When your eCommerce company starts growing fast, your job is to pull together everything it needs to keep growing. ECommerce logistics is a crucial factor that can encourage or inhibit growth.
ECommerce logistics, also called eCommerce fulfillment, is like fertilizer for your business. Using the right fertilizer will promote rapid growth, but your customers won’t be aware of it. Excellent third-party logistics will improve your business — and you get to take all the credit.
Superior eCommerce logistics can impact the health of your online store. In this post, we explore how to leverage professional fulfillment logistics with a 3PL to take full advantage of your growth potential.
What is eCommerce logistics?
ECommerce logistics encompasses the chain of operations set in motion once a customer makes an online purchase. The eCommerce logistics process also includes the supply chain operations needed to have the correct SKU in the right warehouse at the right time to meet customer demand.
Order fulfillment, order logistics, and eCommerce fulfillment are other terms for the same processes. You hire a third-party logistics provider to handle your fulfillment process when you outsource your eCommerce logistics.
Elements of eCommerce logistics
We can break down eCommerce logistics into four basic elements. Supply chain functions before merchandise reaches the fulfillment warehouse are not typically included in the eCommerce logistics process or managed by a 3PL. However, we include it because supply chain management is vital to inventory management.
ECommerce supply chain logistics
A well-managed supply chain is essential to your eCommerce logistics. That requires inventory forecasting to predict how much stock you will need and when. And you must understand the lead time for manufacturing and transporting products so you can have goods on the shelves when the orders come in.
Warehousing is a core component of eCommerce logistics. Your products need a well-organized warehouse to be ready for order fulfillment. However, don’t think of your 3PL as an inventory storage location. Instead, think of it as a staging area, where your goods sit for a short period before shipping to customers. Rapid inventory turnover is a core element of a growing online business.
It’s essential to use a 3PL that does an excellent job with warehousing to get efficient inbound logistics or receiving and little or no inventory shrinkage. But your 3PL is in the business of moving goods through the warehouse rather than storing them, and you should be too.
Inventory management is a collaboration between you and your 3PL. Robust inventory controls will help you understand which SKUs are powering your business growth and which should be discontinued. Active inventory management will help you determine safety stock and reorder levels and ensure that you maximize the amount of capital you have free to invest in business expansion.
It’s critical to choose an eCommerce logistics partner that understands how to handle your products. Improper handling can lead to breakage and inventory loss. Also, choose a 3PL that provides excellent inventory visibility and will partner with you on inventory planning to grow your business.
Pick and pack fulfillment
Pick and pack fulfillment is a core competency for a 3PL and an area where things can go very wrong. After a customer places an online order an integration sends it directly to the warehouse. The warehouse management system generates a pick list and shipping label for the order. A picker pulls the SKUs and quantities to fill the order. A packer inspects the order, boxes it, and labels it. Then the package goes to the outbound dock to be picked up by a shipping carrier.
Fulfillment warehouses often pick and pack thousands of orders a day for multiple companies. Professional picking and packing can speed your fulfillment and reduce errors. However, inadequate fulfillment services can result in high mis-pick rates, increased returns, and lower customer satisfaction. Choosing a 3PL with low error rates and premium pick and pack services is essential to growing your online business.
The final step in eCommerce logistics is delivering the order to your customer. In the U.S., most online orders ship via FedEx, UPS, or USPS. Oversized products sometimes use LTL freight shipping for last-mile delivery.
Third-party logistics providers can give your online store a competitive advantage in shipping, even though they don’t provide the service directly. By choosing a fulfillment center or centers positioned to reach more consumers, you can shorten delivery times and reduce shipping costs.
How third-party logistics providers help eCommerce companies grow
Before there was Red Stag Fulfillment, there were two eCommerce business owners learning some hard lessons about the impact of fulfillment on their business. Like many startups, they initially did their own fulfillment, shipping orders from their living rooms and garages. As their businesses grew, they outsourced their eCommerce logistics. When their businesses outgrew their homes, they found a fulfillment partner to do the work for them.
That’s where the trouble started. The fulfillment center couldn’t keep up with holiday orders, which meant the entrepreneurs couldn’t keep their promises to their customers. They watched their rapid growth slow to a crawl.
So, early in the new year, they went to the warehouse, only to find the floors strewn with trash, the warehouse associates demoralized, and their products stored haphazardly. As they worked to fulfill orders themselves to catch up with backorders, they decided to create a new kind of eCommerce logistics company. So they launched Red Stag Fulfillment, a client-centered 3PL whose central goal is to help online stores like theirs grow and scale.
