The world knows that Amazon and other online marketplaces are the future of eTail.  As brick and mortar stores are closing in preference of an online only presence, smaller businesses are facing the reality that they will need to break into the online marketplace space.  Unfortunately, many small businesses are not equipped to handle the cumbersome requirements that these online marketplaces have in place to submit and sell product. Outsourcing is the practice of partnering with an experienced service provider that handles the logistics and fulfillment aspect of submitting products to online marketplaces.  With any partnership, there are pros and cons to an arrangement of this nature.

Let’s explore the top 5 reasons to outsource eCommerce logistics and fulfillment.

1.  Experience reduces costs

Choosing the right company with a staff of experienced logistics and fulfillment professionals will enable small businesses to save money.  Eliminating a trial and error period is the biggest money saving value.  Experienced staff will be able to take in inventory and produce the necessary output in an efficient and timely manner.  Thus getting their products to a preferred online marketplace’s distribution center right the first time.

Another important aspect of choosing a company that is already proficient at this type of work is there are no additional staffing and overhead costs associated.  3PL companies already have hired and trained their staff.  There are no additional benefits that have to be paid or payroll to incur.

Questions to ask your potential 3PL partner: What percentage of your staff is seasonal/contract?  What is the SLA for a shipment from order date to shipping date?

2.  Size matters: using your 3PL’s size

Most 3PL service providers have a network of freight carriers and suppliers that they have negotiated pricing with.  Their pricing is often going to be much better than what a small business can negotiate due to the volume that the 3PL has with all of their clients put together.

Questions to ask your potential 3PL partner: Is there a discount tier system for shipments? How many shipments do you typically ship small parcel vs. LTL?

3.  Get access to tech and data

Established 3PL companies have a team of dedicated tech personnel that are responsible for the integration between their software and the marketplace’s.  They will spend the time and effort to create the EDI and API integration which allows for a seamless transaction to occur between a shipping company and the receiving marketplace.  These tech teams are then responsible for the upgrade and maintenance of these connections.  Thus eliminating the cost for initial setup and maintenance that any small business would incur during their onboarding phase to the new marketplace.

Data analytics is important to most companies.  The software a 3PL will be using most likely has a robust data set that can assist small businesses.  Not only will it provide insight into the sales of product, it can also provide fulfillment metrics for small businesses to gauge the performance of their 3PL against promised SLAs.

Questions to ask your potential 3PL partner: How often will reports be sent? Can custom reports be generated?  Can you handle lot code and expiration date reporting?

4.  Benefit from their innovation

As supply chain management is always changing, your logistics provider should always be working on ways to be more efficient and innovative.  They are responsible for ongoing negotiations and maintenance of the relationships between themselves and their transportation and materials suppliers.  Thus leaving small businesses time and energy to devote to marketing, customer relations and ways to improve your business.

Questions to ask your potential 3PL partner: How often do you negotiate with your suppliers?  What companies do you prefer to do business with?

5.  Combine shipping for all sources

3PL companies are a great way to combine all shipping of product.  Most are able to ship B2B to online marketplaces and B2B to distributors such as Kehe and UNFI.  Most are even able to ship B2C orders from a website cart.  Shipping more product from a single source will help maintain appropriate inventory awareness and gets higher volume discounts.

Questions to ask your potential 3PL partner: What marketplaces do you currently ship to? What distributors do you currently ship to? What is the process for starting to ship to a new marketplace or distributor?

Making the decision to enter the online marketplace retail space is an easy one.  Choosing the best way to accomplish this task is not.  It will take careful analysis and investigation into the options available before making such a decision.  Saving time and money to get up and running with new online marketplaces is the definition of Outsourcing.  It is highly recommended that before you commit to any 3PL that you make an effort to visit them on-site at the facility where your product will be living in order to see their day-to-day operations in real time, ask the important questions and check references!