Time to outsource your e-commerce logistics?
E-commerce sure is growing, and every day more retailers are making the move to sell online. The ongoing digitalization of retail and recent year’s restrictions on social distancing has frog-leaped the industry. The number of consumers turning to online shopping is steadily increasing and by 2022, e-retail revenues will grow to $6.54 trillion. If your e-commerce business is part of this growth – congratulations! But knowing when to outsource your logistics and how to get a cost-efficient solution that allows for future growth, can be difficult. We are here to help.
Taking the leap to find a third-party logistics (3PL) partner can feel scary, especially if you are running a direct-to-consumer (DTC) brand. From having a complete overview of operations, cost, and orders, to trusting an external supplier with your entire logistics flow.
This can include everything from how your product is packaged, to routines for returns and customer contact.
We know it can be hard, but at some point, it is time to let go and let the professionals take over. In order for you to fully focus on growing your brand and business.
E-commerce is an excellent way to get economies of scale. With the right product and sales channel, you can get your product marketed at a comparatively low price compared to physical sales. As order volumes increase you can keep increasing your income, while the cost per order decreases. But when do you hit the break-even point?
Where many e-shops go wrong is that they think an in-house warehousing solution is more cost-efficient than a 3PL solution. While there is obviously a cost involved for third-party logistics. Many e-shops are not comparing this to the total costs they are spending on managing warehousing, technology, shipping, and returns.
Any 3PL solution should always be compared to the total amount of resources and costs involved. We have helped many e-commerce companies lower their costs and get a flexible fulfillment solution to help them scale.
Here are some benefits to consider when assessing if your business can profit from an outsourced solution:
- Lower your total cost
At first, the initial cost for handling each order through a 3PL partner will be more than doing it yourself, sure. What many business owners don’t consider is the alternative cost of their own time and that of their colleagues and staff. The time that could be spent on other value-adding, core business tasks.
There is a strong benefit in letting experts do what they do best. A 3PL logistics partner will work very efficiently. Moreover, there is a very positive factor involved, which is simply expressed as: “you pay for what you get”. In the 3PL pricing model, you only pay for the efficient time of labor in picking and packing each order. In comparison to in-house logistics set-up where employees and warehouse space are fixed costs.
E-commerce can be very seasonal. An outsourced solution is extremely flexible in terms of workforce and utilized space. Personnel can be on call when there is a surge in orders, and cost you nothing to stand by if there is a decrease in demand and you only pay for what you stock.
- Increase your control
Running your own business and answering to the high customer requirements of delivery and support is increasingly important. The thought of losing control over customer contact, physical orders, and warehousing activities can feel daunting. This is a classic outsourcing dilemma for any caring business owner and it is also one of the big reasons why we developed the Prime Penguin cloud-based platform. To provide a total digital overview of your outsourced e-commerce logistics where you stay in control.
With a technologically robust solution and a trusted partner, you are in very good hands. By outsourcing your logistics and having a digital solution for order management your control will actually increase. A customized optimal, order routing flow can easily be set up based on rules in the platform. All data is monitored, double-checked, and can be updated at any time through the platform.
In many ways, you reduce your business risk considerably. Through the Prime penguin platform, you will gain an aggregated view of all orders and upcoming shipments. Including automated messaging and double-checking all data to be consistent. By flagging any potential errors from the order data streaming from your sales channels (eCommerce platform or marketplace) to the logicist’s warehouse management system (WMS) and vice versa.
- Get Technological Support
Moving your business online has never been easier. With digitalization also comes complexity and the need for technological know-how. Many e-stores are well adapted to bringing exciting brands and innovative products to the market but do not always have the resources or capacity to set this up in an online environment. This is where a 3PL partner and technological SaaS resources come in. In an instant, all of your sales channels can be connected to any warehousing of your choosing. Without having to stress about the technological complexity of integrating your systems to create efficient flows. Often, your e-shop requires a customized solution, depending on the e-commerce platform and pre-existing tech stack. Through outsourcing, you will always have a partner to take care of your development needs without any high consultant fees.
- Opportunity to scale your business
It is never too late until it is too late. By outsourcing your logistics you can obtain a solution that is ready for your growth before you have outgrown your own capacity. Through the flexibility of a low-cost warehousing solution and real-time stock-level updates, you will never miss a sale. In the Prime Penguin platform, you will have notifications on when you are running low on quantity for any SKU and when it’s time to restock.
E-commerce is a global opportunity. As your business expands to new markets it is crucial that you can find efficient partners to route your orders. By creating hubs all over the world in a cost-efficient solution. Finding new warehouses and connecting these to one single platform is a great advantage and a well-worth investment for scalability.
- Providing a better customer experience
We know that customer demands and requirements for delivery, support, and returns are ever-increasing. Doing it with in-house resources is getting increasingly difficult, especially as order volumes grow. With a 3PL solution returns and quality management is in safe hands. By leveraging the 24h customer service and smart warehousing hubs for returns many e-shops can handle and resell their returns to a lower cost than before. Many 3PL partners offer professional and hands-on customer service at a low cost.
- Develop your product and team
All in all, your time and creativity are what matter. By outsourcing the administrative parts of your business to professionals you will have more time and resources left to develop the core business. As your business is scaling it is vital that you are in tune with your customers’ needs and the problems you are solving for them. We value your effort and time and you should do as well. Finding a scalable solution that allows your company to do what you do best is key.
All in all, any business needs to assess the resources spent on administration versus resources spent on business development. However, it is important to highlight the hidden costs of running an in-house business, doing it all on your own. Prime Penguin has helped many e-commerce businesses gain control over cost and order flown to substantially lower their total costs and achieve a more efficient logistic operation.
Hope you’ve found this article helpful.
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