Contact Us: 252-985-1070 | 800-426-0162

Blog

Understanding 3PL Warehousing Costs

Third-party logistics (3PL) solutions are a value-added service for companies, including manufacturers, retailers and other businesses. Organizations often turn to us at Crown LSP Group to outsource warehousing and transportation services so they can focus on what they do best. Explore what you need to know about 3PL warehouse costs so you can get the most value for your budget.

Order Fulfillment Fees Explained

Understanding 3PL warehousing costs starts with considering the fees you might face when outsourcing the packing, picking, shipping and receiving of goods sent to fulfillment centers. These can include fees for warehousing and account setup in addition to the costs you’re paying for labor, storage space, services and more.

Warehousing fees are usually charged in one of the following ways:

  • Monthly flat fee: A 3PL might estimate your service costs based on your inventory and the services you may need and charge you the same fee every month. Flat fees make it easy to budget. This model is best if your order fulfillment needs change very little month over month.
  • Variable pricing: This pricing model is usually based on the cubic or square feet you use in storage, plus any service fees.
  • Rate card pricing: In this type of pricing model, you pay based on the weight of your inventory and where it is shipped. While this type of cost is associated in some warehousing fees, it is much more common in less-than-truckload shipping.

If you’re unsure about 3PL pricing and need to work with real numbers based on your current needs, Crown LSP Group can help. Our transparent and cost-effective solutions are flexible, so we can often find a great option for you that fits your budget. Contact us to talk about how much you may be able to save.

Common Types of 3PL Fees

Total 3PL costs can go beyond the price of storing, packing and shipping your products. The following fees are common, though what you pay will depend on your needs:

  • Transportation fees: These fees cover the cost of transportation for your inventory, from origin to destination. The fee is usually based on the weight or cubic feet of the products. If you’re forwarding products from one destination to another, additional fees may apply for unpacking, inspections, sorting and labeling.
  • Warehouse receiving fees: You will be responsible for fees charged by distribution centers or warehouses when they receive shipments from 3PLs.
  • Fulfillment center storage fees: Also known as an inventory storage fee, this is what you pay to store your products in a fulfillment center. The cost is usually based on the pallet space, cubic feet of storage space or bin space.
  • Pick and pack fees: These fees cover the cost of getting items from inventory and packaging them for shipment. Fees usually apply per item, and you can expect to pay extra for heavy or large items. If you have a large inventory, you may be able to seek a lower per-item rate.
  • Fulfillment fees: This is the shipping fee, which is often based on weight and volume. Sending inventory over long distances can also impact your rates.
  • Return fees: Also known as reverse logistics, these fees cover the costs incurred when a customer returns one of your products.
  • Inventory audit costs: You may pay this cost for an audit to make sure your records match your actual inventory. This additional fee is usually optional and can be helpful to ensure no mistakes have been made in shipping your products.
  • Kitting fees: These costs may apply if your shipments include a need for your 3PL to group or ship products together. For example, if you have a subscription box service, your 3PL team may build boxes every month by combining different products in one package. This assembly will cost an extra fee, which will depend on the number of products assembled as well as your order volume.
  • Setup fees: When you first start working with a 3PL provider, there may be a fee to open your account. The cost can vary depending on the services you need, the provider you’re working with and the size of your company. These one-time fees cover the admin and other costs associated with starting a new account.
  • Account management fees: These costs are ongoing and usually charged per month. The cost may vary depending on the 3PL service provider, your business needs and the services you are receiving. Account management fees cover the miscellaneous expenses not covered by other fees. For example, they can cover reporting, shipping labels, document storage and related costs.

Fees can vary widely, which is why you want to choose a 3PL service solution carefully. When you partner with Crown LSP Group, we provide bespoke solutions that meet your needs — so you don’t pay for services you don’t require. We’re also transparent about pricing, so you can budget accurately and understand any fees that apply.

