Fulfillment is a costly and time-consuming process for a business. Hence, most businesses do partnerships with a third-party fulfillment service provider.
It is anticipated that the Indian Ecommerce n market will reach $550 billion by 2035. This clearly shows that the ecommerce market is growing at an alarming pace today. As the market grows, customer expectations are even changing dramatically. They expect their ordered product to be delivered cost-efficiently and immediately. An e-commerce business needs to have efficient and robust supply chain management to meet customer demands. It may become challenging for small and medium enterprises.
They don’t have much money to invest in infrastructure or to manage staff. Improper operations and inventory management can lead to stock-out or overstocking issues. Also, delays in fulfillment of orders can decrease brand reputation in the market.
In such cases, third-party fulfillment companies can improve customer satisfaction. They have expertise and experience handling picking, packaging, and shipping operations.
What is Third Party Fulfillment?
Third-party fulfillment means outsourcing all the supply chain and logistics operations to a third-party logistics company. These supply chain operations or processes include warehousing, inventory management, picking, packaging, shipping, and returns management. A business taking care of all these operations solely can be quite costly and challenging.
3rd Party fulfillment acts as a bridge between the manufacturer and the customer. 3PL companies have fulfillment centers in various locations in India. Outsource Fulfillment companies near the target markets can quickly fulfill orders with fewer shipping costs.
How Third-Party Fulfillment Works?
1. 3PL Integration
A business should first select a reliable 3PL service provider. Various business owners give access to order and inventory management software to the 3PL fulfillment provider. This ensures that the business owner and third-party fulfillment provider are always updated about stock and inventories.
2. Send Product To Warehouses
You have to ship the goods and products to the 3PL fulfillment warehouse. The staff will inspect the products thoroughly to ensure they are not damaged. They will then keep the products in their designated location inside the third-party fulfillment warehouse.
3. Storage And Inventory Management
A 3PL fulfillment warehouse has an efficient and secure environment for storing goods and products.They keep in track of all the products stored in each shelf,bin and racks inside the warehouse.
4. Order Picking And Packaging
When a customer places an order, the third-party fulfilment provider will receive an update on it. The warehouse staff will pick up the ordered product from the shelf and do a thorough packaging. Proper packaging ensures that the product will not be damaged during the transport.
The packaged product should contain all the necessary details like brand name, order codes, and delivery information.
5. Weight Measurement
3PL fulfillment provider will next do the weight measurements like the product’s length, width, and height. It optimizes logistics costs and ensures that logistics provider regulations are followed.
6. Shipping
Now the products are ready for shipment.The 3PL fulfillment provider will select the shipping carrier based on numerous factors like product dimension, weight, cost, destination, traffic and weather conditions.
A reputed 3PL fulfillment provider will update tracking information for both the business and its customers. Hence you can keep track of the product journey right from the time it leaves the warehouse to the customer doorstep. It even has collaboration with multiple shippers to offer a business flexible choices in choosing a shipping carrier.
7. Return & Refund
Some customers will not like the ordered product and will raise a return request. The delivery partner will collect the item from the customer’s doorstep. It will be returned to the third-party fulfillment warehouse and further inspected thoroughly. If the product is in good condition, then the product will be stored back on the warehouse shelf. The third party fulfillment will then process the refunds according to its rules.
Third-Party Fulfillment Services – What Services offered By 3rd Party Fulfillment
Third-party fulfillment provides numerous services. We are underlining it below.
1. Warehousing
Warehousing and storage are the most important processes in fulfillment. A third-party fulfillment company has warehouses and fulfillment centers to store goods and products for a certain period. The products are stored safely and in an accessible area.
2. Inventory Management
Managing inventory is one of the hardest jobs in a warehouse. If it’s not done properly, it can cause losses to the business. Fulfilment centres are equipped with advanced technology like inventory management systems for tracking stocks and avoiding overstocking and out-of-stock issues.
3. Order Processing
3PL fulfillment company receives orders from the online stores. The staff will pick ordered products and do packaging and shipping.
4. Return Management
A third-party fulfillment provider manages return requests and processes refunds. It picks up the product from the customer’s location, inspects it, and, if it is in good condition, keeps it in the warehouse.
When a Business Needs to Adapt Third Party Fulfillment Services?
1. High Order Volumes
Whenever you start a business, you have a minimum of products. You can store them in your garage or house to fulfill customer orders. But whenever your business expands, you require more space to store products. Building a warehouse requires a lot of investment. It is because you have to purchase land, build a warehouse, pay staff, and more.
In such cases, adapting third-party fulfillment services can be beneficial for your business. You can store products in their fulfillment center, which saves you money on building warehouses.
2. Focus On Core Activities
If you solely manage supply chain and logistics, you must focus completely on various activities like transportation, inventory management, storage, and more. You cannot able to focus on important business development areas.
When you outsource all the supply chain and logistics operations to a third-party fulfillment company, you can focus on core activities like product development and exploration of new markets.
3. Delay In Order Fulfillment
If you are facing frequent returns or getting negative reviews because of delayed orders, then it’s better to outsource your supply chain activities to a third-party company.
4. Technology Gaps
If your warehouse is not equipped with advanced technology, like a warehouse and inventory management system, then you cannot track stocks effectively. This will make it challenging to maintain the stock levels. In such cases, you need to adapt third-party fulfillment services. A 3rd party fulfilment company is usually leveraged with advanced software, like WMS, TMS, and RMS.
Factors to Consider Before Outsourcing Third-Party Fulfillment
1. Warehouse Location: Ensure that the third party fulfillment warehouse should be situated closer to your target markets. That helps to fulfill orders faster and enhance customer satisfaction.
2. Technology: The third-party fulfillment warehouse should be leveraged with technology like warehouse and inventory management systems.
3. Scalability: 3PL fulfillment should scale its operations according to your business requirements. For example, it should have enough space to store products when your products are in high demand in a particular season or holidays.
4. Reputation: You should check the third-party fulfillment company’s reputation, reviews, and testimonials.
Conclusion
Managing a business solely will consume more time, effort, and money. It can even lead to wrong product delivery or more returns, which decreases the brand value in the market.
It’s better to outsource supply chain and logistics activities whenever your business expands to a third-party fulfillment company. This can bring various advantages to a business, like cost reduction and timely order fulfillment.
There are various 3rd party fulfillment companies, which may confuse you when choosing one. So, you need to check factors like technology adoption, scalability, and reputation before outsourcing your supply chain activities to a 3PL fulfillment.
AAJ Supply Chain Management
