Do either of these scenarios sound like you?
One: You’re an ecommerce business owner or operator that’s wearing many different hats and balancing tasks in order to keep your brand running smoothly. After taking on all of those responsibilities, you have your hands full and you’re wondering which tasks you can outsource to trusted partners.
One of the most tedious tasks in your day-to-day routine is packing and shipping orders, which you’ve learned is more time consuming than you expected. As a result, self-fulfilling has become a roadblock on your path to scalability.
Two: You decided to partner with a third-party logistics company to take the stress of fulfillment off you and your team. After vetting the 3PL and starting a relationship, you’ve found that there are issues. It might be that there are continuous problems with customers receiving the wrong orders, analytics are not performing as promised, or the 3PL isn’t scaling quickly enough to offer the support or features you need.
You’re weighing your options about whether to stick it out or move to a new provider. Choosing a 3PL was a big decision, but knowing when to switch could be even more difficult.
Both situations are common for ecommerce brands. No matter where you are in your fulfillment journey, it’s clear fulfillment can be complicated — but it doesn’t have to be.
In this post, we’ll dive into why outsourcing fulfillment is important for ecommerce brands, common terms that can help demystify the logistics industry, and tips for what to look for in a fulfillment partner – whether you’re partnering with a 3PL for the first time or switching providers.
5 reasons to use a 3PL
Third-party logistics providers offer many perks for ecommerce brands of all sizes. As you’re weighing your options about outsourcing fulfillment, consider these five benefits.
1. Save time and money
By using a 3PL, you’re able to reclaim the time spent on self-fulfillment and apply it to other parts of your business. Having a dedicated fulfillment provider could free up hours over the course of your week that could be reallocated to other efforts that could help your brand grow. Additionally, while it may seem counterintuitive to save money by working with a fulfillment provider, a logistics expert provides advanced resources you may not be able to afford otherwise. A 3PL helps you save money on your own warehouse, labor, technology, and more.
2. Gain access to advanced tools and resources
A tech-enabled 3PL stores and tracks your orders, inventory, and more. With these additional insights, you can make more informed business decisions which can ultimately help you be more efficient, cut costs, and grow your brand more quickly.
3. Enhance customers’ unboxing experience
When you pack and ship orders yourself, you get to personalize the experience however you want. If you partner with a 3PL with robust customization features, you maintain a level of control over how orders are packaged and you ensure the customer experience is exactly how you want it to be – even without touching a single box.
4. Leverage expert support
The logistics, supply chain, and ecommerce industries are complicated and interconnected. As a business owner, you may have questions or need someone to lean on when things get tough. When you partner with a 3PL, there is a dedicated team that can guide and support you in your journey.
5. Scale your business
As your business continues to grow, you can enjoy seamless scalability when it comes to things like increased order volume, international shipping, retail/B2B, and more.
Logistics terms to know
The logistics industry has many nuances. The terminology can be overwhelming and the numerous acronyms can leave you scratching your head.
We’ve prepared a list of common terms and concepts so you can better understand the logistics landscape and have better conversations with potential fulfillment partners.
- 3PL: An abbreviation for “third-party logistics,” 3PL refers to logistics companies that enable ecommerce businesses to outsource fulfillment related operations such as warehousing, picking, packing, and shipping.
- Distributed inventory: Distributed inventory is the practice of strategically splitting up your products across various fulfillment centers to be closer to your customers in order to reduce transit times and shipping costs.
- Fulfillment center: A fulfillment center serves as the hub for logistics processes such as order picking, processing, packing, and shipping.
- Inventory management: Inventory management is the process of managing and monitoring stocked goods. Accurate inventory management helps your business with restocking, storing, and forecasting inventory.
- Pick, pack, ship: “Pick, pack, and ship” is the process of choosing an item to be sent to a customer, placing it in a box or mailer in preparation for transit, and sending it via carrier.
- Reorder point: Reorder point, or ROP, is the minimum level of inventory you can have for a specific product that, when reached, triggers the reordering of more inventory. This metric is important because it helps you replenish inventory before reaching zero (or a stockout).
- Shipping zones: Shipping zones are geographical areas that carriers ship to, spanning from Zone 1 (the zone closest to the fulfillment center) to Zone 8 (the zone furthest from the fulfillment center).
- SKU: An abbreviation for “Stock Keeping Unit,” a SKU is a custom alphanumeric code that gets assigned to each unique product so items can be differentiated from each other. SKUs make inventory management more efficient.
