A small ecommerce business might take a simplistic approach to how they initially manage shipping. Many mistakenly believe that as they grow slowly, they can keep up with their own logistics needs without reaching out to a professional third-party logistics (3PL) warehouse for assistance.
As a 3PL, you must be ready to offer strategic ecommerce shipping solutions to help an ecommerce business streamline operations, increase profitability, and stand out from the competition. An ultra-modern 3PL boasts cloud-based warehouse management software (WMS) solutions to meet the logistics needs of ecommerce businesses and their consumers.
Your warehouse must both coordinate well with multiple teams so that everyone understands their role as well as function to guarantee that everything in the pipeline flows smoothly. Also, you’ll need to offer strategic shipping options.
The increase in digital shopping from the COVID-19 pandemic has fed the increasing investments in logistics and the supply chain. Ecommerce companies have struggled to meet rising consumer demands, which has made it essential that they embrace an efficient and operational relationship with a third-party logistics provider.
A 3PL needs to not only tackle the operational demands but also the pricing needs of the ecommerce business to rise above the competition. Nowadays, it's about more than just understanding the process. An ecommerce customer needs a 3PL with an innovative pipeline that gives real-time and rapid shipping solutions.
In this guide, we will explore the shipping solutions that a 3PL must have to meet the demands of ecommerce businesses.
Ecommerce and 3PL Solutions
Partnerships between ecommerce businesses and 3PL warehouses are thriving, especially due to the growing digital economy. Today, ecommerce makes up 15% of retail sales and continues to grow. Since January 2020, online orders have grown by 80%, and the 3PL sector has flourished. The global market forecast sees 3PL growth easily reaching $1 trillion in 2022.
3PL and ecommerce partnerships focus on driving the efficiency of both businesses. Also, a 3PL must satisfy their customers’ demands while meeting the needs of the ecommerce brands’ consumers.
The end-to-end global supply chain must meet the last-mile needs of shoppers effectively. Often, an ecommerce store has outgrown their ability to provide effective and fast logistics. As they are not positioned to respond, they must form a partnership with a 3PL.
The partnership between an ecommerce brand and a 3PL meets the needs of both businesses. The 3PL grows by providing fulfillment, warehousing, and transportation for the ecommerce company, which can then focus on other aspects of their business.
What Is Ecommerce Shipping?
Ecommerce business has many moving parts such as sales, branding, product development, and shipping. As an ecommerce business grows, they eventually must partner with a skilled 3PL to effectively meet their shipping needs.
Without effective commercial delivery and a solid strategy, the entire business can falter and collapse. An ecommerce business needs the 3PL they choose to rise to the challenges presented by supplying concrete solutions. Without a consistent logistics strategy, the ecommerce business could fail, so they rely on your 3PL providing the solutions they need.
The definition of ecommerce shipping runs the gamut of including all processes involved in getting the products into the consumers’ hands once they make their purchase. As a 3PL, you want to ensure the satisfaction of your customers and their consumers by offering simple and cost-effective options.
Ecommerce Shipping Solutions
An ecommerce business needs a 3PL ready to conduct the following functions with innovative tech support and a cutting-edge WMS solution:
- Receiving and processing all orders
- Accurate and timely 3PL billing
- Operational and inventory visibility
- Picking and packing the products at the warehouse
- Printing shipping labels
- Automating customer notifications covering all inventory activity
- Cloud-based tracking of every order
- Automated shopping carts integrations
- API/EDI Integrations and expert dedicated support teams
- Complete repeatable and scalable workflows
- On-demand reporting
- Returns management
A well-run 3PL must provide the above solutions and more. You’ll need to ensure that your warehouse can meet the level of complexity needed to manage all types and sizes of products, deliver to a multitude of regions with various delivery options, and at the speed required.
Benefits of a Fully Integrated Warehouse
The demands of ecommerce companies continue to grow and show no signs of easing in the near future. Utilizing a cloud-based WMS helps ensure that your 3PL can meet the increasing demands of the growing ecommerce marketplace and connect seamlessly with all systems that your customers use to ensure a smooth integration when you partner with an ecommerce business.
- End costly errors—mobile scanning offers 100% accuracy throughout the warehouse.
- Use REST API platform for custom integrations.
- Rely on direct integrations for leading shopping carts and other marketplace tasks.
- Pack with a product like Extensiv 3PL Warehouse Manager’s SmartPack solution to help verify every order in real time.
- Search for the best shipping rates and print labels directly from the WMS.
Attracting Ecommerce Businesses
All 3PL warehouses want to attract ecommerce businesses. A large logistics provider can handle huge, multifaceted customers by using the latest technology solutions to meet the demands of order volume. The latest solutions help them manage workflows and integrate all the various systems together to create seamless and scalable workflows across the board.
As Extensiv reports, if a 3PL offers more value-based services, then they can easily grow their order volume by more than 22% in a single year.
