Benefits of 3PL Outsourcing
A Few Good Reasons for Outsourcing Your Logistics to a 3PL – and One against It
When you set up your online store, you have a lot of decisions to weigh on. From the design of the website and the product management system to marketplaces and marketing campaigns, there is a seemingly endless number of choices to make and implement. Many of them have little to do with the core of your business and, let’s face it, are not much fun. At this point, you naturally start thinking about outsourcing logistics. The fact that logistics can also be outsourced is something that many e-commerce retailers only consider at a later stage, if at all.
On the one hand, 3PL outsourcing rarely comes to mind because many believe that the online store is still too small or that e-commerce fulfillment is too expensive. On the other, some may find it difficult to hand over shipping. After years of product development work, it feels odd to outsource the last step, just before the customer holds the product in their hands. If any of these reasons sound familiar, you should read on.
Excellent Outsourced Logistics for Excellent Products
In all fairness, we can relate to the last reason. You’ve invested a lot of time and effort into making your product perfect. Now you want to present it to your customers exactly as you’ve long envisioned. Few factors have more influence on business success than logistics. In the beginning, this will certainly work smoothly. As sales increase, however, logistics will take up more and more of your time. Besides that, it also ties up other valuable resources such as money and personnel. Most importantly, it distracts you from your core business – and that’s a real shame!
Imagine this scenario instead: you, as an expert for your product, work together with experts for logistics. You have plenty of time to focus on your projects and growth because the fulfillment experts make sure your product gets to your customers exactly the way you intended. Some logistics providers, like us, offer their customers the option to package their goods in their own branded boxes to exact specifications and to ship them with their own marketing materials.
External service providers have optimized and modernized their internal processes over the years. They can react quickly and with flexibility to market fluctuations and already have solutions to most common problems before they emerge. This allows them to handle logistics tasks at a quality level that you would be hard pressed to achieve in addition to the many other daily tasks within your own company.
Time Is Money – Outsourcing Your Logistics Saves You Both
Of course, it takes a bit of time and effort to find the right logistics service provider for you. But this investment is worth it! Just quickly calculate how much time you invest in shipping an order: find the right order, prepare the packaging material, pick the goods, log on to the shipping service provider, enter the address, print out the shipping label and delivery bill, pack, affix the label, update the order details, and off you go to the post office. Now quantify your hourly rate. Not as little as you thought, isn’t it?
When you consider that, depending on the product and packaging, e-commerce fulfillment is possible for as little as 5-6 euros per package, postage and packaging included. You can see that outsourcing can make sense financially. And that was just a simple shipping example! In fact, in addition to shipping logistics, there are also activities such as incoming goods inspection and logging, quality inspection of goods, and returns management. The the more successful your online store becomes, the more resources logistics will eat up.
When opening an online shop, you can still fit your stocok comfortably in your hallway or office. However, at some point, and ideally quite quickly, you will hit capacity limits. At the latest, then it would be the time to rent some storage space.
Warehouse or No Warehouse
Scalability is another key element in deciding whether or not to outsource your logistics. The need to scale depends heavily on your business model. If you have to meet a relatively steady or slowly growing demand, you can plan warehouse capacities quite well. If your product is highly seasonal, you must be able to accommodate wide fluctuations in incoming orders. The same is true if sales numbers are the direct result of marketing campaigns or seasonal peaks.
A good logistics service provider can easily handle such peaks and store large product quantities for you. Since companies receive substantial discounts for large orders, you can gain a significant price advantage. In addition, your service partner’s flexibility lets you grow without having to continually adjust your logistics processes.
Conversely, with each further expansion of your warehouse, you not only incur rental and maintenance costs; the infrastructure grows as well. This includes packaging facilities, personnel, shipping, technical hardware and software, and possibly delivery vehicles. All of this costs money and ties up capital. By using a fulfillment provider like MOODJA, you can save these costs. You use the service provider’s existing infrastructure and only pay for what you actually use.
A Good Customer Is a Satisfied Customer
Your customers satisfaction is a very strong argument for outsourcing your logistics. Of course, the quality of the actual product is the be-all and end-all. Let’s assume you have that covered.
Shipping certainly has to be on point, too. Especially in e-commerce, where the emotional impressions during shopping are not as strong as in physical retail. Customer’s first real contact with the product takes place when the package arrives, so this means you have to get the first impression right. Clean, sturdy packaging and uncomplicated returns processing also need to be on point, of course.
In addition, a logistics service provider can also guarantee fast delivery. Customers hate waiting. Online shopping with its competitive nature is where one or two days are often crucial. Especially during the Christmas season or if you would like to go on holidays, you can rest easy and rely on your fulfillment service provider. They are there for you to keep your customers happy and coming back for more.
In Summary – Outsource Logistics or Keep It In-House?
Outsourcing your logistics has many advantages. To name just a few:
- Significant time and cost savings
- Greater efficiency in warehouse logistics, shipping, and returns
- High customer satisfaction
- A box-free home
Outsourcing your logistics to MOODJA is a worthwhile step for any company that wants to grow. What you’ll have to get used to after taking this step, however, is not seeing your mailman/mailwoman nearly as often as before. If this prospect irks you, it might be time to ask them out for a coffee instead.