Factors That Impact 3PL Costs

To keep 3PL costs low, it’s important to understand what could affect the price you pay:

  • Your 3PL provider: Every 3PL solution charges fees. Crown LSP Group is committed to saving you money and finding custom solutions that meet your service and budget needs. We’re your partner in offering value and exceptional services.
  • Special requirements: Unique needs, like eco-friendly packaging or special services for very heavy, large or fragile items, can affect your costs. Products that need special temperature control will also cost extra because of the added utility costs and special warehousing requirements. In general, the simpler your needs, the less you can expect to pay.
  • Distance: If your items need to travel far, prices may be higher — especially if your items need to pass through multiple hands or across international borders.
  • Services: The services you need beyond warehousing, such as assembly services, will affect your costs. Should you need fewer services, you can expect to pay less.
  • Volume and weight: Heavy and oversized inventory takes more space and is more difficult to move, so it typically incurs additional costs. The amount of inventory you have will also have a big impact on 3PL costs because volume determines how much storage or warehouse space you need.
  • Shipment volume and size: The number of shipments and orders will impact labor costs — and your fees. The average order size can impact your costs, too.
  • Hazardous materials: Hazardous materials need to be stored and shipped with extra caution and in special environments, which can add to your costs.
  • Special shipping considerations: Specialized transportation equipment incurs additional costs. If your inventory requires temperature-controlled trucks, for example, a fee may apply.
  • Inventory values and insurance needs: The value of your inventory can impact insurance costs and result in additional fees.
  • Stock rotation: If your inventory needs to be rotated, the extra work adds to labor costs and the amount you pay.
  • Cross-dock shipments: Cross-docking saves you time by allowing your inventory to move directly from one truck to another in the transportation process, reducing the amount of time your products spend sitting idle. This process is often an extra service with its own fees.
  • Other special considerations: Labor shortages, weather and other unpredictable events can all have an impact on costs and your shipments.

When considering 3PL costs, don’t forget to factor in what you’re saving by outsourcing. The costs of building warehouse space yourself or trying to maintain raw materials or finished products on your premises can add up.

Storing materials and products on-site can also increase your insurance costs and can harm your bottom line if anything gets damaged or goes missing. If you don’t have enough product to start manufacturing or shipping, the costs of keeping production lines idle can be significant — and unhappy customers who don’t get their items on time can slow your business growth. Keep in mind that you can save on these costs when you outsource 3PL solutions to a trusted provider.

Control Costs and Enjoy Quality 3PL Solutions With Crown LSP Group

Costs for 3PL service can vary widely depending on your service needs. At Crown LSP Group, we understand order fulfillment fees affect your bottom line. We offer custom solutions so we can bring you competitive pricing for the services you need.

Crown LSP Group is your partner in warehousing and transportation services. Contact us today to request a quote.

Read more

B2B Fulfillment: What Is It and How Does It Work?

Modern business relies on fulfillment activities to deliver goods and services to customers, whether in business-to-consumer (B2C) transactions or as a business-to-business (B2B) organization.

What Is B2B Fulfillment?

B2B fulfillment services concentrate on satisfying orders between one business and another instead of a business to an individual. This process can take many forms and often involves high-volume or bulk orders.

How Does B2B Fulfillment Work?

For example, a B2B-focused organization may deliver large quantities of goods to a wholesale company. In turn, the receiving company stores, sells and ships the products to retailers who make the final sale to consumers. Another common application is a corporate office with many branches that buys necessary operational supplies in bulk to take advantage of quantity discounts. The company can then allocate these resources to their satellite offices from their stockpile as needed.

Consistent delivery of goods and services is frequently essential to a business’s core purpose or operations. B2B fulfillment practices must be reliable, swift and efficient to prevent costly delays and support an effective supply chain.

The Difference Between B2B and B2C Fulfillment

While both B2B shipping and B2C fulfillment focus on order delivery, their characteristics can vary widely.

Shipping Differences

B2C e-commerce fulfillment generally involves higher numbers of smaller and lighter-weight packages. Parcel delivery services can easily transport and deliver these smaller packages affordably, leading many companies to offer B2C perks like free shipping.

