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It’s not uncommon for direct-to-consumer (DTC) brands to be tempted in tackling logistics alone without the help of a logistics service provider. While fulfilling and shipping orders yourself is a cost-effective strategy during the beginning stages of a business, it is not a scalable solution in the long run.
As monthly order volume increases, so do the hours spent on warehouse picking, packing, and taking trips to the post office to ship out orders. That’s why fast-growing brands turn to a logistics service provider to help with all-things logistics, from receiving and storing inventory to shipping orders. That way, they can spend less time on ecommerce logistics and supply chain efficiency and instead focus more time on growing their business.
In this article, you’ll learn why ecommerce businesses often partner with a logistics service provider, who the top players are in the industry, and the many benefits of outsourcing logistics to the experts.
What is a logistics service provider?
A logistics service provider, also known as third-party logistics (3PL) provider, is a company that specializes in offering services to help manage the supply chain including warehouse management, order fulfillment, and shipping orders. There are several great logistics providers on the market, but it’s important for ecommerce businesses to take the time needed to find the right logistics provider that will go above and beyond to meet and exceed the business’s needs.
Logistics service providers typically offer:
- Inventory management
- Warehousing solutions
- Order fulfillment
- International logistics
- Freight shipping
- Supply chain management
- Transportation services
Why successful ecommerce businesses use logistics service providers
In ecommerce, a logistics service 3pl provider becomes a key player in the ecommerce supply chain. Though many brands start off by fulfilling and shipping orders themselves, fast-growing brands or those with plans to grow recognize early on that there are significant benefits to outsourcing fulfillment and logistics. Failing to capitalize on these benefits leaves money and opportunities on the table. Here are some of the top benefits you can expect when you partner with a logistics service provider.
A reliable logistics provider is a key part of growth. Business owners often find that fulfilling and shipping orders themselves is unsustainable in the long-run, and discover that there are hidden costs to it (e.g., warehousing procurement, labor, high shipping rates, shipping insurance, and packing materials) that chip away at profits and stunt their capacity to grow.
By delegating costly and time-consuming logistics management tasks to a 3PL service, you free up valuable time that you can spend on other profit-driving functions like marketing, customer engagement, and product development while improving profit margins.
Top logistics service providers have an array of partners and integrations that can help in almost every aspect of ecommerce logistics, creating an end-to-end ecommerce solution. These partners specialize in logistics-related tasks, such as inventory and order management, custom packaging, return management, and more. When it comes to shipping, the right 3PL will have a strong ties to major shipping carriers to secure bulk discounts on shipping rates, so you can pass the savings on to your customers.
A world-class logistics service provider offers years of experience working with thousands of ecommerce businesses, and therefore can offer the knowledge and support needed to help you make better decisions as you scale your business. For instance, an experienced 3PL can help you decide which locations to store your inventory in so you can to reach your customer base faster and more cost-effectively.
There are a lot of moving parts across the retail supply chain, so partnering with a logistics service provider with a knowledgeable customer support team can also help you resolve issues quickly, so you can stay focused on other important business needs.
The right logistics service provider can offer the infrastructure and technology to optimize the supply chain and streamline workflows and processes with distribution services that fulfill both local and global logistics. By tapping into a 3PL’s robust infrastructure, you’re able to automate many time-consuming logistics tasks and speed up the time it takes to fulfill and ship an order.
By connecting your online store to a 3PL’s technology, orders are automatically sent to the closest fulfillment center where inventory is stored. From there, the retail fulfillment process begins and a fulfillment expert picks, packs, and ships the order to your customer for you. Third-party logistics services also oversee the entire transportation management system for every order that enters and leaves the warehouse.
Self-shipping vs. working with a third-party logistics provider
Self-shipping orders in the beginning stages is common, but in the long run, there are many challenges and hidden costs to self-fulfillment and shipping. You have to consider the cost of packing materials and supplies, transportation, and even shipping insurance. Warehouse management is also a costly investment; starting in 2021, logistics warehouse tenants can expect to see a 10% rate hike, due to a high demand for warehouse expansion and construction.
On top of cost, you have to also consider where your time is being spent. Every hour you spend checking for new orders, packing your items, driving to the post office and waiting in line, you’re missing the opportunity to grow your customer base, develop new products, market your business, and much more.
By partnering with a logistics service provider, you’re able to tap into a robust logistics infrastructure with multiple fulfillment center locations, best-in-class technology, digital fulfillment expertise, and shipping discounts, which saves you time and money in the long run.
“I’ve talked to people who think they save money by fulfilling themselves. Their first question is always ‘is a 3PL worth the extra expense?’ We see outsourcing fulfillment as a cost-savings and believe it will save you money in the long run. 3PLs negotiate rates, give you back all the time you’d spend stuffing mailers, and reduce the errors you’d make messing up addresses.”
Gerard Ecker, Founder & CEO of Ocean & Co.
Customers see the benefit from logistics service providers, too
Partnering with a logistics service provider can help you stay competitive by providing you with the supply chain and fulfillment infrastructure needed to meet customer expectations. Here are just a few of the ways that a logistics service provider can improve the overall customer experience.
