When trying to grow, online retailers will inevitably hit barriers. One of the most common stumbling blocks is expanding ecommerce operations. An increasingly popular strategic imperative is to outsource order fulfilment, which includes storage, picking, packing, and distribution. Here’s what we think you should consider, when looking for a third-party logistics provider (3PL).
- Review 3PLs’ shipping partners
With 77% of negative reviews related to the post-checkout customer experience, choosing the right courier provider is crucial. When partnering with a 3PL, it’s essential to review the delivery providers they work with. Not just in terms of the carriers’ own feedback, but in terms of your customers’ expectations. Ensure that your delivery options are suited to your customers’ geographic locations, their levels of urgency, and demands for in-flight delivery options.
- Demand full visibility and transparency
How much insight does the 3PL give you? Technology-driven fulfilment providers will grant you access to inventory analysis dashboards, helping you avoid understocking (which can lead to missed sales), and overstocking (which can lead to capital tied up in stock). Inventory analytics can also help predict exactly when to order more stock, and how much stock to order, based on seasonal demand fluctuations.
- Establish KPIs and OKRs
Whether you’ll be outsourcing fulfilment for the first time, or switching provider, you will need to be on the same page with your account manager, and agree on deliverables, by aligning your expectations with order processing times, picking accuracy, delivery success rate, rate of returns and WISMOs (Where is my order?) queries. According to Quantive, “While OKRs facilitate alignment, ambitious goal setting, engagement, and transparency, the main aim of KPIs is to evaluate the success of your overarching business or its activities.” Therefore, OKRs can help monitor performance in real time, while KPIs can ensure you and your 3PL are on track to achieve your goals.
- Seek a sustainable approach
According to eco-friendly packaging specialists Protega Global, 77% of consumers expect brands to minimise packaging, and 66% regard recyclable packaging as important. 49% of consumers said they would pay more for both sustainable packaging and sustainable delivery, and 33% have even rejected a purchase because of unsustainable packaging. With this in mind, it’s important to ensure that your suppliers, and fulfilment provider, offer a sustainable approach. This extends to the courier options you select, and the carbon footprint of all internal and external stakeholders your fulfilment centre deals with.
- Maximise sales with late order cut-off times
Conversion Rate Optimisation (CRO) experts SaleCycle, found that there are two peak hours for online shopping, at 10am and another at 8pm. Furthermore, 62% of consumers expect next-day delivery options, therefore it can be assumed that retailers who don’t offer later order cut-offs will be missing out on sales.
This postulation is evidenced by Complete Strength, a UK-based Shopify retailer. Their founder, Rob Whitfield, has acquired new customers thanks to Zendbox’s 10pm order cut-off time, adding: “The majority of our orders will come in of an evening. When we had an earlier cut-off time, we missed out on sales. Now we’ve got a later cut-off time with Zendbox, we get fewer abandoned carts. We have also noticed customers are shopping with us simply because of the later cut-off time.”
- Aim for technological alignment
73% of retail consumers use multiple channels to shop, so it’s no surprise that the average mid-market ecommerce retailer will sell not just on their own website, but also via marketplaces. Online sellers will either manage sales channels separately or synchronise all of them with an Order Management System (OMS). When looking for a new 3PL, retail decision-makers should assess what the fulfilment centre specialises in – they could prefer to work with particular ecommerce platforms (e.g. Shopify, WooCommerce, or Magento), and/or industry sectors (e.g. health and wellness, sports and nutrition, or luxury goods.)
- Ensure sufficient order volumes
Outsourcing fulfilment isn’t suitable for every retailer. While some SME and start-up-focused fulfilment houses can accept a minimum of 10 average orders per day, more typically they will expect 30 to 300. This can be a combination of parcels, packets and even mail, and order frequency demands will fluctuate based on the ratio of domestic and overseas shipments. Sufficient order volumes are crucial for the client, to ensure they get value for money, and for the 3PL, to ensure they cover their fixed costs of setting up and serving the client. Fulfilment providers may also seek clients based on AOV (Average Order Value), and if they take care of returns and customer service queries, this can impact their suitability too.
To outsource, or not to outsource third-party logistics?In this article we’ve covered seven areas for consideration, to help you make an informed decision. Sourcing, and setting up with a 3PL is time, labour, and capital intensive, but in the long run can empower ecommerce entrepreneurs to refocus their attention on strategy and vision, rather than day-to-day business operations. The ecommerce order fulfilment market is predicted to nearly triple in size by 2030, so expect a diverse range of 3PL offerings, to meet consumers’ demands for sustainability, personalisation, value for money and speed.
