Anyone who has sold products both online and in a bricks and mortar store knows there’s one huge difference, other than the obvious difference in technology. Customers go to stores to find a product and go home with it. With ecommerce they go to a website and the product is shipped to them.
Whether you’ve been running an ecommerce site for some time, or you’re just starting out, getting products into your customers hands will always be a challenge. Generally speaking, it means you have to set-up the logistics infrastructure of storing or warehousing the products you get from suppliers, fulfilling orders and shipping them to you customers.
There are there main models for managing those logistics.
1. Use a Dropshipper
You can get your products from a dropshipper who will deliver your orders directly to your customers. Many ecommerce entrepreneurs find this an attractive option. It lets you run your business with little more than a computer as you outsource just about every non-core task of your business. You need no warehouse space, no need for order fulfillment and shipping is all taken care of for you.
But the downside of using a dropshipper is there’s a good chance they’ll start dropshipping similar products for others, if they’re not doing so already. In addition, you give up control of a large part of your business, including quality control and speed of delivery. And customer support, including returns, can get tricky.
2. Do it Yourself
Stories abound of people using every available square inch of their homes to warehouse products and fulfill orders. If you have the space, this can be a very economical option. Alternatively, if the business outgrows any space you have readily available, you can find warehouse space and manage receiving, fulfillment and shipping yourself.
But, aside from surrendering living space to your business needs, the major problem with this option is that it does not easily scale with your business. Stories abound of either the home being overrun by the business and/or the company being unable to fulfill all the orders that come in. And yet other stories of fledgling companies who rushed out to meet demand by getting into a warehousing contract, only to be stuck with the overhead when sales cycled downward.
3. Work with a Third-Party Logistics Company
Also known as a 3PL, the name explains exactly what they are, an out-sourced company that handles all the logistics of your supply chain for you.
Like a dropshipper, the first benefit of using a third-party logistics company is that you don’t have the headaches of managing your non-core business functions. That leaves you more time to develop products, solutions and new markets.
Unlike a dropshipper, every aspect of your business remains visible to you and in your control, including warehousing, inventory and EDI. And a full-service 3PL will also manage your reverse logistics, including customer service and returns.
Perhaps best of all, you can choose 3PLs who will not require that you enter into a contract, meaning you can scale the logistics you outsource in real-time with your business needs. In other words, you won’t pay for anything you don’t use.
There’s yet another major advantage to 3PLs that most people don’t consider; one that can ultimately save you money. By partnering with a 3PL, you give your business, regardless of its size, instant up-to-date expertise in a large part of its operations. 3PLs are specialists in supply chain management, warehousing, inventory control, order fulfillment, shipping, transportation, last-mile deliver, customer service and so much more; all instantly working for your company, at a much lower cost than sourcing and retaining all that expertise yourself.
If you want to find out more about how a third-party logistics company can help your ecommerce business, call us here at PiVal. We’re ready to go.