Last updated - November 7, 2024
E-commerce growth is projected to continue at a steady pace, with global sales expected to reach $5.4 trillion by 2026 (cf. Statista). This upward trend drives demand for advanced fulfillment solutions.
However, especially smaller companies often lack sufficient resources to store their goods and ship them with the speed and efficiency necessary to keep up with larger competitors.
Third-party logistics (3PL) providers promise integrated solutions that optimize every stage of order processing – from inventory management to final-mile delivery.
The Role of 3PL Providers in E-commerce
Third-Party Logistics (3PL) providers support online retailers by managing basically every part of the ordering process: inventory, picking, packing, and shipping orders, and handling returns.
By outsourcing these logistics to a 3PL partner, e-commerce companies free up important capacities, enabling them to focus on core competencies – like developing innovative products and marketing – and therefore reducing operational complexities and costs.
Fulfillment Services: Key Benefits and Statistics
One of the most important advantages 3PL solutions provide is scalability. Companies can easily adjust logistics capacity based on demand fluctuations. This way, they can efficiently and swiftly handle spikes in demand (i.e. during holiday seasons or special promotions).
Established fulfillment services also provide rapid delivery to millions of households within a two-day timeframe, thanks to strategically located warehouses across Europe and the U.S. With capabilities for 300,000 shipments per month and 99.9% order accuracy, fulfillment centres like WAPI are one of the top solutions for efficient e-commerce logistics – and often the only way for e-commerce-companies to meet increasingly challenging customer expectations:
According to current research, 66% of consumers expect two-day or faster shipping and are willing to pay up to 30% more for same-day delivery. Meeting these expectations can be nearly impossible without robust and reliable fulfillment support.
Therefore, it comes as no surprise that, according to a report by Grand View Research, the global 3PL market is expected to grow at a compound annual growth rate (CAGR) of 7.9% from 2020 to 2027.
Integrations and Software Tools in 3PL
The need for faster and more flexible logistics has led 3PL providers to adopt emerging technologies, such as AI for demand forecasting, automation in warehousing, and real-time tracking.
Popular fulfillment software tools include:
- Warehouse Management Systems (WMS): Enable real-time inventory tracking, order processing, and storage optimization. Some WMS solutions support multiple sales channels, ensuring orders from platforms like Shopify, eBay, and Amazon are processed in one dashboard.
- Inventory Management Software: Tracks stock levels, forecasts demand and prevents stockouts. Research by Statista indicates that 24% of e-commerce businesses prioritize inventory management as a primary benefit of using 3PL providers.
- Order Management Systems (OMS): Coordinate order processing from multiple channels, ensuring that each order follows a streamlined workflow from order placement to delivery.
With over 95 integrations, WAPI exemplifies a provider that enables retailers to unify operations across diverse platforms, from BigCommerce to WooCommerce. Seamless connectivity such as this is an essential prerequisite for omnichannel e-commerce strategies, as it allows for a single-point inventory view and faster, automated order fulfillment.
Enhancing Customer Experience Through Final-Mile Delivery
The final-mile delivery stage: the moment when the order is delivered and finally reaches the customer’s hands.
Its efficiency can significantly influence consumer satisfaction – according to recent studies, 80% of customers are more likely to make repeat purchases from retailers that provide a seamless delivery experience.
Because of this, many fulfillment providers collaborate with major carriers, such as FedEx, DHL, and Royal Mail, to offer delivery within 24 to 48 hours in-country and 3-5 days for cross-border shipments.
Key Metrics and Performance Indicators in 3PL Fulfillment
When it comes to 3PL and fulfillment, performance metrics are a valuable tool for comparing different providers, and can help e-commerce-companies with identifying improvement areas.
Important key performance indicators (KPIs) include:
- Order Accuracy: Reflects the percentage of correct orders shipped to customers. Leading 3PL providers maintain up to 99.9% order accuracy, minimizing return rates and ensuring customer satisfaction.
- On-Time Shipping Rate: Measures the percentage of orders shipped by the promised date, crucial for managing customer expectations. A 99% on-time rate is typical for top 3PL providers.
- Inventory Turnover Ratio: This KPI helps gauge how efficiently inventory is managed. High turnover indicates better inventory management, reducing storage costs and stockouts.
When choosing a potential 3PL solution, these KPIs provide valuable insight into the service quality of different providers. Trustworthy fulfillment services often communicate this data transparently on their website.
Marketplaces and Multi-Channel Selling
A notable trend in e-commerce is the aforementioned multi-channel selling. To support retailers in expanding across various marketplaces, some 3PL providers offer integration with platforms like Amazon, eBay, and Allegro. Multi-channel selling expands reach but also introduces complexity in logistics management.
Innovative fulfillment solutions facilitate the multi-channel listing, enabling businesses to upload a product catalog that instantly populates across connected marketplaces.
This capability reduces time-to-market and keeps inventory updated across channels, preventing issues such as overselling or backorders.
Return Management: Streamlining the Reverse Logistics Process
Efficient return management is vital, as studies show that nearly 30% of all online purchases are returned. A streamlined return process can boost customer loyalty, with 92% of consumers saying they will shop with a retailer again if the return process is easy.
First class fulfillment services often provide solutions that include return management: returned items are inspected, cleaned, and restocked, a process that not only saves retailers time but also enhances customer retention by simplifying one of the most common pain points in e-commerce.
Strategic Warehousing and Geographic Expansion
The location of fulfillment centres significantly impacts shipping speed and costs. Providers often strategically place warehouses across Europe and the U.S., supporting faster and cheaper delivery options.
As mentioned before, these are key factors when it comes to fulfilling customer demands: Research from Deloitte shows that 50% of consumers abandon their carts due to high shipping costs or slow delivery speeds.
With a well-distributed warehousing network, 3LP providers enable two-day delivery to millions of households in Europe, making it possible for retailers to meet these expectations without having to build their own infrastructure.
This distribution model also lowers cross-border shipping expenses – a major advantage for companies aiming to expand internationally.
FAQ
How much do 3PL providers charge?
The cost of 3PL and fulfillment services can vary widely and mostly depend on the specific services offered, the volume of orders processed, and the complexity of the logistics involved. Typically, pricing structures may include charges for storage, picking and packing, shipping, and additional services like returns processing or kitting.
Are there order minimums?
Many 3PL providers do impose order minimums, particularly for storage and fulfillment services. Minimum order quantities can vary significantly depending on the provider and the specific services you require.
How can I access my inventory?
Most 3PL companies offer an online, cloud-based dashboard that allows clients to track inventory levels in real time, place orders, and manage shipments.