Use the following to attract ecommerce customers:
- Rely on intuitive software with modern UI
- Supply automated customer notifications about low stock, shipped orders and more
- Share a customer portal that offers a view of inventory, reporting, and billing for complete transparency
- Use a tech service team for all EDI, API, and developer support
- Provide exceptional value-adds for ecommerce customers such as attaching images, kitting and final assembly, shopping cart integrations, pallet in/pallet out workflows, and more
3PL Customer Demands
Customers have become much savvier, and they don’t want to simply hand over business functions to a 3PL warehouse. Instead, they want to feel included in the processes and have the choice of overseeing operations.
Customers now demand greater visibility and impressive accuracy for an affordably competitive price. A 3PL should invest in an intuitive warehouse management system to meet their customers’ expectations and demands.
Isn’t it time to move away from paper or stop relying on Excel spreadsheets? Best of all, with a WMS, your team doesn't have to be overly technically skilled. As long as they understand warehouse operations, the software will walk everyone through the steps needed to process warehouse operations digitally.
3PL customers want:
- Lower costs: A competitive rate that helps reduce overhead costs.
- Visibility and reporting: Complete visibility that lets them track shipments easily and receive automated reports with back-office support.
- Consistent output: A 3PL that can consistently meet capacity demands.
- Partnership: A partnership with a respected 3PL that provides industry expertise and solutions across the board that benefits everyone involved in the supply chain.
3PL Warehousing WMS Solutions
Ecommerce owners want to partner with a 3PL that runs an effective warehouse management system to meet the growing supply and demand dilemma. Inventory management coupled with stock control data can help make warehousing space more efficient, which ultimately saves an ecommerce business money.
A study carried out by McKinsey showed that ecommerce stores operate with 2% to 4% of earnings prior to interest and taxes. Using improved automation and efficiency by partnering with a 3PL with innovative warehousing solutions can increase that amount to 5% to 9%.
A 3PL warehouse offers many value-added solutions to ecommerce stores without straining the 3PL’s budget.
- Full automation
- Paperless practices to maximize efficiency
- Warehousing location choices to reduce last-mile delivery expenses
- Order picking, packing, and processing for pallet volumes, units, and cases
- Generation of all shipping documents
The Importance of Ecommerce Delivery Services
US consumers demand fast shipping speeds. Studies show that 62% of US customers demand rapid shipping speeds and 54% list easy delivery processes as a necessity.
A 3PL has solutions in place to process everything from receiving to processing once an order is picked, packed, and shipped for delivery.
Upon receiving an order, you’ll have your warehouse team check the inventory stock, verify all shipping addresses, and attach any additional pertinent information. A functional 3PL makes the process of pick, pack, and ship look effortless.
Best Shipping Practices for a 3PL
Your 3PL should follow best shipping practices to ensure proper alignment with your ecommerce customer's needs. Develop a clear strategy and a document of a SMART (specific, measurable, achievable, relevant, and time-based) gameplan before launching. Along the way, you’ll make improvements to better meet your customer’s needs as you gather feedback.
Build a Winning Team
A top 3PL has a winning team. They have identified the right people to fulfill all aspects of your logistics shipping strategy. The fulfillment team ensures the proper picking, packing, and shipping of all orders to guarantee accuracy and on time delivery.
Your marketing team must communicate effectively with your customers so they understand all shipping options and promotions and have a deep understanding of why your 3PL provides the greatest value as opposed to the competition.
Maintain a leading customer service team to deal with any complaints about missed or delayed deliveries, wrong items, etc. Your support team should have a firm grasp of the 3PL’s approach to shipping throughout the entire cycle so they can properly answer any questions. They should have answers about pricing for each stage and anything that could impact the costs.
Establishing your 3PL policies helps assure satisfaction in all aspects of the ecommerce shipping solutions pipeline.
Most ecommerce brands expect a 3PL to provide omnichannel experience as part of ecommerce shipping solutions. 3PL warehouses must deliver a truly unified approach by providing agility with various delivery options and the technology needed to meet the varying spikes in demand.
Operating a 3PL, you need to stay on top of technology, maximize speed, reduce financial investment, and factor in the data collected at each touch point into improving the supply chain.
Micro-fulfillment options have never been more demanding. The challenges have taken ecommerce businesses to the edge as they struggle to over-deliver to compete against industry leaders like Amazon.
In this highly competitive climate, the main goal always focuses on decreasing the time that takes place between order and delivery. Partnering with the right 3PL who boasts the proper tech solutions can create a lucrative union between the ecommerce brand and logistics provider.
A 3PL can offer micro-fulfillment solutions to rise to the top and meet the demands of their ecommerce customers.
Examples of micro-fulfillment solutions include:
- Custom packing, assembling, and repackaging to maintain consistency
- Tracking inventory via a bar-coding system
- Returns management (studies show that 16% to 40% of online purchases end up returned, especially clothing and shoes)
- Handling exchanges
Very few small- or medium-sized ecommerce businesses have the infrastructure to meet their transportation needs, so they turn to a 3PL. A 3PL warehouse with a network of distribution centers coupled with highly efficient fleet management resources can rapidly cover the mid-mile while providing affordable costs.
A 3PL can supply the following value-based services:
- Full visibility of the supply chain through GPS tracking
- Mid-mile and last-mile fulfillment
- Real-time data that offers complete end-to-end visibility about product flows
When an ecommerce company outsources their backend processes to a third-party logistics provider, they can turn their focus to other important aspects of their brand.
