E-commerce scalability issues? 7 Ways a 3PL can help

Blog Post
E-commerce businesses facing scalability issues turn to third-party logistics (3PL) providers for solutions. Effective 3PL partnerships involve collaborative efforts to address scalability challenges, integrate AI automation, optimize overhead, manage reverse logistics, ensure real-time visibility, and provide multi-service support. Personalized collaboration and strategic alignment between businesses and 3PL partners are crucial for success, shaping how they navigate growth and enhance customer experiences.
fulfillment center with robots moving packages

When your e-commerce business starts showing scalability issues, you must answer some of these questions:

– Expand your eCommerce fulfillment infrastructure or outsource?
– Invest in more headcount or robotic automation?
– Modernize your tech stack or partner with cutting-edge vendors?

It’s at this point that retailers consider third-party logistics (3PL) companies as potential answer to the first question.

Rather than look primarily at what a 3PL can do for you, we encourage e-commerce leaders to go beyond and look at the ways a 3PL will work with you:

People often think of scaling as expanding up and out, fast. Think peak season order fulfillment. But thee last few years have drilled it home that businesses need to be able to scale down as fast as they scale up.

What they need is elasticity. It’s hard to get it with internal infrastructure. This is one reason that staffing up doesn’t work, and even temporary hiring (seasonal) doesn’t cut it when we’re seeing order volumes spike randomly. Any product can become a hit overnight. Then just as quickly order volumes drop.  
A 3PL should work closely with your teams to create an elastic capacity to scale service whenever you need it. Up or down. With predictable costs. They should get to know your business so well that they feel part of your teams and you can communicate openly and transparently with them at all times. They should also sync their technology with yours so that you are always on the same page. No surprises.

AI automation  
AI is here to stay, but you don’t need to jump in hastily or without a solid plan. Don’t let false urgency make your AI decisions. The generative AI craze will soon settle for more rational, strategic implementations. Many retailers are grappling with legacy technology and slower-than-hoped-for transformation. You are not alone.  
This is where a 3PL partner that is actively investing in AI automation bridges the gap.

Overhead reduction  
This is a tough one for every retailer. In today’s economy, cost reduction and containment are paramount – but so is levitating the customer experience (CX) to new heights.

Most e-commerce retailers cannot reduce overhead and scale internally without damaging the customer experience. Retailers also must consider the employee experience and brand reputation. Today’s employees are more burned out and disillusioned with corporate cost-cutting than they have been in years.

One of the cleanest ways to reduce overhead without harming CX is to bring in a 3PL.

Reverse logistics
Returns are a migraine for every e-commerce retailer. It’s become more so with the recent attempts to charge for returns and the ensuing loss of business.

Customers won’t have it, not while they can still get free returns elsewhere. Solving the returns problem is paramount; retailers bleed money when they don’t. Reverse logistics is an expensive operation to run.  
A 3PL that has a solid, efficient reverse logistics operation will bring that positive impact to you immediately. Without you having to invest in creating order from chaos. They should collaborate closely with your leadership team to understand your pain points and bring expert guidance in how to alleviate them.

Real-time visibility  
Many retailers assume they can buy software to solve this. Modern real-time visibility software is not the only factor.

Supply chains are diverse, complex ecosystems with a variety of technology systems in play. More importantly, a variety of communication styles. You need effective communication with people in the supply chain. 

Ask 3PLs how they will facilitate this communication along with visibility. They should value both and demonstrate how they implement it. It becomes apparent in the way they prevent and resolve problems before they impact the customer. Ask for proof.

When you scale order fulfillment, it’s predicated on the fact that your digital traffic has scaled, your payment processing has scaled, your fraud prevention has scaled, and your post-sale processes have scaled.

Many e-commerce leaders come to us knowing they need more than order fulfillment; few expect a 3PL can do more.  
Most 3PLs specialize in order fulfillment services. Radial understood long ago that e-commerce retailers need a variety of support – all of which ultimately impacts fulfillment. We also know that consolidating services into one vendor cuts out complexity, and that one-size-fits-all doesn’t account for the nuances of e-commerce businesses.

We offer fulfillment, transportation management, omnichannel solutions, customer care, and payment solutions (including fully managed fraud prevention and chargeback services) – and tailor each service to a retailer’s unique needs. Just as you would if you owned these functions inhouse.

We encourage retailers to evaluate the way a 3PL will work with you not just what they can do for you. Partnership matters. Accountability matters. Your customers cannot afford for you to be just another account at your 3PL.
You also deserve to have your 3PL championing your growth and future. Think of 3PLs as specialists and experts in their fields, with years of experience and a strong network of deep learning based on their clientele. That kind of expertise lends itself to be mentor, coach, advisor. On your side. There for you. Your best interests at heart.  

How you choose to scale your eCommerce business will have short- and long-term effects on your revenue and customer experience. Engaging a 3PL that will partner with you through your growth and provide the guidance, support, and expertise to help you make the best decisions for your business can be the wisest move. It’s not what they can do for you (as much as that matters), but how they do it with you that will make the difference.  

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