In contrast, B2B orders are less frequent since they’re larger. Because of the volumes involved and the fulfillment speed necessary, shipping costs are generally higher.

B2B orders also often use freight carriers and work with third-party logistics providers like Crown LSP Group. These partners help broker freight on either a full truckload basis or through negotiated rates for less-than-truckload deliveries.

Receiving Protocols

B2B order fulfillment can be complex since customer demands may vary. Larger companies may require electronic documentation or value-added services like drayage and barcoding for better inventory management.

Similarly, a recipient may restrict deliveries by specifying certain days or times of the day for receiving. Narrow delivery windows can add to the shipping costs, and delays can result in penalties or denied deliveries.

Conversely, B2C orders generally carry no limitations. Parcel companies can deliver at any time of day or day of the week, usually with no documentation necessary.

When to Choose a B2B Fulfillment Provider

B2B fulfillment services are ideal for companies that have commercial customers or want to attract them. These specialized services can help you ship swiftly, efficiently and cost-effectively to meet your customers’ needs. Plus, effective B2B order fulfillment can create repeat long-term customers, reducing your cost-per-acquisition numbers.

How to Choose the Right B2B Fulfillment Provider

Consider several factors when identifying the best B2B partner for your company.

Flexibility

The B2B fulfillment process may follow similar steps for each company, but you need more than a cookie-cutter approach. A knowledgeable and experienced 3PL fulfillment provider works with you as a consultant to understand your unique business challenges and designs a solution to answer them head-on.

Scalability

Whether you have hundreds of B2B customers or you’re seeing your first sales, you need an agile partner. Carefully assess the 3PL company to ensure they’ll be able to handle increased order processing demands and support continued growth.

Capability

Your 3PL B2B fulfillment provider should offer an extensive range of capabilities for your success.

For example, many businesses choose to integrate warehousing services to maximize space. Companies also use their 3PL partner’s transportation network to achieve cost savings or meet specified delivery requirements. These benefits can be especially valuable for specialized needs, such as temperature-controlled storage and transportation.

Consider whether your prospective 3PL partner can handle extras like labeling and barcoding, which may be essential for inventory management. Offering advantages such as goods palletization and robust quality programs can ensure your products’ integrity on arrival. Other value-added services — like order picking and packingtransloading and cross-docking — can also help you take your business to the next level.

Service

Your ideal 3PL fulfillment partner should demonstrate a shared focus on your success through exceptional customer service. You should see your B2B fulfillment provider responding to issues and rapidly engaging to resolve them.

Plus, an experienced B2B fulfillment services company can help you proactively identify opportunities. As a result, your business gains additional efficiencies and cost savings while improving customer satisfaction.

Choose Crown LSP Group for Your B2B Fulfillment Needs

Crown LSP Group is a full-service distribution solutions provider in eastern North Carolina with extensive B2B fulfillment experience. Our team believes your organization has unique needs and deserves a one-of-a-kind fulfillment answer. That’s why we create custom strategies for our customers. When you work with us, you also benefit from scalability, flexibility and a commitment to partnership. Find out how we can help with a tailored solution for all your fulfillment needs, from warehousing to transportation.

Request a quote online, or connect with a team member for more information.

Read more

How Does Pick and Pack Fulfillment Work?

Fulfilling orders placed by your customers involves multiple processes associated with both receiving and shipping customer orders. Picking and packing is one of the earliest and most essential processes in order fulfillment. If you own a small business or an e-commerce company, you may be wondering how outsourcing the warehouse pick and pack process can benefit your operations.

Logistics companies can promise speed and efficiency because of the pick and pack process. But before you outsource this crucial process, you should understand pick and pack fulfillment, learn some picking and packing best practices and know the benefits of e-commerce pick and pack fulfillment.

Continue reading to learn more about pick and pack fulfillment with Crown LSP Group.

What Is Pick and Pack Fulfillment?