- Storage fee: Fulfillment center storage fees are the costs associated with storing products. Some fulfillment centers may factor receiving fees and other costs associated with order processing, handling and shipping.
- Supply chain: A supply chain is the connected system focused on moving products from suppliers to consumers. Sellers, manufacturers, resources, and transportation are all a part of the supply chain.
- Warehousing: Warehousing is the process of storing and managing goods intended for online sales in a warehouse.
- WRO: Short for “Warehouse Receiving Order,” a WRO is a form that is filled out prior to sending inventory shipments to the fulfillment center. WROs outline what is being sent to the fulfillment center.
What to look for in a 3PL
Choosing the right 3PL can be challenging – regardless of whether you’re sourcing a fulfillment partner for the first time or finding one that is a better fit for your business.
If you’re experiencing any of the following, you’re likely ready to outsource fulfillment:
- You spend multiple hours per week on packing boxes and shipping orders
- You’re running out of space to store your inventory
- You need more time for strategic business projects
- You’re unable to invest in the fulfillment infrastructure needed to scale your business
If you’re experiencing any of the following, you may want to consider switching 3PLs:
- Your current 3PL is consistently making errors and it’s harming your business’s reputation and customers’ experience
- Your current fulfillment partner hasn’t introduced new features or the technology is outdated
- Your order volume has increased and your 3PL cannot keep up with fulfillment
- The 3PL you’re working with doesn’t have a nationwide or global presence
- You aren’t receiving proper support or timely answers to questions
- Accessing your inventory and order data is challenging at best
When outsourcing fulfillment, it’s important to look for a solution that goes beyond the traditional pick, pack, and ship model. Consider these factors when searching for a 3PL:
- Advanced technology with the features you need to scale. During the vetting process, inquire about the 3PLs inventory and order management tools, shipment tracking capabilities, and integrations with platforms you already use. Easy-to-use reporting and access to analytics are important for you to keep a finger on the pulse of your fulfillment.
- Ability to offer reliable and accurate fulfillment. You’ll want to work with a trustworthy 3PL that clearly states their SLAs, reports on on-time order rate, has the ability to file claims, and gives you the flexibility to edit orders when needed. A reliable fulfillment provider will also map out the most cost-effective and fastest shipping options to give you transparency.
- Best-in-class partners. A 3PL should offer integrations with ecommerce platforms you already use in order to streamline and optimize your ecommerce tech stack. These capabilities help you manage your logistics from one centralized platform.
- Robust fulfillment network. In order to scale, you should look for a 3PL that has an expansive geographical footprint. The ability to distribute inventory domestically and internationally allows you to offer faster shipping, drive down storage costs, and make customs and duties easier to navigate.
- Innovation and growth. A fulfillment provider should be a partner in the sense that they’re enabling your growth and open to feedback. A tech-forward 3PL should be releasing new features and optimizations, listening to customer feedback, and be open to implementing suggestions.
How ShipBob and Tydo make your ecommerce operation
Having the right fulfillment partner is key to creating an efficient ecommerce business.
A global omnifulfillment platform like ShipBob optimizes order fulfillment at each of its 30+ locations throughout the US, EU, UK, Canada, and Australia to provide your brand with the fulfillment solution it needs.
ShipBob has dozens of partnerships with ecommerce platforms that are commonly used throughout the industry, including Tydo. With ShipBob’s partnership with Tydo, businesses can pull shipping data from their online store and get suggestions about how to make shipping and fulfillment more efficient.
- What to pledge
- How to improve
- Which tools will set you up for success
I think the most important thing brands can do in 2023 is to better manage their customer data—both ethically and effectively. There’s an opportunity for brands to know their customers better than ever before—a clear benefit for both the customer and the brand. When you manage your data correctly, you’ll create stronger and more personalized ads, creative, site experiences, and so much more.
This is a classic: Let the data guide you. Go where the buyers for your products are and communicate with them on a personal level (i.e. by persona and funnel position) and nurture those relationships (past, present, and future customers). It’s possible—all through data.
We recommend that Shopify brands analyze and update their websites using data-driven decisions. Using analytics tools such as heatmaps and scrollmaps can help brands better understand how customers are interacting with their store.
Store owners tend to make assumptions about the way customers interact with their website. Most never go back and analyze their design choices to find pain points or areas of opportunity. By using heatmaps and scrollmaps, they can see where real customers are clicking and concentrating their attention. Leveraging this data, brands can start to iterate on design and make their online store experience streamlined and intuitive.