Faster, affordable shipping
Whether it’s through distributing inventory or negotiating discounted bulk shipping rates with carriers, a logistics provider can help you speed up delivery and reduce shipping costs in a number of ways with distribution centers that are able to fulfill orders more efficiently. Saving on fulfillment costs allows you to offer more affordable shipping options for customers, such as affordable 2-day shipping via ground, or even free shipping, which can help to reduce cart abandonment and improve brand loyalty.
Better order tracking
With a tech-enabled 3PL, you are given full visibility into the entire ecommerce order tracking process in real-time. With access to order tracking, you can outsource the order management process while maintaining control, empowering customers, and quickly addressing any issues that might arise. Without a proper order tracking system, important tracking information can get missed, resulting in a backlog of emails from unhappy customers.
Faster returns process
A logistics service provider can also help you improve your returns management process. With expertise and return management solutions, logistic service providers make it easy and cost-effective for customers to return items. A streamlined returns process can make your customers feel more confident in purchasing from you in the future or even recover money through exchanges.
3 top logistics service providers
Outsourcing logistics to the experts is key to scaling your business, but not all logistics companies are created equal. To maximize the benefits, you need to partner with a logistics service provider that goes beyond picking, packing, and shipping and offers a full suite of logistics services that will support your business for long-term growth.
ShipBob is a best-in-class logistics and fulfillment provider that goes beyond picking and packing, with an international fulfillment network, proprietary technology, built-in inventory and order management tools, dedicated customer support, and more. ShipBob partners with brands to help reduce shipping costs with the ability to split inventory across multiple fulfillment center locations.
As a tech-enabled 3PL, ecommerce brands can easily integrate ShipBob’s technology with major ecommerce platforms, marketplaces, and other tools, or utilize ShipBob’s Developer API for a more robust solution.
“Our fulfillment is on autopilot. ShipBob saves us so much effort, and the opportunity cost savings has been substantial. I’ve been spending my time on business development and strategic partnerships, reaching out to retailers to see if they want our product on their shelves. Rather than us packing boxes and going to FedEx, or paying additional fees to another third-party, having ShipBob do it all is awesome.”
Yannick Crespo, Co-Founder & President of Pot d’Huile
Flexport is a digital freight forwarding company that offers low-cost ocean, air, trucking, and intermodal freight shipping. Their cloud software program gives clients deep visibility and control of their transportation management and connects them with every party involved in global trade (importers, exporters, carriers, customs agencies, etc.) in one place. In addition, Flexport provides its clients their own “squad” of experts with the insight and expertise to help them better manage their freight forwarding.
UPS is the world’s largest multinational shipping carrier and package delivery company. While it is most commonly known to deliver packages for individual consumers, UPS is large enough to offer a remarkable array of logistics services (including basic warehousing, ecommerce fulfillment, reverse logistics, and freight shipping functions), as well as value-added services such as product customization, packaging solutions, and retail quality checks.
Partner with the world’s leading ecommerce fulfillment logistics service provider: ShipBob
Leading ecommerce businesses trust ShipBob to handle their logistics, and for good reason. ShipBob takes time-consuming logistics tasks off your plate while providing a robust fulfillment network across the US, Canada, and Europe, built-in inventory management software, analytics and reporting, and world-class customer support. ShipBob has partnered with fast-growing brands in a wide range of industries to help reduce shipping costs and transit times, and even expand into new markets with international shipping capabilities.
“When I switched to ShipBob, it was game over! I could finally start growing my business. My CPA even said to me, ‘Thank God you switched to ShipBob.’”
Courtney Lee, founder of Prymal
Partnering with the right logistics service provider can help you scale faster and prepare for future growth. As risky as outsourcing logistics might seem, it is most often a necessary step in any successful business’s growth trajectory — and one that, if you find the right partner, can yield massive benefits for your business.
ShipBob is a fulfillment and logistics service provider that can help optimize your supply chain, increase customer satisfaction, and catapult your business to the next level of success. Click the button below to learn more about how ShipBob works, request pricing, and see if we’d be a good fit for your business.
Logistics service providers FAQs
Ecommerce logistics can be a challenge. Here are some of the most frequently asked questions about logistics service providers.
How do I choose a logistics service provider?
When considering logistic service providers, look for a holistic solution that offers the infrastructure, technology, and support you need to help your business scale. Location and technology also play a key role. The right logistics provider will offer a robust fulfillment location network that’s powered by leading technology that helps streamline logistics operations.
What is logistics?
Logistics is a broad term used to refer to the more concrete processes involved in a business’s supply chain operations. Logistics encompasses a wide range of tasks that collectively cover the lifecycle of an order, including inventory storage, inventory management, order verification and processing, picking and packing orders, and shipping.
What is a third party logistics company?
Also referred to as a 3PL, a third-party logistics company handles a business’s inbound and outbound logistics functions, from receiving inventory to picking, packing, and shipping orders. Fast-growing ecommerce businesses outsource fulfillment to a 3PL like ShipBob to increase their efficiency and order accuracy, and to repurpose resources from their operations to accomplish more pressing objectives.