Third-party logistics (3PLs) are commonly used by companies to fulfill orders. Also known as fulfillment centers or fulfillment warehouses, these companies fulfill orders on behalf of customers.
Companies such as these receive orders, keep inventory, process orders, and deliver products to customers. As a result, businesses are freed from having to manage inventory and ship items.
Three-party logistics companies offer a variety of services. There are companies that specialize in high-value items and others that offer sophisticated inventory tracking and security. Several 3PLs offer temperature-controlled storage and shipping, which can be convenient if you sell perishable items.
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How can fulfillment services benefit you?
Several factors are contributing to the increase in popularity of outsourcing fulfillment services, particularly among small and medium businesses.
Accelerate the growth of your business
Many businesses outsource order fulfillment to third-party logistics companies due to a lack of personnel or space. Businesses with fewer internal resources (or the capital to invest in them) can have difficulty growing. The companies can focus their efforts on marketing, product development, and other processes vital to the success of their company by outsourcing these functions.
Learn how to fulfill your goals
Although you may be able to confidently claim expertise in your industry, it may not be the same when it comes to logistics and order fulfillment. Businesses can leverage third-party logistics providers to keep their order processing running smoothly by leveraging an expert team that’s knowledgeable in all areas.
Reduce costs and save money
When businesses use order fulfillment services, they can also save money. Buying or renting warehouse space, or purchasing equipment to support order fulfillment operations is not required when outsourcing order fulfillment. As an alternative, you can leverage a provider that already has all the infrastructure and associates in place to handle it all for you at a fraction of the cost.
You can save money on materials and shipping by using third party logistics and fulfillment providers. Because they handle higher volumes, they may qualify for bulk discounts on packaging and shipping. These kinds of processes are handled in-house by smaller companies, so they are likely to have lower volumes, which would not qualify for volume discounts. The 3PL may be able to pass those savings on to their clients, who can then use those funds to develop new products or pursue other growth opportunities.
Enhance your competitiveness
You can gain a competitive edge even when competing against major companies, as you’re able to expand your business without spending a lot on logistics and warehousing.
Small companies can, for example, offer free two-day shipping, returns that are hassle-free, free returns, and other perks that appeal to consumers at lower costs. The inability of smaller firms to offer these perks is a result of high costs or a lack of manpower needed to complete orders efficiently.
Easier scaling & faster expansion
Today, success in business depends on being agile – more than just a buzzword. Adapting to changes in the market and seasonal demands will be easier for companies that are flexible enough to scale up and down as needed.
A company can also expand and enter new markets more easily by using fulfillment services, as well as the flexibility and scalability they offer. Among the costs associated with expanding to another region are acquiring warehouse space, investing in equipment, and hiring employees to operate the facility. A fulfillment service provider that offers the infrastructure and services needed in the target region can allow a company to expand into a new area without investing in warehouse space and infrastructure.
