How Outsourcing Fulfillment Cuts Operational Costs

As a third-party logistics (3PL) and fulfillment provider, we talk a lot about shipping discounts and cost savings for ecommerce businesses, but are these claims true? Isn’t it cheaper and less risky to handle fulfillment yourself? These are big questions that deserve honest answers.

Key Takeaways

A good 3PL continually invests in technologies and services to become more accurate and efficient, which in turn makes their ecommerce clients more accurate and efficient.
When you outsource to a 3PL, they build and maintain the infrastructure, and the costs are spread across hundreds or thousands of other ecommerce businesses just like yours.
Access to unlimited space, an army of trained specialists, and advanced technology makes it easier to scale at your own pace.

How Do 3PLs Work?

A 3PL acts as an extension of your business, storing your inventory and handling post-purchase operations (order fulfillment and shipping) on your behalf. You pay the 3PL a fee for the warehouse space and services you use, and they turn a profit by providing these same services for multiple businesses like yours. A good 3PL continually invests in technologies and services to become more accurate and efficient, which in turn makes their ecommerce clients more accurate and efficient.

How Does Outsourcing Cut Costs?

Fulfillment and shipping costs can add up to as much as 70% of average order value. The problem is, as you struggle to become more efficient and lower those costs, the solutions (larger warehouses, automation, tracking systems, shipping, etc.) become a lot more expensive. When you outsource to a 3PL, they build and maintain the infrastructure, and the costs are spread across hundreds or thousands of ecommerce businesses like yours.

Leading edge technology – When you outsource to a 3PL, keeping up with the latest technology is our job, not yours. ShipMonk’s industry-leading 3PL platform integrates with 100+ sales channels, shopping carts, marketplaces, tools and apps, as well as back-end systems for financials, inventory, CRM, ERP, and more. As your omnichannel brand grows, we seamlessly add EDI integrations, retail distribution and international capabilities.

Lower overhead costs – With a 3PL, you won’t be paying for warehouse space you’re not using (or at least you shouldn’t be). At ShipMonk, merchants only pay for the space they use, and that figure is recalculated daily. Your monthly costs will vary based on the space and services you use that month, and you’ll be able to see exactly what you’re paying for. Learn more about ShipMonk’s transparent billing.

Better shipping rates – ShipMonk leverages huge shipping volume to negotiate significant discounts on shipping for our clients. Additionally, our Virtual Carrier Network automatically finds the best shipping rate and carrier for each order based on its destination, desired delivery date and carrier availability.

Better freight rates – As an authorized freight broker with a network of experienced, trustworthy carriers, ShipMonk can arrange domestic and international freight transportation services, overseeing both inbound freight shipments to our warehouses and outbound shipments to marketplaces and/or retailers.

Multi-node order distribution – A 3PL with multiple fulfillment center locations gives you the option to distribute inventory across the country, or around the world. ShipMonk’s first-party network of twelve locations puts your inventory within 2-day delivery of every major city in the US, the UK and Europe.

Section 321 Savings – ShipMonk’s fulfillment centers in Mexico and Canada can eliminate import duties for goods coming from overseas for fulfillment in the US. Learn more about Section 321 here.

More flexible shipping options – Our extensive relationships with shipping companies and multiple warehouse locations give ecommerce businesses much more flexibility. You’re not locked into set, single-carrier rates, but can offer your customers their choice of affordable shipping options.

High-efficiency pick-and-pack operations – Pickand pack services are the heart and soul of every 3PL. Our investment in robotics, automation, systems, AI and machine learning ensures proper placement of your inventory, same-day shipping, and 99.9% accuracy.

Bulk prices for packaging – We buy packaging in bulk and in all sizes, materials, and shapes, so you don’t have to.

Returns – Returns can pile up and cost you dearly without a process in place to handle them. A 3PL like ShipMonk has the space and dedicated team members to handle returns for you and help recover as much value as possible from what would otherwise be a loss.

Peak season experience – This isn’t our first rodeo. If your current fulfillment provider had trouble keeping up with holiday orders or tracking inventory in 2023, it’s not too late to switch partners. Read what our clients have to say.

Fulfillment expertise – It goes without saying that we’re logistics geeks. We love systems and figuring out how to make them work faster and smoother. Can you say the same about yourself? When you work with a 3PL, you have a whole team of geeks whose brains you can pick. Whether you want to talk about your tech stack, your packaging, or how to split your inventory, we’re here for you.

You’re in Control

We can’t say this enough. You’re the boss. We are on your team. Our order and inventory system allows you to monitor KPIs, track orders and inventory across multiple warehouses and sales channels, and easily access order histories and customer information. You can provide your own branded packaging if you choose, and we follow your packing instructions to the letter. Need last minute kitting or casing services? We’re on it. Adding international or retail sales? We got you. Best of all, having access to unlimited space, advanced technology, and an army of trained specialists makes it easy to scale at your own pace. You don’t have to sweat the small stuff, and can put more of your time and capital into growing your business.