An ecommerce brand’s bottom line can take a hit with the cost per unit of most online orders being five times that of physical stores according to studies. With these prohibitive costs, anything ecommerce business can do to save money will give them a competitive edge.
Partnering with an innovative 3PL is usually the best way to gain this competitive edge and increase profitability.
Ecommerce companies seek a multitude of delivery options. A 3PL should consider offering the following:
- Same Day Delivery: Provide guarantees that orders will arrive the same day of purchase
- Overnight Shipping: Statista reports that 19% of all consumers want orders to arrive the next day
- 2-Day Shipping: Two-day shipping is rapid, so consumers feel satisfied with the wait, which is more cost effective for ecommerce businesses
- Longer Shipping: On occasion, some consumers will agree to wait a week or more for certain items
- International Shipping: Typically, the cost of international shipping runs higher due to the greater distances
Ecommerce and 3PL Automation
Ecommerce customers usually have very innovative thinking and viewpoints. They have based their business on digital shopping, so they usually embrace all aspects of technology innovation as a step towards future growth. When they shop for a 3PL partnership, they often try to find forward-thinking 3PL warehouses who have taken a step forward by embracing automation. However, in 2021, less than 20% of warehouses were using automation despite the growth in the trend.
The trend towards automation will continue to grow as 3PLs discover that it’s quickly becoming not simply a customer ‘want’ but a customer ‘demand.’ Studies show that between 2021 and 2025, the global warehouse automation market will go from $18.61 billion to $30.99 billion.
Automation will eliminate manual processes that are often repetitive. Software will increase productivity, safety, and accuracy to lower labor costs.
Warehousing uses two forms of automation: digital and physical.
- Digital automation refers to anything IT-related such as warehouse management systems, order management systems (OMS), inventory tracking, customer communication, and business intelligence.
- Physical automation relies on machines and equipment to replace or enhance employee labor throughout the warehouse. The most common forms of physical automation include autonomous mobile robots (AMRs) and autonomous guided vehicles (AGVs).
A third-party logistics warehouse provides many value-added ecommerce shipping solutions to customers that will help them better navigate the supply chain. A 3PL provides inventory management, picking, packing, and shipping, but they also offer so much more to ecommerce businesses.
A 3PL that focuses on supplying at least the following value-added services will rise above the competition and attract more ecommerce customers.
Shipping Rate Negotiations
A 3PL has the know-how and power to negotiate the best shipping rates through major shipping carriers for their ecommerce customers.
The 2022 State of the Third Party Logistics Industry Report states that “transportation and freight expertise top the list as to why businesses look to partner with a 3PL.”
In addition, a skilled 3PL can effectively navigate complex domestic and international shipping methods due to their strong relationships with major carriers.
The process of negotiating the best shipping rates saves money for the 3PL and their ecommerce customers. Small ecommerce businesses usually do not have the order volume needed to negotiate the lowest rates with the big carriers. However, a 3PL has the connections and business needed to ensure the best rates for themselves and their customers.
Ecommerce consumers also report greater satisfaction when a 3PL manages shipping and negotiations rates because they receive low-cost, rapid shipping.
Kitting and Assembly of Products
The terms ‘kitting’ or ‘assembly’ are used interchangeably and refer to the act of combining multiple products or SKUs into a single, easy-to-pick package.
A 3PL warehouse will kit items that sell frequently together. The 3PL will rely on a WMS software solution to track, combine, and assign SKUs. Kitting saves the warehouse time in picking orders, which increases operational efficiency and shortens the delivery time.
Repackaging and Rebranding
The ability to repackage and rebrand products allows ecommerce customers further customize their sales. A 3PL can provide specialized packaging and ensure that they take extra care during packing to deliver accurate branding.
Managing Subscription Boxes
The trend of subscription boxes continues to grow. Ecommerce businesses offer beauty, foods, beverages, nutraceuticals, clothing and more in recurring subscription boxes. A 3PL will fill personalized boxes with the assorted items in a single package.
Managing subscription boxes creates another layer of complexity in the fulfillment workflow because of the need to meet the strict shipment deadlines. Consumers want and demand the prompt delivery of subscription boxes, so a 3PL must meet the demand by guaranteeing the consumer receives the box on the promised date.
A 3PL must implement a detailed system that relies on technology solutions to meet the ongoing demands of subscription boxes. The growing number of picks, high-volume batch generation, and ongoing printing of shipping labels each month make subscription boxes a definite value-added service.
Reverse logistics has become a necessity in omnichannel fulfillment strategies. Virtually all ecommerce customers demand return processing for a 3PL. The logistics provider will accept and process the returns to help their customers save money and time while effectively meeting their consumer expectations and demands. Technology solutions help track orders and handle returns. An order management system rapidly processes returns and keeps them organized for 3PLs and customers.
The demands for ecommerce shipping solutions continues to expand as customers and 3PLs partner together to create an effective team that profits both parties. Utilizing technology solutions such as Extensiv 3PL Warehouse Manager benefits a 3PL and helps create a firm foundation for streamlined services across the supply chain.