Knowledge Hub

Using a 3PL warehouse vs your own

Improve your customers’ experience by making the right choice

As an ecommerce business, you want to do much more than simply deliver products to your customers on time. To achieve loyal customers, it can help to provide a convenient and memorable ecommerce fulfilment experience. When you shop for a product online, do you often look for a specific brand due to your trust in their business? Most of us have had a great ecommerce fulfilment experience that has turned us into loyal customers. A global survey about ecommerce by the consulting firm Capgemini found that 53% of customers who are satisfied with a company’s delivery services pay memberships for delivery, and 74% increase their spend with that retailer as a result.

Is there anything you can do to improve your customers’ experience? Do your customers feel valued when they make an order? One thing to consider when reviewing your e-fulfilment process is whether to use a third-party logistics warehouse or to use your own.

To help you ensure you are making the right choice, this guide explains how each option can contribute to customer satisfaction. We also provide tips on making the best choice for your business, to keep both you and your customers happy!

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How can managing your own warehouse benefit you and your customers?

Do you prefer to have complete control over your e-fulfilment process and how you present products to your customers? Managing your own warehouse can be beneficial if you like to play an active role in each stage of your ecommerce fulfilment. Many businesses choose to manage their own warehouse with an aim to delight their customers and provide an experience that is special and unique to their brand. Here are some of the benefits that managing your own warehouse can provide:

Personalised touches = loyal customers

Using your own fulfilment warehouse means you have more control over your branding and product customisation. This control allows you to add personalised touches to your product packaging. You may want to gift wrap certain items, for example. In-house ecommerce fulfilment can be especially useful if you offer subscription boxes or sell very fragile items. Your customers want to feel excited about receiving and opening a product. Unique packaging plays a huge part in this experience. Shipping products out yourself can also feel more personal to your customers, and many businesses take pride in doing this themselves.

You have more control over inventory and warehouse operations

One of the biggest benefits of owning your own warehouse space is having direct control over your staff and inventory. You can personally ensure that your products are stored, handled and taken care of properly. This allows you to decide whether you need a new picking system, equipment, or further staff training. Many businesses like to feel involved in this process.

Can be a more suitable choice if you have a very involved return process

If you have a specific and involved returns process unique to your business, you may want full control over this. Many businesses enjoy talking to their customers directly, building positive customer relations.

Can serve as a cost-effective option if you are a small or start-up company

If you are a small or start-up company and don’t struggle to keep up with customer demand, in-house ecommerce fulfilment can be more cost-effective. If you have the resources and time to run in-house order fulfilment on your own, why not try it?

A centrally located 3PL = quick shipping

Are you based outside a city without close access to motorways? Relocating your business can be a hassle. 3PL warehouses are often based in convenient, accessible locations. This means faster shipping, leading to customer satisfaction. You can also store inventory at multiple fulfilment locations near your customers, reducing time in transit and shipping costs.

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So, what about 3PL warehouses? Can they really improve ecommerce fulfilment?

Managing your own warehouse is surely an easier option than finding and paying a 3PL, isn’t it? You might be surprised to hear the answer to this is no – this isn’t always the case! Often, an ecommerce business will begin to use a 3PL fulfilment warehouse when they achieve business growth or higher customer demand, or they want more time to focus on other duties. Does this sound like you? Have a read of the benefits that a 3PL warehouse can bring to you and your customers:

A centrally located 3PL = quick shipping

Are you based outside a city without close access to motorways? Relocating your business can be a hassle. 3PL warehouses are often based in convenient, accessible locations. This means faster shipping, leading to customer satisfaction. You can also store inventory at multiple fulfilment locations near your customers, reducing time in transit and shipping costs.

High customer demand isn’t an issue!

Do you struggle to handle sudden spikes in volume or new products? This can be stressful when it leads to the hiring of new staff, purchasing new equipment or extending your warehouse. With the help of an outsourced logistics service, you can spend your time and money on other elements of your business!

Streamlined shipping and fulfilment solutions

3PL warehouses often have integrated systems that connect to online marketplaces and popular ecommerce platforms, such as Shopify and Magento, to send orders automatically to the 3PL.

Real-time inventory tracking and automated order tracking

So, won’t using a third-party logistics company mean you lose track of where your products are? Luckily, most 3PL warehouses give you the ability to track inventory and order progress, so you have insight into your products’ handling.

