Throughout the pandemic, we have seen more and more businesses opening online stores in various niches and growing their presence. But how are these businesses growing so rapidly? We all know that the key to running a successful business is having the right team, vendors, systems, and processes in place to keep the business running smoothly.
A lot of companies choose to use third-party logistics companies to effectively cut costs, improve efficiency, mitigate risks and drive more sales. In this blog post, we will talk about what are the key benefits of using a third-party logistics company.
What are the main benefits of using a third-party logistics company?
Third-party logistics companies offer end-to-end fulfilment, meaning that they offer a solution that helps with everything from warehouse management to inventory management. They pick, pack and ship the products you sell online. Here are some of the main benefits of using their services.
You save on shipping costs
These third-party logistics companies work with multiple carriers on behalf of their clients, meaning that they are in a better position to negotiate shipping rates than an individual company. Since they usually provide services for multiple companies, they have a high shipping volume, offering them more leverage when it comes to negotiating prices.
They help reduce operating expenses
Companies that use third-party logistics companies not only save on shipping costs but also get to bypass several in-house logistical and overhead costs, mainly when it comes to costs related to the staff and rent. For every warehouse you own, you have to pay rent, utilities, maintenance, and insurance. Not to mention the salaries and benefits of all those warehouse workers.
Better international logistics
If you’ve ever tried to ship an item to a friend using international postage, you will know that it’s expensive and frustrating – high shipping costs, customs fees, delays at the border and so on. When you sell products every day in many different countries, coordinating international logistics can quickly become a full-time job for multiple people on your team. These challenges got even more complicated thanks to the new EU tax regulations that just came into effect.
This is why using a 3rd party logistics company can eliminate a lot of the burden and hassle that comes with international shipping and logistics. They have years of experience navigating this terrain and know how to put the right process controls in place. This allows you to expand into international markets without the upfront cost, risk, and time investment of tackling international logistics in-house.
You have time to focus on growth
Outsourcing your logistics can give you more time to focus on the important growth in your business – like crunching data to forecast demand, analyze your stock, or improve your website. This applies to your team as well. If you combine this with the right inventory management software, you get more details about which SKUs are selling faster, sales trends, stock control, and account for inventory levels.
Potential market growth
Working with a third-party logistics company offers you a level of flexibility when it comes to expansion. If you decide to expand your business in other regions, a third-party logistics company can easily position you to make the shift. Access to distribution centers and warehouses means that you can ship your product wherever you want to grow your sales.
According to studies, consumers are predicted to maintain their online shopping habits acquired during the pandemic. This means there’s good potential for online sales growth in 2021. Worldwide eCommerce growth is predicted to be at 14.3% this year, representing 611 billion dollars in additional sales.
Improved customer experience
A streamlined logistics process means a better experience for everyone involved – including the customer. Third-party logistics companies improve the response times, brand reliability, and help reduce the risk of shipping issues that could frustrate the customer. This is important because a positive shipping experience that meets customer expectations is crucial to successful logistics.
It wasn’t that long ago when you had to wait for days or weeks for a delivery from an online purchase and that was normal. Shoppers have come a long way since then, nowadays they expect quick shipping thanks to Amazon’s business model and Prime shipping options. This shouldn’t come as a shock considering Amazon’s projected market share accounts for 50% of the total eCommerce retail market’s gross merchandise volume. They have effectively set a standard for the whole industry that can be challenging t keep up with, especially for smaller businesses that handle their logistics in-house.
Luckily for these businesses, third-party logistics companies are well-equipped to meet consumer demand for fast shipping. This means better customer satisfaction and more sales for your brand.