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How partnering with the right third party logistics provider (3PL) can help retailers overcome e-commerce challenges

The right third party logistics provider (3PL) can be an invaluable partner to a business, saving retailers both time and money in the long term.

An experienced 3PL can help to make a supply chain more flexible and efficient, and provide the knowledge and expertise needed to navigate the tricky world of e-commerce logistics.

With increasingly high customer expectations when it comes to online orders, retailers are being forced to overhaul their distribution networks in order to keep up with demand. Those who opt for in-house distribution are often still relying on old distribution networks, which are not designed to handle the complex fulfilment needs for online orders. This makes fulfilment both costly and inefficient, and leads to dissatisfaction amongst customers when orders are not delivered in the manner or time frame they’ve become accustomed to.

For a retailer who has previously relied on in-house distribution, partnering with a 3PL can seem like an unnecessary extra expense. However, the right provider can have a dramatic impact on performance, creating a much more cost-effective way of working and meaning the short-term increase in distribution costs more than pay for themselves over time. 

This is not the only benefit of partnering with a 3PL though, there are a number of additional extra benefits.

Accommodate growth and an ability to scale

Retail marketplaces are constantly fluctuating, and growth can be sudden and unpredictable, making it incredibly difficult for retailers to predict these changes in advance. An experienced 3PL can be an invaluable asset to both new and growing businesses, providing a long-term solution that helps to facilitate growth by seamlessly growing with your business in the most efficient way possible.

To cope with the pressures of peak demand periods, businesses will need access to sufficient warehouse space and also additional staff to keep up with increased order volumes. However, once demand slows, these become an unnecessary extra expense. A 3PL can provide the flexibility needed to ride out these peaks and troughs in demand by offering scalable warehouse space and staffing. This enables the retailer to keep costs low and efficiency high. Retailers often prefer to move away from logistics services as a fixed cost, to avoid paying for services and labour that are not needed. Due to the 3PL’s ability to flex, costs remain variable based on order volume, directly increasing the retailer’s profit margin.

This increased flexibility and the ability to scale operations both up and down as needed, in line with the changing marketplace, can be a huge advantage to retailers too. It allows businesses to react more quickly and effectively to the unpredictable environment of e-commerce; making order volume increases, changes in consumer demands, seasonal promotions and business fluctuations much more manageable. 

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Access to the latest technology and software

One of the biggest advantages of partnering with a 3PL is gaining access to the latest technologies and software. Technology is becoming rapidly embedded within the logistics industry, making it an essential component in providing a high quality customer experience and helping providers streamline their services in order to offer the most cost effective solutions.

Implementing these systems in-house can often be a large and daunting up-front investment for retailers, requiring technical expertise and additional resources to run effectively. However, by partnering with a 3PL, businesses can bypass this step whilst still reaping all of the benefits. A 3PL will have already performed thorough research to determine the best and most comprehensive system for the job, or may have even developed their own system to fully meet the needs of their clients, and a partnership will allow your business to gain full access without the costly up-front investment.

Access to these technologies also has the added advantage of providing useful insights into current fulfilment procedures, and highlight areas where optimisations can be made. Detailed fulfilment reports and the ability to make use of big data to analyse customers shopping habits can be an invaluable tool to allow retailers to better respond to the demands of their customers.

Tap into fulfilment expertise

Partnering with the right 3PL can completely transform a retail operation, thanks to a strong network of shipping contacts, warehouse space, fulfilment capabilities and global shipping expertise. A 3PL benefits from larger volume of shipments, which significantly reduces transport costs. 

Providers will have a keen insight into where the industry is headed in the future, and will also be able to use their experience to accurately suggest the best and most cost effective fulfilment options for each business. Retailers should also be sure to tap into a 3PL’s global expertise by leveraging a 3PL in strategic regions, giving themselves a competitive edge against competitors in new and emerging markets in the wake of Brexit. Regulations, taxes, compliance and culture vary widely across the world, but a 3PL fully understands these unique differences, allowing businesses to effortlessly navigate new markets and take advantage of the benefits they can offer.

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Optimise operations and reduce costs

An experienced 3PL is constantly innovating and looking for ways to improve efficiency and this innovation is then passed on to their clients, making your own business much more efficient too. Once a 3PL is appointed, retailers have access to their own dedicated team of logistics experts who are constantly monitoring, analysing and improving logistics operations in the background. This gives businesses time to focus on their own strengths, investing  efforts into growing their business and ensuring service and quality levels remain high.

It can be incredibly expensive to maintain a modern warehouse, complete with a fleet of delivery vehicles and an expert logistics team. Choosing to work alongside a 3PL can be a very cost effective solution, allowing retailers to run a first class logistics operation without the high set-up and maintenance costs of running it in-house. Businesses can also avoid the worry and risks involved in investing in infrastructure and new technologies, which can help to further minimise the associated costs when it comes to scaling fulfilment processes.

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Improve customer experience 

By handling storage, shipment and returns in one place, businesses not only increase efficiency, but can also vastly improve customer experience too. 

Partnering with a 3PL enables retailers to maintain a high level of customer service by utilising their expert knowledge to fully optimise logistics operations. Fast shipping and easy returns are key to keeping customers happy and staying on top of demand. A 3PL can help to make next and same-day deliveries effortless with access to a number of warehouse locations for storing and shipping products, as well as improving order accuracy by offering a precise real-time view of all inventory. Many providers specialise in handling returns, an area that can often be a problem for retailers. Allowing a 3PL to take care of both forward and reverse logistics helps to create a more seamless process and experience for both the business and the customer.

Alongside this, a 3PL can also ensure retailers have access to the right tools and services as they grow, with the ability to quickly flex up and down when needed. This enables businesses to successfully handle order volume increases during peak periods, without impacting on quality, accuracy and, ultimately, customer satisfaction.

Find out more about how partnering with CML can help your business overcome e-commerce challenges

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