When Should Your Growing Business Outsource Logistics to a 3PL?

If, like many growing enterprises with order fulfillment operations, you’re currently using parcel services and renting vans and motorcycles to execute customer deliveries, there’s a risk of reaching a point where your ability to keep up with orders is compromised, perhaps resulting in increasingly disgruntled customers.

If you think that point is approaching, perhaps it’s time to look at outsourcing to a third-party logistics (3PL) provider such as Shipa Delivery?

Logistics outsourcing can’t solve every business challenge, but in many cases, it can mean the difference between the success and failure of an enterprise. In this article, we share some pointers to help you decide if outsourcing logistics to a 3PL makes good business sense for you.

Understanding the Basics: What is a 3PL? ###

Before delving into the reasons for outsourcing logistics, let's clarify what a 3PL is. A third-party logistics provider is a specialized company that handles various supply chain activities on behalf of its clients, from the first mile, through storage, picking, packing, distribution, and last-mile delivery.

Considering 3PL Outsourcing? These 5 Signs Mean You Should!

It’s rarely possible to determine with certainty if 3PL outsourcing is the best solution to your logistics dilemmas. However, it is possible to spot indications that support from an external service provider might benefit your business significantly.

Let’s look at each of them in turn.

1. You Can’t Keep up with Orders ###

A sudden influx of customers or spikes in order volume can leave you and your team reeling, especially during seasonal demand peaks.

You may find that the warehouse space you are renting is inadequate, your delivery team is stretched, you need to deploy more drivers and vehicles, and you are facing a delivery bottleneck. And, of course, maintaining an in-house delivery fleet is expensive, fraught with costs including vehicle maintenance, fuel, insurance, and driver salaries. Similarly, in-house fulfillment operations incur substantial fixed and variable costs, including storage space, labor, and technology infrastructure.

Outsourcing to a 3PL which has a ‘pay-as-you-go’ option–such as Shipa Delivery—would allow you to convert those fixed costs into variable costs, since you pay only for the services you use. If orders are peaking, a 3PL has the resources required to scale up. If orders are going through a trough, you will use the fulfillment company’s services sparingly.

2. Customer Complaints are Increasing ###

Satisfied customers are the key to business success. Everyone knows that. But as your company grows, the pressure on staff inevitably increases and mistakes can creep in, leading to a deluge of customer complaints. These could include tardy delivery times, missed schedules, wrong items being delivered, poor packaging, breakages, and impoliteness from overstretched and frustrated drivers.

Once your brand gets a bad name for fulfillment and a spate of negative reviews, it may never recover.

Outsourcing fulfillment to a reliable 3PL can obviate these problems and elicit the opposite impact—positive reviews and happy customers.

3. Your Technology is Outdated ###

Like it or not, today’s consumers expect to track the progress of their order from the moment they click on the ‘buy now’ button until it arrives at the designated point of delivery.

Parcel tracking technology is expensive and requires experts to manage it.

This is where 3PLs have the edge since most of them have already invested in advanced technology systems for inventory management, order processing, and tracking. Your company could benefit from these systems without hefty investment, gaining visibility into your supply chain and enhancing your customers’ experience with real-time tracking information.

4. You Wish to Expand into New Global Markets ###

Expanding your sales into new countries or regions can be a lucrative gambit, but navigating the complexities of cross-border logistics can be daunting.

3PL providers with global networks and expertise in international shipping can facilitate seamless expansion into new markets. They employ experts to deal with the nuances of customs clearance, shipping regulations, and local delivery networks, ensuring a smooth customer experience regardless of geographical boundaries.

Outsourcing to a 3PL would allow your company to tap into new markets without the burden of complex international logistics management.

5. The Competition is Outperforming Your Brand ###

Competition is an integral part of the business challenge, and to set your brand apart, it’s often necessary to steal a march on your competitors. Therefore, if you notice your opposition is managing faster delivery times and more reliable service, you could consider partnering with a 3PL. Indeed, some of your competitors may have followed this route themselves.

Instead of trying to play logistics catchup in a highly competitive business world, 3PL outsourcing allows you to focus on tactics that will enhance your brand development, advertising, and marketing.

Is a 3PL the Solution for You? Let Us Help You Decide ##

Whether it's scaling operations during peak seasons, optimizing costs, expanding globally, or embracing cutting-edge technology, the advantages of 3PL services are many. However, 3PL outsourcing may not be the best option for your company. There are pros and cons to consider before making such a significant commitment.

Unless your company excels in logistics and data analysis, you may want to consider contacting our team of experts who can walk you through the steps involved.

After all, a partnership with a service provider such as Shipa Delivery, with its wealth of logistics expertise, can be the key to unlocking efficiency, customer satisfaction, and sustained growth.