Lower distribution costs

Using a 3PL warehouse can often mean lower distribution costs, as they ship a larger volume of orders to certain locations.

Get speedy against competitors

3PL warehouses often provide shipping services that you cannot offer due to either costs or business location. Think same day and one-day delivery options to give you that competitive edge!

Save your time, save your money

A 3PL can often save you time and money due to the following benefits:

  1. Potentially lower distribution costs
  2. You don’t need to recruit and train new/temporary in-house warehouse staff when order volumes increase
  3. No longer managing your order fulfilment means you can spend time on other projects
  4. There is no need to purchase new equipment and acquire extra storage space if customer demand increases
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Choosing between in-house or outsourced fulfilment

So, how do you choose between both options? It can be helpful to consider the following factors:

Is your returns process very involved?

Your customers will expect a no-fuss return policy. If you have a very specific returns process and worry that a 3PL may not perform this to the same standard, you may want to handle this yourself.

Do you want to provide a personalised experience?

If you are passionate about delighting your customers with a personalised experience unique to your brand, managing your own warehouse is likely the best option for you.

Do you need more time to focus on in-house efforts?

Using a third-party logistics provider can help as you may want to spend time on other aspects of your business. This means you can finally focus on those other areas while they handle your logistics process.

Are you struggling with high customer demand?

Are you experiencing a dramatic increase in orders and struggling to keep up? You may not have the resources available to extend your warehouse, hire new staff or purchase new equipment. A 3PL warehouse can be a perfect solution.

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Where do you start with choosing a 3PL warehouse?

You’ve decided to use a 3PL, now what? The following factors are important to consider when choosing a 3PL warehouse:

Good location = speedy logistics

Try and choose a location that’s close to major transport links such motorways to ensure speedy logistics.

Storage and fulfilment cost

Budget carefully to ensure storage and fulfilment costs don’t use up too much of your operating capital. You should also ensure that your 3PL partner manages your stock effectively to avoid stock obsolescence. Regular slow-moving stock reports can highlight issues with your product range and marketing tactics. Slow-moving stock reports are especially important where there is perishable stock, as you need to ensure regular stock turnover.

Distribution costs

A 3PL can often offer cheaper carrier/courier rates than a small ecommerce brand can secure, so it is worth looking for a service provider with lower distribution prices.

Stability

Do your research, and try and find a third-party logistics provider with a good track record. After all, research makes perfect.

Attention to detail

Your customers deserve to feel appreciated. Choose a service that offers the same attention to detail in their fulfilment service and logistics operations that your own warehouse would provide.

Think modern

A modern warehouse management system and advanced technology can increase the speed of fulfilment operations and shipping. This will ultimately ensure a more efficient service, keeping those “where is my order?” emails at bay. Some 3PL warehouses also offer multichannel customer response centres to further improve communication.

Look for scalability

A shared-space environment is a key advantage of outsourcing a 3PL. The provider balances the needs of multiple customers, allowing them to meet peak requirements without investing in permanent space. This means they can scale operations to accommodate business needs, and if your needs change, your rates do not change unless there is a new service or profile update.

How much will a 3PL warehouse cost?

The cost of a 3PL warehouse depends on the following:

  1. Location
  2. Dedicated or shared warehouse services
  3. Your needs and product characteristics

On-demand warehousing platforms vs 3PL warehouses: what are the differences?

A 3PL is ideal if you want more time to devote to the rest of your organisation. An on-demand warehousing platform finds warehouses that have space for you to use. 3PLs run their own fulfilment centres and have visibility into what’s happening inside all of their warehouses. Using a 3PL warehouse can feel more secure, as you are working with a team you have built a relationship with, in a set location.

Are you struggling to improve customer satisfaction? Linney can take the pressure off

Linney understands how important ecommerce fulfilment is in making your customers happy. We can ensure your products are handled with care and delivered to your customers quickly to provide a memorable ecommerce fulfilment experience. From stock management to managed ecommerce, and order fulfilment services – we can take the pressure off your hands and help you achieve customer satisfaction.

Our online tools and fully configurable reports provide the visibility you need to facilitate stock management, replenishment, manage budgets, track orders and demand, as well as set automatic stock level triggers and destroy old stock.

You can find out more about the full range of services we offer here.

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