Third-party logistics providers (3PLs) have become an invaluable component in the e-commerce ecosystem. Retailers who operate online in any capacity have discovered how valuable these partnerships can be when fulfilling orders. By lifting much of the burden of warehousing, shipping, and returns off their shoulders, retail operations can concentrate on other aspects of their businesses and leave these crucial elements of their supply chains in the hands of experts.
In many ways, having a 3PL partnership is no longer a mere alternative or luxury for these companies – it has become a fact of life and a necessary means of survival. If any retailer hopes to stay competitive in the modern landscape, it must outsource at least a portion of its online order fulfillment to one of these experts. But why is this the case today, and what will the immediate future look like? To understand why 3PL is so critical to e-commerce and retail in general, it’s essential to understand the trends that have brought the industry to its current state.
Experiencing the Amazon Effect
One of the most significant drivers throughout retailing history has been convenience. Sears became one of the world’s largest retailers, thanks in no small part to its catalog, which opened up new possibilities for consumers who did not have easy access to a physical department store location. Supermarkets dominated the post-WWII era because they consolidated multiple categories into a single space to make grocery shopping easier in suburban sprawl. E-commerce emerged as a popular option because it gave people the power to shop from their own homes whenever they had the time.
However, it’s hard to argue with the idea that it was Amazon that transformed shopping online from a niche to a juggernaut. The online giant’s commitment to having the largest selection, fastest service, and greatest convenience has had a powerful impact on how people shop and retailers compete. Thanks to features such as two-day shipping and the company’s vast inventory, customers who buy practically anything from anybody online expect to find exactly what they want and have it delivered to their door within days, if not the next day.
Developing Stronger Fulfillment
The coronavirus pandemic has only accelerated the demand for online ordering that meets the Amazon-established standard for excellence. This is why it is critical for retailers of all stripes to take advantage of the advanced technology and expertise 3PL providers can bring to their operations. As a result, many of these companies have made significant investments over the past decade, adding new capabilities such as high-density storage, automated picking, and artificial intelligence warehouse management software to their arsenals.
The result of these innovations is that today’s fulfillment centers can meet the hefty demands placed on them by consumers. They provide shoppers with an inventory that includes what they’re looking for, logistics that get items out to them quickly, and an infrastructure for returns and exchanges that enhances customer satisfaction.
There’s no doubt that the pressures being placed on e-commerce retailers today are more significant than ever before. This is mainly due to the overwhelming influence of Amazon and the high standards it has set for the entire retail industry. However, thanks to the presence of 3PL providers and the technology they bring to the table, retailers small and large can position themselves to satisfy all customer expectations.
Beau Christian is Director of Marketing at WSI, a leading third-party logistics provider specializing in fulfillment, chemical warehousing, transloading, transportation, and more. Having the 17th-largest 3PL network in the United States, spanning more than 15 million square feet, WSI delivers tailored end-to-end supply chain solutions to customers who seek to increase efficiency, shorten lead times, deliver more reliable performance and minimize costs.
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