The pick and pack process is a part of the supply chain — the process that moves goods from the supplier or retailer to the customer. Picking and packing in a warehouse is the process that takes place after orders are placed at a store online. The fulfillment center finds products from shipments and re-packages them for distribution.

  • Picking: Warehouse picking means using a picking list for identifying and retrieving the right quantities of every product from the facility.
  • Packing: Packing means placing items in the correct box and choosing the appropriate documentation and packing materials. The package is then ready for labeling and shipping.

Pick and pack fulfillment is popular among internet or e-commerce businesses with customers across the nation or even around the world.

Types of Pick and Pack Strategies

As your company grows, you may need to adopt other strategies for picking and packing your orders. A warehouse that offers pick and pack services should use best practices and strategies that reduce errors and returns and save you money. These strategies include piece picking, zone picking, batch picking and wave picking.

Piece Picking

This picking and packing method is pretty straightforward — warehouse workers pick each item for an order by hand as they are received. The worker will take the order’s packing slip and move around the warehouse to pick the order’s items off the shelves. After the worker finds every item for the order, they will take the items to the packing station. There, the order will be packed for shipping.

For small businesses that receive just a few orders each day, piece picking may be the easiest strategy to use for picking and packing.

Zone Picking

For the zone picking method, areas of the warehouse are divided into zones. Workers assigned to these zones pick items from the assigned areas. If the order calls for items from multiple zones, workers pass items from one zone to another. Once an order moves through every zone where the items on the packing slip are, the order will go to the packing station.

This method is best for larger fulfillment centers. Since complex coordination is required for this method, you’ll need warehouse management software.

Batch Picking

The batch picking method refers to picking orders in batches rather than individually. This strategy is most efficient if you have a large number of orders. Every batch is comprised of items located within the same zone of the warehouse. Warehouses utilize the batch picking method so pickers have the most efficient path possible through the facility. This saves time that would otherwise be spent walking back and forth, so orders will be packed and shipped faster.

Batch picking can be an effective picking and packing strategy for businesses of all sizes. All of the orders can be picked at one time every day, so this method will be more efficient than the piece picking method, which involves picking the items for each order as you receive them.

Wave Picking

Wave picking combines the zone picking and batch picking methods. For this strategy, employees stay in a designated area but pick orders in batches in those zones rather than picking items for a single order at a time. The batch is then passed to the next area in the warehouse for picking.

Benefits of Pick and Pack Fulfillment

Should your business implement pick and pack fulfillment into your operations? To help you make your decision, consider the benefits of pick and pack fulfillment:

  • Cost-effectiveness: Pick and pack fulfillment can handle any order, so you can avoid minimum order charges. Additionally, items don’t need to be gathered from various storage facilities. This practice reduces time and costs associated with labor, streamlining the process and making it more cost-effective.
  • Quicker turnaround: Another benefit of pick and pack fulfillment is the increased packing and shipping speed. Orders will arrive to customers sooner with pick and pack methods that utilize organized and well-managed handling strategies. Warehouse employees will be trained to work efficiently and will know what goods to search for to fulfill orders and how to pack these items properly to prevent damage.
  • Organization: Any successful pick and pack system relies on an organized warehouse. Groups of items will be clearly labeled to make workers’ jobs easier and every worker will know where to find the items they need, avoiding wasted time.
  • Customer satisfaction: When performed correctly, pick and pack fulfillment ensures orders are filled properly and reach customers on time and without damage. When you work with a pick and pack company, you won’t have to worry about the wrong items being sent to your customers. Properly trained workers and an organized warehouse will ensure orders are accurate and your customers are satisfied with their experience.
  • Efficiency: A proper process for picking and packing streamlines order fulfillment by removing the middleman needed when items are collected from various storage facilities before being sent to another location for packing and labeling. This makes the entire process more efficient.

Pick and pack fulfillment can help your business manage order fulfillment and increase profitability. To enjoy these benefits, you should work with a company that provides pick and pack services.

