Warehousing & Fulfillment

Why Every eCommerce Business Needs a 3PL Business

Warehousing & Fulfillment
November 9, 2021
7 min read

Learn how a 3PL business can help your ecommerce business expand into new markets and grow top-line revenue by improving service levels and offering shoppers the shipping options they’ve come to expect from an ecommerce experience.


A 3PL may be the first step for merchants looking to outsource their fulfillment. However, the traditional 3PL business model may not feel flexible enough to manage the needs of a fast-paced ecommerce business. The rapid acceleration of the ecommerce boom was made possible in part by the flexible nature of ecommerce sales platforms. Online shopping carts like BigCommerce and Shopify have made it easier than ever to build and launch a direct to consumer sales channel.


Speed and agility is the main benefit of ecommerce sales channels for merchants and helped merchants weather the storm of 2020 shut-downs when in-person retail channels all but dried up. In fact, a 2020 merchant survey revealed that 37% of merchants launched an online store for the first time in 2020.


This agility is enabled by the digital nature of ecommerce sales platforms. eCommerce fulfillment, on the other hand, deals with physical products, requires labor, warehouse space, packaging, and final mile logistics. Historically, these factors have made fulfillment less agile in face of market disruptions, but the 3PL business has been disrupted, and creating supply chain resilience has become a priority in the logistics industry.


The 3PL business model has evolved to better serve ecommerce in the following ways:


  • An expanded network, often including multiple 3PL’s in a single network (often referred to as a 4PL)
  • A technology platform that integrates with virtually any sales platform
  • In-depth reporting to inform demand forecasting and procurement strategies
  • Flexibility to move inventory within the network when demand shifts
  • Customized data to inform inventory distribution to lower time in transit and save on final mile delivery costs


Ahead, we’ll discuss how each of these changes in the 3PL business can benefit ecommerce merchants, helping them gain more control over their business growth while at the same time, freeing up internal resources to focus on their core competencies.


Looking for a 3PL business for your ecommerce business? Talk to one of our fulfillment experts today.


#1: An Expanded Network


Often, when SMB’s think of a 3PL, they think of a small, regional carrier with a single fulfillment center. These 3PL’s may serve a small region of the country well, but when a merchant is ready to scale their ecommerce sales, they will want the ability to serve the entire country. They may only see 3 options ahead of them:


  • Offer slower delivery times (Ultimately losing their competitive edge)
  • Offer 1- to 2-day shipping at expensive next-day air rates (Eroding margins)
  • Partner with additional 3PL’s in other regions (Complicating their fulfillment operations and limiting supply chain visibility)


However, the changing 3PL landscape has opened up a new option for ecommerce merchants. The new generation of 3PL’s offer a nationwide network of fulfillment centers that allow merchants to stock their inventory in multiple locations across the country so they can reach any of their customers with 1- to 2-day ground shipping.


Because all of the fulfillment centers are within the same network, they are connected by the same technology platform, allowing merchants to have full visibility into inventory levels and fulfillment statuses at a glance, through a single dashboard.


#2: Integrated Technology


The best 3PL technology will also integrate with multiple sales channels to automate processes that may have previously been executed manually. This includes:


  • Order Processing: Orders are automatically routed to the correct warehouse to enable faster fulfillment times.
  • Inventory Management: Merchants can monitor inventory levels across all sales channels to avoid stockouts.
  • Delivery Tracking: Last mile carrier tracking will be automatically sent to customers to limit customer service requests.
  • In Depth Reporting: Monitor the performance of specific sales channels to inform marketing and inventory allocation.


#3: In-Depth Reporting


Because your 3PL business has access to order management, warehouse management, and transportation data, that data can be aggregated to create in-depth reporting around customer profiles and, geographic order distribution, time in transit, and SKU velocity. This reporting can be used to make strategic decisions like:


  • Which geographic markets to double down on marketing efforts
  • When to stock up for seasonal spikes in demand
  • Which SKU’s may need to be eliminated
  • Which SKU’s may need to be re-ordered in smaller quantities


‍#4: Flexibility


Having multiple 3PL’s in a single network will allow you to move inventory when you see a new market opportunity or an inefficiency in your fulfillment model. Some examples of when you might want to redirect inventory within your network include:


  • You notice that you’re over-indexing on long-zone shipments. You may want to move into an additional warehouse in order to save on final mile delivery costs.
  • You’re storing slow-moving inventory in a prime location and racking up pricey long-term storage fees. You may want to move your slower-moving inventory to the center of the country where storage fees are more affordable.
  • There’s a cold snap in the Southeast and see an opportunity to push your winter weather gear in usually low-demand market.


‍#5: Smarter Inventory Distribution


Sometimes SMB’s may know that a distributed inventory model is the best way to lower time in transit and improve their service levels but don’t know where to start when it comes to choosing warehouse placement. A tech-enabled 3PL partner like Ware2Go offers self-service technology that uses personalized sales and fulfillment data to make warehouse placement recommendations that strike a balance between improved delivery speeds and affordable final mile delivery costs.


Ware2Go’s NetworkVu allows users to either upload their own data or connect directly to their shopping cart via an app in the Shopify or BigCommerce store. It analyzes their data and matches them to best-fit warehouse locations that take the guesswork out of inventory distribution.


Looking to build an optimized fulfillment network? Learn more about NetworkVu here.


Leveraging the Next Generation of 3PL Business


The 3PL of the future is as flexible and nimble as the digital sales platforms that have enabled the current ecommerce boom. To learn more about how to choose the right 3PL business partner for you, download the helpful guide linked below or reach out to one of our fulfillment experts.


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