How to Lower Logistics Costs

When customers buy from you, they expect their purchases to be delivered as promised—on-time and unharmed.

If a company can’t meet consumer demands and expectations, they’ll lose shoppers regardless of how amazing their product is. Dissatisfied customers will take business elsewhere and can influence other shoppers to do the same.

The importance of order fulfillment to customer retention can’t be overstated—it has to be accurate so a business can thrive. Outsourcing to third party logistics (3PL) experts can help, as it can improve customer experience (CX), and save time and money. Here’s how.

What Do Third Party Logistics (3PL) Do?

Third party logistics providers are supply chain experts that are skilled in providing efficient, cost-effective order fulfillment and inventory distribution solutions. A 3PL company specializes in warehousing, packing, shipping, receiving, transportation and inventory control. They can significantly lighten the load of retailers, eCommerce businesses and B2B suppliers. While a 3PL handles a variety of order fulfillment aspects, brands can focus more on their products.

Flexible, Scalable Order Fulfillment

Order fulfillment can be costly and time-consuming, which is especially true for eCommerce businesses and independent retailers. As a business scales, the investment of time and resources grows alongside it.

Partnering with a 3PL helps in staying proactive as consumer demand changes, while also allowing for better customer experience.

Built for Consumer Demand

The costs of running a warehouse don’t magically diminish during a business slowdown, and fulfillment operations won’t automatically adjust to a rise in product demand. 

A sudden spike in demand requires fast, efficient order fulfillment, which is where a 3PL would come in. Third party logistics experts should be equipped with the tools and staff to accommodate brand growth, while operating with total efficiency. 

3PLs are already set up to adapt quickly to consumer demand with advanced inventory management tools like warehousing management systems (WMS), forecasting and automation. They have a greater ability to streamline supply chain operations, saving clients money. 

Expert third party logistics should offer global order fulfillment solutions that would be difficult and impractical to implement solo. Warehouses should be strategically located near large client bases, making it easy to receive and deliver orders to customers.

3PLs can also help in staying compliant with unfamiliar local rules and tax codes, which helps to lower costs. For example, if a company were shipping from the United States to the United Kingdom, they would have to pay value added tax (VAT) at each level of supply chain operations, trickling down from suppliers, to manufacturers, distributors, retailers and then to customers (which is a high cause for shopping cart abandonment). However, if they were partnered with a 3PL with bonded warehousing, the VAT is paid only one time – when the shipment enters the UK.

Omnichannel Order Fulfillment

Third party logistics can offer a variety of order completion strategies to match company goals. A global 3PL can use omnichannel order fulfillment to manage the entire inventory supply chain. They work end-to-end, from receiving merchandise to packing and distribution.

A 3PL’s omnichannel capabilities allow them to manage inventory across all sales channels, which includes brick-and-mortar stores, social media and online.

3PLs can also help with giving customers the shipping options they prefer, such as ship-to-store, ship-to-customer or ship-to-pickup-point.

Omnichannel fulfillment needs to be customizable to fit a certain client. Third party logistics can match order processing for customer service priorities, whether it’s speed of delivery, cost of shipping, the unboxing experience or reducing carbon footprint.

Saving Money

Efficient order fulfillment means expert management of your bottom line. A 3PL provider saves you money, as they operate on a much larger scale than you do.

They have the mechanisms already in place to manage inventory and fulfill orders. For instance, a low freight rate based on volume offers savings you cannot achieve on your own. 

Facilities and Personnel Costs

Running your own warehouse can be expensive. Even if sales are enough to keep up with the rent, there are additional costs to consider. You’ll need to purchase an effective WMS (warehouse management system) and inventory control software. Even cloud solutions require an investment.

You’ll also need to hire a logistics expert who understands the nuances of supply chain management. They should be knowledgeable in warehousing, inventory management and cost-effective shipping methods.

If your eCommerce business works with overseas clients or suppliers, they should have a solid understanding of local laws. This includes understanding local value-added tax (VAT) rules so you remain compliant.

Or you could take the time to learn all that yourself.

Once you have these bases covered, you’ll need enough (but not too many) trained fulfillment center personnel to keep up with demand. You don’t want to pay people to stand around during a lull in business.

If you or your current employees are spending their time learning international commerce rules, packing, shipping and managing inventory, who will focus on sales and building your business?

A global 3PL company can handle the necessary fulfillment processes, as they’re equipped with the facilities, staff, expertise and technology to get the job done.

Efficient, Cost-Effective WMS

Third party logistics providers have warehouse management systems (WMS) in place to ensure efficient operations. The WMS can integrate with top eCommerce platforms like Shopify and Magento, as well as point-of-sale software. This makes inventory control and workflow seamless by automating the order fulfillment process.

The automation features of a 3PL-level WMS can greatly reduce order fulfillment errors. Reducing errors will save money on return shipping, repacking and restocking.

It also helps to better meet customer expectations, which improves customer trust and retention. You don’t want to lose sales because of avoidable order fulfillment errors.

Low Costs Per Order

A 3PL company has shipping expertise and resources that far exceed most eCommerce businesses. This can translate into lower costs per order and increase efficiency. 

You will see substantial savings on shipping costs when using third party logistics, as a 3PL’s volume gets them discounted rates for shipping—both across town and across the continent. That low freight rate translates into big savings.

Plus, a 3PL company’s inventory solutions are robust enough to work for all client order types, from wholesale and retail to ecommerce.

They can also offer cost-effective solutions for custom packaging and branding. 

Keep Your Focus on Your Business

The success of an eCommerce company relies on efficient order fulfillment. Entrusting your fulfillment process to a global 3PL gives you preferred shipping options, helps you maintain quality CX and safeguards your bottom line.

Beren Logistics has decades of operational experience, and global distribution facilities in strategic locations, including Canada, the Netherlands, Shanghai, Hong Kong and across the United States.

Contact us to learn how our third party logistics solutions can work for you.