Choose Crown LSP for Pick and Pack Service

At Crown LSP Group, we provide distribution and supply chain solutions, regardless of whether we’re warehousing raw materials or finished goods. In the current environment, many companies realize they need more safety stock beyond what they were previously keeping on hand, which is where our services come in. Additionally, our transportation department can provide shuttle service from the customer’s facility to Crown LSP Group and vice versa.

We are a proud, family-owned third-party logistics provider that is happy to offer flexible and scalable solutions to our customers. If you are interested in outsourcing picking and packing services, request a quote from Crown LSP Group today.

Read more

Value-Added Services in Logistics and Warehousing

Value-added services in logistics allow businesses to provide more comprehensive benefits, which has become an essential tool in increasing customer satisfaction. Using these services is especially vital in operations based on customer trust. Supply chain and logistics are some of the most competitive sectors and adding value can give your organization an edge.

What is a Value-Added Service (VAS)?

The term value-added services refer to the additional distribution and warehousing services offered by third-party logistics providers to business looking to outsource their supply chain operations.

Whenever logistics providers add value the right way, it affects the level of customer satisfaction, while indirectly increasing their bottom line. Service providers know the ins and outs of the business and they can assist companies in responding to customers’ needs. Companies partnering with value-added logistics providers can focus on their core business and work on being more competent in the market. Value-adding is not a one-time task — it requires continuous maintenance and 3PLs are working toward providing value-added services in conjunction with their more traditional offerings.

Adding value to your packaging and transportation process can give your company an edge in the market and enable you to stand out from the competition. Service providers offer a range of contributions that add value to your brand, but how do they do that? And is it advantageous? Let’s look at some offerings and how they can benefit your organization.

How Do Value-Added Services Help Improve the Supply Chain?

Forward-thinking companies use their supply chain to gain market share and get ahead of their competitors. Spending time and resources to keep this supply chain smooth has become a notable trend in the logistics industry. Forward-thinking entrepreneurs work toward maintaining supply chain excellence, and it has become a widely accepted business strategy in today’s market. Value-added logistics services are not only for customers but also for management. Consider these reasons behind the importance of common supply chain value-added services.

Staying in the competition and emerging on top will require a redesign of supply chains and traditional methods.

1. Increased Price Pressures and Competition

Previously, brand recognition and product features were more than enough to set companies apart but things have shifted. After commoditizing several products in the market, organizations need better methods to stand apart.

Brand equity and product innovation are no longer the only tools that can allow a business to set a higher selling price. Staying in the competition and emerging on top will require a redesign of supply chains and traditional methods.

Companies are using two methods to adapt to this trend. First, they assess cost-reduction strategies and create new techniques to build a more efficient value chain. These changes will allow them to retain a competitive edge. Second, companies are searching for strategies to provide value-added services that will enable them to meet savvy customers’ demands.

2. Outsourcing

As the market evolves, many companies are taking a step back to evaluate their core competency and some organizations realize that outsourcing part of the supply chain can be beneficial.

The marketplace continues to revolve around three pillars:

  1. Cost and quality of global manufacturing and distribution
  2. Information mediums and systems
  3. Product design capabilities

By outsourcing their supply chain and logistics operations, companies can breathe new life into their business. Still, without the correct systems, processes or organization management, the risk can rise to unmanageable levels. When their business model relies too heavily on outsourcing, companies must implement solutions to make up for off-site supply chain capabilities. The need for details becomes the foremost priority in an outsourced logistics environment.

3. More Complex and Shortened Product Lifecycles

Companies are under significant pressure to develop cutting-edge products and launch them to market quickly, without maximizing or compromising the integrity of their high-demand existing products. To meet this ever-growing need, companies require streamlined product lifecycle management processes, which emphasize new product launches, product discontinuation and design.

The primary benefit of product lifecycle management technology and processes is that it helps companies design products that can share components, operations or materials — reducing the risk of obsolescence write-offs, ensuring optimal use of all infrastructure investments and limiting increased costs when buying essential materials. In addition to all these benefits, it will also shorten the time to market. Companies can focus on product lifecycle management efforts in all these areas and buffer themselves against the risk of any unexpected cost increases, spontaneous obsolescence write-offs and underwhelming product launches. These practices will also enhance customer perception of your company and establish yourself as an innovative reformer.

