The youngest generations of internet users are no doubt familiar with online retail. In fact, many of them find it hard to imagine there was a time in which you had to go into a store to buy the products you wanted and needed. It’s a testament to the growing popularity of e-commerce.
While buying and selling products online seems pretty straightforward, the reality is it’s more challenging than most people think. Unlike traditional retail, where products are distributed to a series of stores in bulk to be sold individually, online retail involves the storage, sale, and delivery of products on a less predictable basis.
In order to run a successful online retail store, business owners need to develop their own logistics operations. Unfortunately, doing so on your own is easier said than done.
The solution – more times than not – is to utilize the services of third-party logistics providers. Commonly referred to as 3PL, third-party logistics providers give small e-commerce operators a way to compete with larger online retailers.
Let’s take a closer look at six benefits of using 3PL service providers:
Cost savings
The primary benefit of using 3PLs comes in the form of cost savings. Shipping will be significantly less expensive due to the existing relationships these services have with major carriers. Savings also come courtesy of the advanced algorithms used to determine the best shipping options for a specific order.
Logistics optimization
Saving money on shipping comes down to ensuring products arrive at their destination as fast and cheaply as possible. Referred to as logistics optimization, it’s a process that’s been streamlined by the world’s leading 3PL service providers. Software is used to instantly detect the optimum route from the manufacturer to the warehouse to the distribution center to the customer.
Greater scalability
As the ongoing pandemic and current holiday season demonstrate, supply and demand tends to ebb and flow over time. Companies that cannot scale up or down in accordance with these fluctuations are at an extreme disadvantage. 3PL services give online retailers a chance to adjust their operations in order to prevent waste and maximize efficiency. That way, regardless of what unexpected events occur down the line, retailers can act accordingly without worrying about how to resume peak productivity when the situation calls for it.
Improved customer satisfaction
The more affordable the product and the faster it arrives, the happier the customer. It’s a rule of thumb that has dictated retail for decades. Online retail is no exception. Given how satisfied customers are more likely to turn into repeat customers, the optimized logistics provided by 3PL make it an essential component of e-commerce. Once this positive feedback loop is established, steady growth will lead to greater confidence during expansion and other significant phases of the business.
Access to insights and experience
Another benefit of using 3PL for online retail is the array of information you’re able to access. These insights would take years to obtain otherwise. From the nitty-gritty of logistics to the fundamentals of packaging, the knowledge accumulated by an existing 3PL service will prove invaluable going forward. Also, as a partner, you’ll be able to rely on your 3PL provider as a type of consultant on all matters related to shipping and handling.
Less risk
Risk is an unavoidable part of any business. However, business success often comes down to mitigating these risks as much as possible. Working with third-party logistics services takes a lot of risk out of online retail by reducing the pressure on you to make the right decisions at the right time. These decisions are made on your behalf through the lens of years of experience.
Millions of people – mostly under the age of 30 – can’t imagine a world where they can’t buy whatever they want online. From cutting-edge video games to sophisticated gadgets and gizmos to ordinary household products, the availability of competitively priced goods online is the end result of years upon years of trial and error. Why wouldn’t you tap into that existing knowledge? It’s the easiest way to turn an e-commerce idea into a practical business model and eventually – hopefully – a thriving success.
Julie Steinbeck is a freelance writer from Florida. She enjoys writing about business, finance, health, and travel.