“The way that such an enormous operation can still feel so personal is amazing. The fact that my one package, which may barely make a ripple in your business on its own, can be so trackable, that someone can hold my hand and give me such intense attention when I need it — that’s just so important to a business owner.” — Brenden Marquardt, Owner and Co-Founder, Homestead Brands, 99.93% on-time fulfillment | 10X company growth
Here are some of the ways that Red Stag Fulfillment services help eCommerce businesses expand and thrive.
Increased customer satisfaction
The first and most significant benefit of outstanding eCommerce logistics is customer satisfaction. Expertly packed boxes will arrive in perfect condition, with no damage to what’s inside. Accurate picking means fewer customer service headaches for you and your customers.
When fulfillment is done right, your customers won’t notice it. They will know only that they got just what they ordered and were delighted when they opened the box. That leads to positive reviews, turns customers into promoters, and builds brand loyalty. And those are all things you need to turbocharge your business expansion.
Fast order processing
The speed of order processing is just as critical as accurate fulfillment for making your customers happy. You don’t have much control over the delivery times, other than using expedited shipping, but fulfillment speed also impacts the customer order cycle time.
For example, Red Stag Fulfillment offers two levels of same-day fulfillment service. Orders placed by the cutoff time are guaranteed to ship the same day the customer makes an online purchase. So order handling time doesn’t add to the customer’s perceived delivery time, and your orders will arrive on time and in full.
Terrible fulfillment may come with a cheaper price estimate, but you can pay a hefty penalty in the long term. In addition to lost customers and lower sales, fulfillment mistakes cost you staff time to deal with problems and the expense of returns.
In addition, some 3PLs can reduce your shipping costs by passing on bulk shipping discounts. For example, Red Stag Fulfillment can negotiate favorable prices with shipping carriers because it is a high-volume shipper. That lets us offer discounted shipping to our clients, saving you money.
Flexible storage and staffing
When you run your eCommerce logistics in-house, your overhead for warehousing and staff is a fixed cost. However, when you outsource to a 3PL, you can flex your storage space and fulfillment services, paying only for what you use each month.
Fulfillment centers generally have tens of thousands of square feet of storage space. You can bring in more product to ensure you have stock on hand during your peak sales season and shrink your eCommerce logistics during slow months.
The ability to expand quickly is crucial for a fast-growing online store. Choose a 3PL that can grow with you so your fulfillment doesn’t hinder your growth.
Strategic warehouse locations
In eCommerce logistics, location matters. For example, the best West Coast fulfillment warehouse location probably isn’t Long Beach or Los Angeles, even though your goods may arrive at one of those ports. A fulfillment center in Las Vegas or Salt Lake City makes more sense because it can ship packages quickly up and down the coast as well as to other western states and the Midwest.
Using a 3PL gives you a competitive advantage because you can choose warehouse locations to reach your customers quickly, no matter where your business has its headquarters. For example, Red Stag Fulfillment can ship orders to 95% of U.S. addresses in two days or less from just two strategic warehouse locations.
Let the professionals handle your pick and pack and reverse logistics services
Perhaps the most crucial resource your business needs to grow is you. You need time to dream up new products, open new markets, connect with investors, and invent brilliant marketing strategies. Outsourcing your eCommerce logistics, including reverse logistics, is an excellent first step.
But to truly unburden yourself, you need a top-quality fulfillment partner. If you’re constantly putting out fires in the fulfillment segment of your supply chain, your 3PL isn’t supporting your business growth. When you choose an industry-leading eCommerce logistics provider like Red Stag Fulfillment, you create a springboard to grow your business.
Grow your brand with Red Stag Fulfillment
Red Stag Fulfillment is expert at shipping heavy, bulky, and high-value products. We are also experts at helping our clients expand their businesses. When companies come to us in a high-growth phase, our services help them meet their full potential.
“[Red Stag Fulfillment was] always very dependable. It was a given that, if an order got to them, it would be shipped on time.” – Tony Stucker, Owner, Pop-A-Shot: 100% on-time delivery with Red Stag | 200X company growth | 40X revenue growth
Red Stag is not the right fulfillment partner for every online store. But we can promise you that if our business is a good match for yours, we will make it our number one priority to help your business succeed. If you’re ready for outstanding eCommerce logistics, give us a call.
More about eCommerce logistics:
- How Efficient Logistics Systems Improve Your Supply Chain
- 3 Ways to Improve 2022 Logistics: An Interview with Lorrie Watts
- Tips for Faster Onboarding When You Switch Fulfillment Companies