With recent global events, many third-party logistics (3PL) providers are exploring ways to operate their business leaner and diversify their sources of revenue to minimize risk. To keep their business growing and reduce supply chain liability, many 3PLs have adopted ecommerce-enabled warehouse management systems.
Why Should 3PLs Diversify into Ecommerce?
The main reason a warehouse would adapt into an ecommerce 3PL is the opportunity to evolve their successful warehouse business to offer more services for their customers and drive more revenue. For example, our proprietary data on third-party logistics warehouses has demonstrated that year-over-year ecommerce order volume grew by 81%. Since “Stay at Home” orders took effect in early March, 3PLs fulfilling ecommerce saw a rapid increase in order volume driven by a rising demand for online products.
Consequently, warehouses not investing in ecommerce-enabled platforms are missing out on these five key benefits:
1. Ride the Rising Ecommerce Wave
The first benefit of using an ecommerce-enabled warehouse management system (WMS) is taking advantage of the current rise in consumer demand. This market trend presents a golden revenue-generating opportunity for third-party logistics warehouses who want to offer ecommerce fulfillment services. How much is ecommerce demand growing? According to Adobe Analytics, Ecommerce sales have increased by 25% on average since the beginning of March 2020.
We have heard from many 3PLs that they would like to offer ecommerce fulfillment, but don’t know where to begin. An ecommerce-enabled WMS that integrates directly with shopping carts such as Shopify or Amazon, and automatically processes online orders is a great starting point to offer customers value-added ecommerce services.
2. Reduce Supply Chain Risk by Diversifying Clients
Adopting an ecommerce-enabled WMS platform can also serve to reduce supply chain risk.
“The companies that build resilience into their supply chains will be best positioned for success and growth as they will have an adaptive advantage in the face of change and volatility”
-Kerag, Luxury Goods manufacturer
Small- to medium-sized warehouses must diversify their sources of client business in order to survive fluctuations in consumer demand. Warehouses who diversify their client base experience less of a negative impact from economic uncertainty than warehouses who specialize in a single type of business. For example, if a 3PL traditionally offers B2B fulfillment of clothing to retail stores expands into fulfillment for direct to consumer dry packaged goods ecommerce, the economic cycles will likely not follow the same peaks and valleys.
By not putting all their proverbial “eggs in one basket”, warehouses reduce supply chain risk. If one warehouse client’s business declines, losses are compensated by another client’s growth.
3. Offer Value-Added Services
Leveraging a WMS built for ecommerce integrations opens new revenue opportunities for warehouses offering value-added services. 3PLs often turn down new business opportunities because they do not currently offer ecommerce capabilities that suppliers need such as shopping cart or small parcel shipping integrations.
Warehouse management systems designed for ecommerce, such as Extensiv 3PL Warehouse Manager, integrate out-of-the box with ecommerce platforms such as Shopify and Amazon or opportunities for warehouses to build integrations via a REST API to meet the unique needs of warehouse customers.
4. Increase Order Volume
A fourth reason to utilize an ecommerce-enabled WMS is that these platforms equip fulfillment warehouses to handle a high volume of orders that would otherwise be impossible to manage efficiently with manual methods such as Excel.
We have seen many examples of 3PLs that start out with small ecommerce warehouse processes, then quickly scale their operation to handle thousands of orders each day. Third-party logistics professionals need a robust ecommerce WMS to profitably scale business with a limited workforce, while not compromising order accuracy.
5. Stay Relevant & Ahead of the Technology Curve
A final benefit of using an ecommerce-enabled WMS is to keep up with industry standards for a high-quality fulfillment experience by leveraging technology. In a world where customers expect same-day delivery services and a seamless online shopping experience, 3PLs need to keep up in order to survive competitive pressure from Amazon and other large logistics firms who drive margins to razor thin levels.
Ecommerce WMS platforms empower warehouses to offer these quick fulfillment services. Bulk shipping enables a warehouse worker to process up to 1,000 orders in a few minutes. These quick, automated order processing methods help warehouses operate leaner and accomplish more with less staff.
Final Recommendation
To recap, 3PLs can transform their businesses by using an ecommerce-enabled WMS. The benefits of this approach include taking advantage of rising ecommerce demand, offering customers value-added services, opening new revenue streams, reducing supply chain risk, keeping up with modern consumer expectations, and boosting labor productivity.
If you would like to expand your 3PL into ecommerce, reach out to our Extensiv experts here to quickly Transform Your Business.
