In fact, 37% of SMEs already outsource logistics and various other aspects of their business operations with over 50% looking to do so in the future.
Managing inventory, optimising supply chains, and ensuring seamless order fulfilment are just a few of the complexities that can consume valuable time and resources. A strategy that has been increasingly adopted by SMEs in recent times is to work with a Third-Party Logistics (3PL) provider. This strategic decision presents numerous benefits that can make a substantial difference in an SMEs financial performance, improved efficiencies and overall competitiveness within their markets.
There is also the question of when is the right time to outsource. With many companies starting out with the jack-of-all-trades approach, there is a time when self-fulfilment is no longer enough to maintain customer satisfaction and to sustain the demands of a growing business.
The 3PL Advantage to Outsource Logistics
1. Cost Efficiency
Businesses, especially SMEs, often face budget constraints. Outsourcing 3PL services can be a game-changer in terms of cost efficiency. When order volumes hit around 500 per month, the economies of scale offered by 3PL providers can significantly reduce your fulfilment costs. They have the infrastructure and expertise to optimise processes, leading to savings in warehousing, labour, and shipping expenses.
Sales can fluctuate, especially during peak seasons or promotional events. A reliable 3PL partner can seamlessly scale operations up or down to accommodate these fluctuations. This flexibility ensures that you can meet customer demand effectively, whether you’re experiencing a sudden surge in orders or navigating a quieter period.
3. Focus on Core Competencies
65% of small and medium businesses suggest that BPO (Business Process Outsourcing) helps them to focus on their core competencies – with the most popular functions including payroll and other HR services, marketing, customer service and logistics.
One of the most critical benefits of outsourcing logistics is that it allows you to concentrate on what you do best—growing your business. Managing logistics, inventory, and shipping can be time-consuming and divert your attention from strategic planning and business development. By partnering with a 3PL provider, you free up valuable resources and
expertise to focus on expanding your product offerings, enhancing marketing strategies, and refining customer experiences.
4. Improved Customer Satisfaction
Timely and accurate order fulfilment is crucial for customer satisfaction. 3PL providers are experts in streamlining logistics operations, ensuring that products are delivered on time and in excellent condition. This reliability can lead to increased customer loyalty and positive reviews, which, in turn, can drive repeat business and referrals. On the other hand, over 50% of consumers will turn to a competing brand, after just one bad experience!
5. Access to Expertise
The world of ecommerce is constantly evolving, with new technologies, shipping options, and market trends emerging regularly. 3PL providers stay updated on industry developments and adapt their strategies accordingly. By outsourcing, you gain access to this expertise, ensuring that your fulfilment operations remain efficient, compliant with regulations, and competitive in the ever-changing ecommerce landscape.
When to Outsource Logistics
The 500 Orders Threshold
The decision to outsource ecommerce fulfilment to a 3PL provider is a strategic one, and the 500 orders per month threshold is a significant consideration. As your order volume approaches this mark, you should seriously evaluate the benefits of outsourcing.
Cost Savings: At this point, the cost savings offered by 3PL providers become more pronounced, helping you optimise your budget.
Efficiency: A 3PL’s expertise in managing higher volumes can improve order accuracy, decrease shipping times, and enhance overall efficiency.
Customer Satisfaction: Ensuring timely delivery becomes even more critical as your business grows, and 3PL providers excel in meeting these demands.
SMEs can gain a substantial advantage by outsourcing their fulfilment operations to a reliable 3PL provider. As your business approaches an order threshold, the benefits of cost savings, scalability, and improved customer satisfaction become increasingly evident.
By partnering with a 3PL provider, you can free up resources, streamline your supply chain, and focus on what matters most – growing your business and customers.