Top benefits of using value added services

Top Benefits of Using Value-Added Services for Your Business

You can find several positive reasons to consider a 3PL provider for value-added logistics services. Here are a few notable benefits of value-added services that can readily translate to a competitive advantage for your business.

1. Flexibility

The most significant benefit of using a 3PL provider is flexibility. Partnering with them will allow you more flexibility in labor, space and equipment. They can offer all these components to enable you to meet your customers’ requirements more effectively. Some 3PL providers also offer extra physical space for a specific time as a value-added service, which could be a warehouse for storing rush inventory or a meeting space for discussing on-the-fly software updates. Labor resources are also available as part of value-added services. If any of your product campaigns require a more hands-on approach to attract your audience’s attention, a 3PL can quickly shift their staff to your project and keep your labor cost to a bare minimum.

2. Quality

A 3PL’s added-value services department is primarily a team of specifically trained staff who can assist you in executing specialized projects. With the assistance of a dedicated professional team working or overseeing any customization, you can focus on quality and work efficiency. The value-adding team provided by a trusted 3PL provider might collaborate with customers. They can outline the project, ensure accuracy and precision and take the necessary steps to complete the project on time.

3. Ease of Integration

Partnering with a 3PL provider’s value-added services enables the seller or company to work with one partner for all their logistics needs. A reliable 3PL can assist you in managing warehousing, transportation and all the value-added services you need. This help can make the process more seamless to integrate any updates or changes along the way. Keeping the product in a single fulfillment center can also minimize the cost of moving products and transportation.

Types of Value-Added Services That Improve Your Competitiveness

Types of Value-Added Supply Chain Services

In warehousing and distribution, value-added services go further than normal operations and can set you apart from your competition. Among these types of activities are cross-docking, transloading, palletizing, kitting, and return processing.

Here are some value-added service examples that decrease your costs and impact your business operations.

Cross-Docking

A cross-docking system allows companies to move products directly from the receiving dock to the shipping dock. This streamlined method saves space and eases manual handling in the distribution center. Cross-docking requires close synchronization of all outbound and inbound shipping movements and reduces the cost by decreasing stockpiling. Cross-docking also involves re-packing, inspection and labeling.

Transloading

The process of transloading requires more than one transport mode. Businesses primarily use this solution when one mode of transport, like land, air or sea, is insufficient to deliver the goods from the origin point to the destination. International shipments, which require multiple modes of transportation, are the best example of transloading. The international shipment process usually begins by air or sea, followed by a truck.

Transloading lets you arrange and sort the shipments before delivering them to the distribution center or warehouse. This streamlined process removes any expensive or unnecessary land transportation. All shipments get grouped upon arrival, eliminating the need for any distribution center.

Transloading also enables your business to save money by removing any less-than-truckload costs. In addition to benefiting the companies, the process is also speedier, thus bringing your customers more satisfaction. You can reach different areas with transloading by using various local and international shipment methods, increasing business possibilities and growth.

Palletizing

In palletizing, you place items or goods on pallets. Depending on the business and product, you may use manual, semi-automated or fully automated methods to put the shipments on pallets. Moving palletized products is more efficient, with a quicker delivery turnaround. With palletizing, you can move perishable goods faster and decrease the risk of spoilage. The palletizing process also reduces labor requirements.

With standard pallet sizes, you can optimize warehouse workflow and operations. Palletizing significantly reduces the risk of worker injury. Since the pallets are more durable than other shipping containers, they can allow you to carry more products at a single time.

Order Fulfillment Services

Order fulfillment services provide the highest customer satisfaction among all the value-added services, and it is one of the top value-added services in logistics. These services can simplify your supply chain and allow you to move your products faster. The order fulfillment services can help you delight your customers with a streamlined process and faster deliveries. This service includes in-house packaging with the latest technology tools. Order fulfillment services perfectly handle labeling and new product launches. When you employ a trusted partner’s help, you can increase your efficiency in handling operations and save a substantial amount of money on purchasing and maintaining expensive equipment.

