With so many operational tasks to oversee, ecommerce companies may not always be able to handle everything in-house. In such instances, businesses typically outsource their logistics needs to a third-party logistics service provider, or 3PL. We will go into distribution of fulfillment centers later in the article.
Choosing the finest 3PL for your company might be a difficult task because there are several variables to consider. The number and locations of 3PL warehouses and/or fulfillment centers that the firm operates is referred to as the distribution network in Ecommerce companies.
Although it may seem that the size and reach of a 3PL’s distribution network are less important for an ecommerce firm, because they affect your company’s shipping expenses, 2-day availability, and scaling in the future.
To enable your brand to reach its goals, it’s critical to associate with a 3PL provider that has a distribution network that matches your ambitions and allows you to achieve yours.
In this post, you’ll learn what 3PL distribution is and why it’s essential to work with a 3PL that has a dispersed network of warehouses. You’ll also understand how fulfillment center networks help DTC businesses thrive.
How to Choose a 3PL for Your Ecommerce Business
Investigate how to match your fulfillment demands with the greatest mutual fit available.
What is 3PL distribution?
The term 3PL distribution refers to when a business entrusts the processing, fulfillment, and shipping of orders to a third-party logistics firm.
In 3PL distribution, your 3PL provider manages all distribution logistics services, such as:
- Inventory reception, storage, and labeling
- Kitting and assembly (when necessary)
- Arranging shipping and/or last-mile delivery
- Reverse logistics and returns
A 3PL may perform these services for an ecommerce firm in just one warehouse or fulfillment center, or it may use many fulfillment centers in different locations.
What role do fulfillment centers play in logistics?
Fulfillment centers are warehouses where ecommerce enterprises store their inventory and prepare orders to be delivered to end clients.
Typically, fulfillment centers take goods straight from an ecommerce company’s manufacturer or supplier and store it there. That order is processed in the fulfillment center — that is, the purchased SKUs are chosen and packed into a box — and put on hold to be sent later (usually through last-mile carriers such as UPS, FedEx, or USPS).
Most ecommerce firms collaborate with a 3PL that owns and manages fulfillment centers for them, as smaller brands are unable to afford to set up and run their own fulfillment center (let alone a whole network of them).
This model gives ecommerce companies everything they want: while they are not responsible for the facility’s rent, maintenance, or labor charges, they gain access to warehouse space for their goods and may entirely outsource time-consuming distribution operations such as receiving, stowing, selecting, packing, and shipping.
How 3PLs with distributed warehouses are facilitating DTC growth
Although some third-party logistics firms have a single fulfillment center, more established 3PLs will generally have a network of fulfillment centers dispersed across several countries or even worldwide.
Working with a 3PL that has a big distribution and fulfillment network might provide a significant competitive edge for ecommerce firms. Here are just a few of the advantages that an ecommerce company may anticipate from partnering with a 3PL with a large distribution network.
Offer fast shipping to meet customer expectations
Customers have become accustomed to lightning-quick delivery for their purchases, with 67 percent of clients expecting two-day delivery. 3PLs with a wide network of distribution centers can help smaller DTC brands fulfill this demand by optimizing the physical distribution of items.
With so many fulfillment centers at their disposal, a competent 3PL may keep portions of your inventory in various locations. This way, when an order comes in, it can be handled, fulfilled, and sent from the fulfillment center nearest to the final delivery site.
The use of specialized containers and automated storage devices allows a company to store items in smaller quantities without sacrificing long-term stability. This significantly reduces the average transit distance, which means faster deliveries that improve client happiness.
Reach international audiences without the headache
The complications and delays associated with global shipping can make it hard for DTC brands to expand internationally. Because you must examine import regulations and procedures, international delivery may be quite difficult and time-consuming.
It can also be quite pricey, especially if you’re importing goods from another country, as international purchases are subjected to import fees, taxes, and charges that may inflate shipping costs, deter buyers, and reduce your earnings or bottom line.
International warehouses and 3PLs with foreign warehouses assist to relieve some of these hassles by allowing you to keep inventory in the country where you’ll be selling. This significantly reduces the distance that orders must travel, making sure that products arrive faster and costing less to ship.
Your goods may also avoid any import duties or fees that you would otherwise be required to pay if they are stored locally and never leave the country.
Distribute inventory more tactically
When you have a strong network of fulfillment centers, you may distribute your goods between numerous sites.
You can better track, manage, and control inventory holding expenses by strategically distributing it. You may also optimize item allocation to best meet local demand and minimize product lost in the case of unanticipated catastrophes.
Some 3PL services include inventory management software and analytics tools to assist you distribute your products.
Based on this information, our tool calculates your ideal inventory distribution ratios so that you know how much inventory to keep at each fulfillment center to minimize delivery time, save money, and avoid stockouts.
Consolidate your fulfillment to a single 3PL
Some ecommerce firms collaborate with several distinct 3PLs in various locations to diversify their operations and serve new areas.
However, this method is almost always more trouble than it’s worth; not only does it necessitate a business owner to monitor with several stakeholders on a daily basis, but each 3PL’s unique warehousing SOPs might easily result in disparate consumer experiences and needless inefficiencies.
Working with a 3PL that has several fulfillment centers minimizes the problem. You get all of the advantages of a wide distribution network without sacrificing communication or juggling dozens of platforms — and you can do it all with one standardized ecommerce fulfillment process.