touchland
Touchland, a fast-growing brand that has successfully upgraded the hand sanitizing experience to a whole new level. Their high-quality, moisturizing hand sanitizers include aloe vera, essential oils, and other high-performance natural ingredients along with Denatured Ethyl Alcohol that kills germs without leaving hands dry or sticky. Prior to the COVID-19 pandemic, Touchland was already growing quickly, but the pandemic led to a 30,000+ customer waitlist.
“We were already growing quickly when COVID began, then we completely sold out the first week of the pandemic. In three weeks, more than 34,000 customers were waitlisted on Touchland.com. We even did pre-orders to try and meet demand. Between March and May 2020, we had up to 700 orders per day and sold 10,000 dispensers to industry-leading brands in those three months.
COVID changed the mentality of hand sanitation for most businesses, and this won’t go away after the pandemic.”
Andrea Lisbona, Founder & CEO of Touchland
ShipBob as your fulfillment partner
ShipBob is a 3PL that works with fast-growing ecommerce companies. Whether you’re shipping 2,000 orders per month or 200,000, we’re a partner that will be by your side for the long term.
By partnering with ShipBob, you’re given access to nationwide fulfillment centers, proprietary technology, built-in analytics and distribution metrics, 2-day shipping options, and much more to help grow your business faster.
Whether you’re looking for a 3PL to partner with for the first time, or you’re looking to make a switch from your current 3PL partner, ShipBob can help.
