How 3PL Integrations Can Boost Your E-commerce Business Profit

Posted by Marian

If you’re an entrepreneur and you haven’t dipped your toe on e-commerce, then this is your cue to do it now or miss out. E-commerce is now getting huge waves because it generates more profit for businesses that stick to the traditional marketing or sales methods. While there’s nothing wrong with the brick-and-mortar setup, jumping into an e-commerce platform can benefit your brand in significant ways.

Outsourcing to a 3PL

Businessman, Boxes, Transport, Delivery, Logistics, Box

An e-commerce platform is an excellent tool for generating orders and collecting payments. But it still requires a person to process and ship the order. Outsourcing the order processing to a 3PL streamlines the order management process yet requires integration between your e-commerce platform and the 3PL’s warehouse management system.

There are two critical benefits to integrations:

  • Real-time Inventory Management
  • Efficient Order Processing

 When fully integrated, the two systems work in harmony to ensure that the products you’re selling are in stock and the orders are out the door and quickly shipped to your customers.

How 3PL Integrations Work

Industry 4, Web, Network, Points, Lines, Interfaces

Select Integration Method

The most common data exchange method is the application programming interface (API). It’s both efficient and secure, and it can exchange data back and forth between two systems. It requires a set of defined rules or data sets that are exchanged legibly in real-time.

Some 3PLs are already set up with a specific platform making integrations even easier.

Choose the Information to Exchange

Not all data needs to be exchanged between a warehouse and the store. It’s best to understand which data is the most important and how it should be received. In an e-commerce integration, the most common data exchanges include:

  • Products by SKU
  • Inventory by SKU
  • Order quantities
  • Orders received
  • Orders shipped
  • Product deliveries
  • Out of stock/low stock alerts
  • Product change alerts
  • Customer shipping information
  • Shipment tracking & alerts

Set Up the Exchange

Developers use coding and rules to allow each system to speak the same language. This is the most essential step in the integration process because it merges the two systems. The data formats need to line up perfectly for the exchange to be understood by each platform. In many cases, a custom script, like manipulation of the data or a special rule, will need to be created.

Data Testing

Coding requires a fair amount of testing to ensure accuracy. Sometimes the data doesn’t format correctly or ends up in the wrong place. Maybe the data set isn’t complete, or it is delayed. These issues can be identified and solved through extensive testing. Software updates can also throw off data, so it’s best to have ongoing testing to prevent disruption.

Integrations that Provide Easy and Enjoyable Customer Experience

Online Shop, Shopping, Business, E-Commerce, Ecommerce

While integrations are behind the scenes in the e-commerce process, a successful integration enhances the customer experience. It makes the ordering process easy, customizable, and enjoyable.

It builds brand loyalty and accessibility to more products. And it gives sellers the power to manufacture more products at a grander scale, with more customization.

Fulfillment companies are key players in the growing e-commerce industry, making it easier for small and large online merchants to fulfill their customers’ orders. Online purchases have been growing exponentially for the past two decades.

The e-commerce market is growing in size, competition, and, more importantly, customer expectations. When shopping online, the main pain points for consumers are speed of delivery, confidence in receiving/returning parcels, handling complaints, and payment security issues.

But there’s one difference between struggling e-commerce brands and thriving e-commerce brands. Businesses with us have nailed their logistics processes and provided a fast, reliable, and consistent delivery service. Unless you are playing small, there is no DIY when it comes to e-commerce logistics. Outsourcing logistics to Zip Logistics is more often than not a considerable time and money saver for e-commerce brands who can then focus on marketing, product development, and customer service.

To make it all work, it is crucial to choose a fulfillment company that will adequately handle your inventory, provide a positive experience to your customers, and makes a stellar contribution to the growth of your business.

What is Order Fulfillment?

Shopping, Visa, Business, Card, Credit, Mobile, Online

Order fulfillment can be described like the steps involved in delivering orders to end customers. These orders can be business-to-consumer (B2C), business-to-business (B2B), or direct-to-consumer (D2C).

Before these orders arrive at their destination, they need to be picked up, processed, delivered, and possibly returned.

An e-commerce fulfillment service is a third-party company that collaborates with an e-commerce brand to take all the steps mentioned earlier on their behalf.

