Online Retailers: Top 5 Benefits of Using a 3PL to Manage Logistics

May 5, 2016 by FreightCenter Team
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If you thought 2015 was a busy year for your online business, you’re not alone. According to the Quarterly E-Commerce Report, e-commerce sales continued their steady climb making up 7.5% of retail sales by the end of 2015. Compare these figures to the end of 2003 when online sales made up only 1.8% of all retail sales and it’s easy to see that online retailers can continue to expect an increase in sales well into the future.

What can online retailers do to ensure they can meet growing demand? The answer lies in logistics. Whether you’re organizing shipping for a small online store or a large ecommerce supply chain, logistics management is crucial to streamlining your operations.

To streamline your transportation you can either use your own in-house transportation management team or outsource with a 3PL. The benefits of either option will be dependent on the size of your supply chain and your company’s specific needs.

Greentec Auto rebuilds hybrid car batteries. They have 11 locations throughout the country where they can service electric cars and build their batteries, but they also sell their products across the world through an online store. When Vice President of Greentec, Daniel Razumovsky, was tired of wasting time comparing shipping rates and filling out paperwork, he turned to FreightCenter. Outsourcing with a 3PL turned out to be a time and cost efficient strategy. Now between their many locations, Greentec ships batteries almost weekly through FreightCenter and they continue to reap the following benefits of using a 3PL to manage their shipping logistics.

1. Cost Reduction: Shipping volume is a key driver of freight shipping rates. Many small and mid-size online retailers are at a disadvantage when it comes to negotiating rates. 3PLs have the buying power of their entire customers’ freight volume.

2. Smoother operations and technology: A 3PL can provide advice on packaging, including crating services. They also provide e-commerce retailers access to best in class technology that provides benefits like order optimization and delivery performance reporting.

3. Routing optimization and flexibility: Each order you ship—from a single LTL shipment to a truckload—can be optimized. A 3PL has the perspective to see the opportunities to consolidate orders. The flow of logistics data into other company systems is vital as well. Tracking and managing Cost of Goods Sold (COGS) and other important metrics are made easier when logistics data can be integrated with other company systems.

4. Complexity of international shipping: Since most online retailers do not make what they sell, many have built a supply chain that involves importing products from overseas to save on costs. International shipping is very complex and involves a lot of complicated requirements and other entities that include customs brokers, different modes of shipping, and lots of rules and regulations.

5. Omni-channel and inventory management: Retailers are now seeing the need to potentially share inventory across channels (like between online and brick and mortar stores) to make sure product is always available to customer—regardless of how they are trying to buy it. A 3PL can provide inventory tracking tools to make sure you have the visibility—and ability—to get the inventory you need when you need it.

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