July 2014 | Commentary | Checking In

3PL e-Volution Continues

Tags: 3PL, Retail, Supply Chain Management, E-commerce

Keith Biondo is the publisher of Inbound Logistics magazine.

While the editor of Inbound Logistics is content to use her column to take you on an archeological journey through 3PL history, I prefer to take you on a trip forward.

We all know Amazon and eBay as e-commerce titans that match millions of customers with the products they demand, when they want them. Both companies are "shippers" by definition, because their transport spend reaches into the hundreds of millions of dollars annually. But, not content to consider e-commerce consumers their only customers, both e-tailers are expanding their offerings to provide their many vendors with logistics support—profiting from their supply chain expertise upstream and downstream at the same time.

In her column, the editor echoes the maxim, "He who is closest to the customer wins." It is also relevant here. Inbound Logistics is replete with examples of demand-driven practitioners who achieve success by recognizing that vendors are customers, too.

By adding fulfillment and other value-added logistics solutions—Fulfillment By Amazon (FBA) and eBay Enterprise—to the mix of services they offer vendors, these two e-commerce giants edged into the role of logistics solutions provider, and carved out a lucrative market by making their vendors 3PL customers at the same time.

Two million vendors use Amazon.com to sell products globally. With its Fulfillment By Amazon solution, the world's largest online retailer not only lets vendors/sellers list their items on its website, it also lets them outsource shipping. Amazon charges vendors for warehouse space down to the inch, and takes a percentage of orders shipped. Leveraging Amazon's logistics might enable vendors to reach 250 million global customers and make Amazon's supply chain excellence their own.

eBay also has come a long way from its early e-commerce days. Today, with eBay Enterprise and the Magento platform, the company offers order management, fulfillment, customer care, and marketing solutions. Its plan is to enable brands and retailers of all sizes to deliver omni-channel experiences that are quick and customer friendly, and to "deliver products with speed and quality" in a way that would be difficult for customers to do themselves.

And it's not just online sales, either. "We are leading local commerce with close to 4,000 stores enabled with store-based fulfillment globally," says Tobias Hartmann, interim president of eBay Enterprise. "We continue to help merchants compete in a global marketplace, having recently launched our ship-from-store solution for a leading retailer in North America, Europe, and China, which is an industry first.

"Our goal is to provide retailers with warehouse and store-based fulfillment solutions that provide a competitive advantage and exceed their customers' expectations to build long-lasting loyalty," Hartmann adds. Within the United States, eBay Enterprise fulfillment centers help retailers and e-tailers quickly reach customers by fulfilling orders from various locations and claiming 99 percent of orders delivered within two days.

"Today's consumers expect their orders quickly, hassle-free, and with nominal shipping fees, if any," says Hartmann. That requires incredibly reliable logistics performance.

Yes, he who is closest to the customer wins. The 3PL value proposition for both Amazon and eBay is telling vendors to focus on what they do best, and leave the logistics to them. Demand-driven logistics excellence makes a difference in a successful e-commerce enterprise, and Amazon and eBay are both providing the third-party logistics solutions to make that future possible.