Managing Inventory

Whether you are storing your products in-house or through an e-commerce warehouse, your inventory needs to be received, examined, labeled, and correctly managed via an e-commerce warehouse management system (WMS).

Inventory accuracy is critical to ensure that customers can’t order out of stock or unavailable products.

Having clear visibility on inventory levels means no unnecessary stock or shortages and better purchasing and production management.

Order Processing

After an order has been placed, the items need to be picked up from their storage locations and prepared for shipping. The better streamlined this process is, the faster your customer orders will be shipped.

Efficient 3rd party fulfillment companies use a method called optimized slotting to determine where items should be placed. This means the most popular items are stored together near the starting point of picking to minimize walking time and excess bending.

Also, more fragile items need to be picked last and thus stored further away to avoid placing them underneath heavier items.

As your e-commerce business scales, automation is necessary to increase efficiency, lower costs and avoid human error. Processing 5 to 10 orders a day the traditional way is acceptable, but even just dozens of daily orders is an entirely different story.

Packaging

Once the order is processed and packed, it is delivered to the packaging area.

Good 3rd party fulfillment companies will allow their customers to provide their own branded packaging. This is the first physical contact a customer has with an online brand and should be designed with care.

The unboxing experience of your e-commerce store is crucial to retaining customers and initiating word of mouth. Furthermore, orders need to be packaged efficiently to reduce dimensional weight, also known as volumetric weight, without compromising security.

If you’re packaging your products in-house, packaging automation can be a great way to reduce packaging costs and increase efficiency.

Shipping

The order is now packaged and labeled. Depending on the customers ‘ location, it leaves the storage facility and is shipped to the customer via the most efficient transportation method.

Most e-commerce fulfillment warehouses will have preferred carriers picking up orders from their facility and shipping them to the end customer. Thanks to the sheer volume of orders, 3PLs benefit from preferential prices and pass those savings on to you. A tracking number is assigned to every order and automatically shared with the customer.

Managing Returns

Unfortunately, fulfillment doesn’t always end with shipping. Sometimes, customers may decide to return their purchases for various reasons ranging from a change of heart to product defects.

Returns are inevitable. Allowing customers to return their orders quickly and handling that process with care can make or break any e-commerce venture. We provide a streamlined process of taking returns in a way that is effortless for your customers.

Order Fulfillment Models

Ecommerce, Shipping, Globe, Trade, Map, Worldwide

Self-Fulfillment

This is the typical starting point for online stores. Sales are still growing, and processing orders, picking, packing, and handing packages to carriers is not a heavy burden.

But as your e-commerce venture grows, your order volume will increase. Being ready for exponential growth and the occasional spike in sales is crucial to avoid being overwhelmed and unable to keep up with demand.

If you can’t handle the load, especially during seasonal spikes, prepare to have your time obliterated with packing boxes, facing angry customers and stock shortages. Moreover, store owners need to devote their time to strategy, marketing, product development, and overall business growth.

Fulfilling orders in-house could make sense if you’re running a D2C brand and have enough space and workforce to set up your efficient order fulfillment unit. The direct costs of running your e-commerce warehouse are not the only criteria if you’re evaluating whether to outsource or do it in-house.

Performance in terms of delivery speed, return rates, order accuracy, and overall customer satisfaction also needs to be considered.

Third-Party Fulfillment

Businesses of many sizes can benefit from 3PL fulfillment services. With the exponential growth of e-commerce worldwide, a wide variety of e-commerce warehouses have shown up, catering to both smaller and larger-scale operations.

Partnering with a 3PL saves you time and money and allows you to focus on growth drivers like sales and marketing. A fulfillment company will handle storage, order processing, picking, packing, shipping, and more than likely returns on your behalf.

All you have to do is sign a contract, send them your inventory, including custom packaging, connect your shopping cart to their system and enjoy more free time.

Typically, a 3rd party order fulfillment service will charge a flat fee upon receiving your inventory, a monthly storage fee per cubic meter or pallet, and a shipping fee depending on the client’s location.

Thanks to the economies of scale, these e-commerce warehouses generally offer affordable shipping prices and run processes streamlined to the core. As your business grows, you rent out more space on their shelves and keep on doing your thing. There is no need to hire more people or rent an enormous warehouse.

