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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 startup 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 startup fulfillment 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.
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:
- Healthy and wellness
- Vitamins and supplements
- Pet accessories
- General merchandise
- 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.
6 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. Ample Foods
Meal replacement and nutrition company Ample Foods has worked with a couple of 3PLs before ultimately staying with ShipBob. As an emerging company, brand recognition and loyalty were key to their business, which is what they get today in addition to cost savings and faster shipping: :
“From expanding into a second ShipBob fulfillment center, we are excited to be able to offer 65% of our customers with 2-day shipping, up from 32% by only having a single West Coast facility. Soon, this will be 100%. Not only is this better for our customers but we also gain a 13% savings to our bottom line.”
Pablo Gabatto, Business Operations Manager at Ample Foods
Men’s body shaver BAKblade grew 291% under 3 years by partnering with ShipBob. They currently store inventory in multiple ShipBob fulfillment centers. They’ve used ShipBob’s services from their initial crowdfunding launch to reaching $10 million in annual sales in 2018:
“ShipBob has definitely adapted to our growth. They keep getting better and better, helping brands grow and expand at a ratio that other 3PLs might be a few years behind.”
Matt Dryfhout, Founder & CEO of BAKblade
Men’s socks company Brummell needed a fulfillment partner to help launch right before the holiday shopping rush, and succeeded by ramping up quickly with ShipBob:
“I can’t express enough how happy I have been to work with ShipBob. They have been instrumental in both the start-up stage and the growth of our company. We have had a great experience over the past couple years and look forward to the longer relationship.”
Steve Staffan, founder and CEO of Brummell
4. Nature’s Ultra
Not many companies grow as fast as 9,900% year over year. By partnering with ShipBob and tapping into our nationwide fulfillment center network, CBD company Nature’s Ulta can offer 2-day shipping to all their customers across the US:
“We place considerable expectations and pressure on shipping so we can get close to what Amazon does. With ShipBob, 100% of our orders are going out via 2-day shipping.”
Andrew Hardy, COO of Nature’s Ultra
Girl’s apparel brand iloveplum increased their average order value by 97% after partnering with ShipBob to deliver 2-day shipping to their customers. They’ve also seen a 267% increase in sales in just under a year with new fulfillment infrastructure in place:
“Since partnering with ShipBob, we’ve been able to scale our business from $300,000 in sales per year to over $1.1 million due to infrastructure, technology, and scalability improvements.”
Ryan Casas, COO of iloveplum
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 ecommerce companies of all sizes. Whether you’re shipping 200 orders per month or 20,000, 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.