Hotjar provides a simple way to implement heatmaps, scrollmaps, and recorded user sessions on your site, helping you acquire incredibly informative user data. Additionally, it gives you the ability to create on-site surveys, which allows you to obtain direct and often critical feedback from users about their experience.
Test various attribution models and analyze the impact on your business. At Fifty Six, we are always here to help our clients identify and optimize their approach—a critical step in any successful marketing strategy.
If I’ve said it once, I’ve said it a million times–Customer Lifetime Value. And even more importantly, Future Lifetime Value (FLTV). With the ever-growing importance of first-party data, it is crucial that brands take a good look at their CRM and FLTV metrics.
Stop allocating budgets to low-hanging fruit that doesn’t move the needle on conversion. Think about what’s really going to improve your CX and the return of undertaking different initiatives—not just on what’s top on your list of bugbears on the site!
One of the best ways to understand your customer behavior is by using HotJar. Their heat-mapping and screen recording tools shine a light on where customers are navigating to and from on your site, where they're rage clicking and experiencing frustration, and where conversion is dropping off within real life customer journeys and flows!
Understanding your customers’ pain points via data and analytics , will allow you to work with your CRO/CX Agency to solve customer frustrations and improve conversion.
Rewind backs up all product, customer, and order data for Shopify sites—essential since Shopify itself doesn’t provide this solution. It's saved so many of our clients time and money from administrative accidents.
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33% of customer service inquiries are pre-sale questions. What does this mean? If you’re not investing in customer service, you’re missing out on revenue-generating opportunities.
The benefits of elevating your customer experience:
- 10% to 25% increase in AOV for customers who engage with live chat pre-purchase
- 21x higher conversion rate for customers who reach out via Live Chat or SMS compared to other site visitors
- 87% of customers who have a great customer experience will make another purchase
- 72% of customers share positive experiences with 6 or more individuals
Gorgias is our favorite Helpdesk platform. They can reduce costs by 35%, primarily by decreasing the average ticket handle time. Their machine learning algorithms are trained on millions of ecommerce-related interactions across Gorgias’ customer base and provide accurate, automated replies for the most common ecommerce inquiries. This helps our agents resolve tickets faster, which provides the customer a seamless experience.
Trust your agency! Agencies do the same things across multiple brands and niches, so we see the trends and have the practice and experience!
Don't be afraid of data and insights. If customers aren't clicking on your emails, try a new CTA. If your ads are driving good metrics at a small spend, start scaling. If your customers are complaining about a product, look into QA! If the data tells you something isn't working, let it go and try something else!
I'm supposed to say Tydo, right? 😉
Double down on differentiation. There will be a lot of headwinds this year and standing out from the crowd will set you apart.
A picture is worth 1,000 words. A video? Probably millions. In ecommerce that value translates into engagement, acquisition, and retention—everything you need to impact your bottom line.
At soona, we've seen the we've seen the impact of creative and the continuous split testing of it yield results. Our resolution is to challenge ourselves and double down on innovation and creative optionality so that each brand we work with can distinguish themselves in a crowded sea of D2C ecomm. We'd love to see our brands share this resolution and keep pushing the creative limits.
Klaviyo. We're using it to power our email and newsletter at soona too!
Optimize your returns strategy! This can lead to valuable customer insights, enhanced user experiences, and increased revenue and customer loyalty.
Brands need to dive deeper into understanding their customers to set themselves up for success. Conduct research to gain insights into customer needs, preferences, and behaviors. By doing so, you can develop targeted strategies that will enhance customer experience and boost overall retention.
Right now I would say Gorgias. Having a good customer service tool is crucial to building strong customer relationships.
Start paying heavy attention to data, specifically around retention. We see a lot of effort put towards acquisition with the assumption that once someone buys, they are your customer forever. Instead, get to know your customer, understand their needs, and analyze their behaviors once they are on-site and judge their sentiment after they have visited. Work with a retention focused and data-driven agency to implement tools that contribute to repeat business and customer delight. It will pay dividends.
When surveyed, about 80% of ecommerce merchants think that they are delivering a great experience to their customers. However, when the same customers are surveyed, only 8% of those customers think that they are getting a great experience from the merchant. Now, more than ever, retaining loyal customers is an essential part of any online business and you should spend time with your customers to judge their experience with your website and products and offer improvements based on that feedback.
Tydo's report cards are an essential tool, along with Klaviyo for email and SMS, Recharge for subscriptions and memberships, Okendo for reviews and surveys, Rebuy for AI driven collections and upsells, Loop for self service returns... each tool is great on their own, but their strength as the ultimate tool comes from when they are used together!
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