Dropshipping

The most significant difference between 3rd party fulfillment and dropshipping is that the merchant neither stocks nor owns the inventory. Only when an order is placed does the seller purchase the item from a wholesaler or manufacturer who takes care of fulfillment.

This model is suitable for testing out market demand for a new product or setting foot in e-commerce since less capital is required.

The downsides of the dropshipping model are the following:

  • lack of customization
  • lack of control over the product itself
  • difficulty to provide proper customer support and ensure consistent quality

Why Partner Up with a 3PL for Your Ecommerce Business?

Web, Network, Information Technology, Woman, Smarthome

Meet and Exceed New Demands of Customers

Customers are now expecting faster deliveries (1-day delivery is now the norm), free returns, and stellar customer support.

Apart from that, customers also expect and demand the following:

  • Flexible return options
  • Faster and free shipping
  • Accurate inventory for products
  • Perks like loyalty discounts

Most of these are directly tied to your logistics, and you can see how important it is to choose a reliable third-party fulfillment partner.

Sustainability issues are also a growing trend amongst shoppers who are now ready to pay a premium for brands in environmental protection initiatives. Customers are notably expecting eco-friendly packaging options that are either easily recyclable or reusable.

Edge of Personalization

Personalization in e-commerce is not the icing on the cake anymore. It is the yeast without which your cake would be flat and unattractive.

E-commerce personalization aims at tailoring your website or app’s content to each individual based on their previous actions, demographics, and other data like weather, location, interests, and so on.

Being able to sync customer data across multiple devices, in-store and online, and offer personalized experiences throughout the customer journey has a significant return on investment. Delivering orders to customers is probably the only time your brand will make face-to-face contact with a customer. It doesn’t get more personal than that!

For example, getting goods automatically delivered in your customers’ preferred time frame is a great touch. Also, including a handwritten thank-you note in your customer’s name indeed adds value.

Packaging Matters!

Your customer’s first physical interaction with your brand is usually your packaging.  There are endless options to choose from but branded, and sustainable packaging ranks high in online shoppers’ expectations.

Acquisition costs are on the rise because of higher advertising prices and narrower customer attention spans. When you succeed at making a sale, you need to surprise your customers and exceed their expectations. In doing so, you drive repeat purchases, word of mouth and increase the value you provide to your customers.

Achieving this requires a great product, obviously, and a smooth delivery and return process, and a memorable unboxing experience.

As for sustainability, it is a growing concern for the majority of online shoppers. Sustainable packaging is not only about using sustainable materials but also keeping it simple. Here’s how you do it:

  • Avoid over-packaging
  • Enable easy recycling
  • Provide accessible and affordable sourcing from suppliers who strive to minimize their carbon footprint throughout the production and supply chain processes.

In addition to contributing to making the planet great again, you’re also enhancing your brand image.

Privacy Protection

Customers now have increased awareness of data privacy and security online. They know that their data is essential and worth caring for. They need to give their consent, know exactly who will use it, how, and for what purposes.

E-commerce businesses deal with confidential customer data like credit card information, purchase history, physical addresses, and contact information.

Online shoppers expect e-commerce boutiques to deal with their information with professionalism. Selling their data to third parties, spamming, or allowing for security breaches to happen because of poor data protection can bring havoc to your online endeavors.

The new GDPR rules have to be respected to keep your customers happy and avoid any unwanted hefty fines.

Boost Customer Experience and Loyalty

Feedback, Stars, Rating, Megaphone, Service, Quality

Customer service and customer loyalty go hand in hand. Acquiring new customers is more complicated and less profitable than keeping them.

Customers are looking for a better service and need to feel that their time is valued. Happy customers can become brand ambassadors and attract new ones for free.

With excellent customer service, you can also command higher prices as online shoppers will typically pay more when they are sure of receiving VIP treatment.

With that in mind, a well-designed customer journey from the first website visit to receiving a purchase and dealing with possible complications is a must in properly scaling online revenues.

You need a logistics company with years of unparalleled expertise and experience in manning supply chain systems and understanding how shipping, warehouse management, and order processing work. It’s your time to build and scale. Partnering up with Zip Logistics for your e-commerce business is what you need right now to scale and move your business to new heights – guaranteed.

Leave a Reply