July 2015 | Commentary | 3PL Line

3PLs Can Deliver Big Benefits to Small Companies

Tags: 3PL, E-commerce, Logistics, Third-Party Logistics

Mike Grayson is Senior Vice President of Operations, Worldwide Express, 214-720-2400

No group has benefitted more from the explosion of e-commerce than small and mid-sized businesses (SMBs). Still, the perception is often that SMBs deal only in personal, face-to-face interactions between customers and business owners in a brick-and-mortar store.

While that personal touch is still very much alive, e-commerce has fundamentally changed and expanded the number of customers SMBs can reach. No longer limited to foot traffic and phone calls, SMBs with a vibrant online presence can just as easily sell to folks who live hundreds or thousands of miles away as they can to customers who stroll in off the sidewalk.

But how can SMBs compete with larger retailers when it comes to delivering a seamless shopping experience?

The popular buzzword for this is "omni-channel," but all consumers, including those purchasing from SMBs, want the same experience whether they're buying products on their tablet, over the phone, or in person. How quickly e-commerce customers expect to receive the products they order online can be particularly challenging for SMBs.

For huge companies such as Walmart and Amazon that have significant logistics expertise, customer demand for fast or even same-day delivery is by no means insurmountable. But for SMBs with fewer resources, the challenge is hardly insignificant. The reason big companies devote so much money to honing their logistics operations is because it is extremely complicated.

For SMBs focused on developing and improving their product lines and the effectiveness of marketing and sales teams, the expertise, staff time, and money necessary to handle logistics properly can be out of reach. Some businesses bring in third-party logistics (3PL) companies to act as de facto shipping managers.

Leveraging Shipping Expertise

3PLs can help navigate the complicated requirements involved with getting products from a warehouse or storefront to a customer's front door. Sometimes that means managing freight claims, invoicing, or insurance processes, or negotiating carrier rates that might be far higher if the SMB tried to go it alone.

What 3PLs can offer to SMBs amounts to improved efficiencies. These can be measured both in the better rates SMBs receive from carriers, as well as the labor SMBs won't have to devote to understanding and executing logistics. It also helps SMBs compete with larger companies, particularly as they continue to push the boundaries of how quickly a product ordered online can be delivered.

3PLs also provide an important service to carriers by helping them easily fill empty spaces on their assets. This saves carriers the time, energy, and resources they would otherwise devote to consolidating the freight loads themselves. This access to aggregated demand, and the opportunity to balance lanes, helps improve carrier operating ratios.

It is unlikely that logistics will get any simpler in the future. The traditional hub-and-spoke delivery system is already being transformed, and who can know what the future holds as technologies such as drones and 3-D printing evolve?

For small companies working with a 3PL, these questions are not their concern. As the industry evolves, savvy 3PLs will evolve with it. And as they do, they will be empowered to help SMBs better grasp the growing opportunities e-commerce presents.






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