Return Processing

Returns can cause financial and logistics problems, but they are an unavoidable part of doing business. Returns can require substantial effort and time and sometimes companies can get themselves in trouble trying to handle them. With value-added services, you can outsource your return processing. These service providers have dedicated warehouses and ample personnel to process and manage the returns as required. When a return arrives, workers scan it into the system to determine whether it’s possible to resell. Quick action can keep your business reputation intact and monitor the return patterns for insights.

Pick and Pack

Pick and pack is part of the order fulfillment process, but sometimes you need to pay some extra attention to ensure uniform packing and delivery of all products. A pick-and-pack service can streamline all your packages and deliver them before the expected date. Value-added service providers have the latest technology that assists them in finding the best route and double-checking the delivery address to reduce any chances of mistakes.

Kitting

The kitting process includes combining multiple products into a simple and easy-to-pick package. The process works in many ways, whether it’s banding two similar items or creating an integrated solution by pairing two commonly purchased products. This solution can significantly reduce transportation costs and delivery time. It can also slash your company’s combined costs.

What Are Customized Value-Added Service Solutions?

Value-added services can transform your supply chain, but it is not a one-size-fits-all solution. Service providers must understand a supply chain’s business model and weak spots. With an effective solution, you can optimize your supply chain’s operations.

Besides solving logistical challenges, an expert service provider can also provide other long-term benefits. Customized value-added services can build delivery models that will improve inventory and transportation costs, enhancing your operations and saving time and money.

Value-added service solutions can work on distribution channels to address your company’s trucking capacity and assist you with time-sensitive deliveries. Service providers can offer consultations and innovative solutions to address your trade landscape and warehousing requirements.

A significant benefit of customizing value-added services is an improvement of the supply chain by finding discrepancies in the process and taking corrective measures to improve them, so you can focus on customer satisfaction by providing optimum services.

Crown LSP Group Can Be Your One-Stop Solution for Managing Your Supply Chain

Choose Crown LSP for Managing Your Supply Chain

When you go toe-to-toe with your competition, it’s essential to partner with service providers who take care of your fundamental requirements while offering insights on distribution best practices to help you stand out from the competition. Being able to offer value-added services has become the latest norm in the constantly evolving market. Partnering with a reliable logistics service provider is paramount in optimizing your supply chain and distribution channel. Your partner should understand your business’s unique needs and deliver on them to achieve quantifiable results.

At Crown LSP Group, we can assist you with our value-added offerings and establish your business in the market. Take a look at the wide range of solutions we provide and get in touch with us for a customized value-added solution.

Request a Quote Today

Read more

How to Create an Ecommerce Fulfillment Strategy

To rake in consistent sales for your ecommerce business and remain profitable, you need more than a stunning website. You need a rock-solid and efficient ecommerce fulfillment strategy. By 2024 ecommerce will account for 21.8% of total retail sales worldwide. As more customers move online and ecommerce becomes very competitive, customers’ satisfaction will shift from product availability to speed and accuracy of order delivery. One poor experience and they may never return to your store.

According to a study by Retail TouchPoints, 88% of customers say they’ll pay more for same-day delivery. And Amazon set the standard for ecommerce fulfillment with their addition of the next-day delivery option. What does this mean for online businesses and the consumer goods supply chain?

To satisfy your customers, stay competitive and profitable, you need a reliable and effective order fulfillment plan. Discover what you need to know about ecommerce fulfillment below. Find out how to select a fulfillment strategy that suits your unique business needs and how ecommerce fulfillment services can satisfy your warehousing, transportation and distribution needs.

What Is Ecommerce Fulfillment?

Ecommerce fulfillment — also called order fulfillment — refers to the process involved in delivering online orders to customers. The entire process consists of several stages that include receiving and storing inventory, order processing, picking and packing items, delivering products to the final consumer, and handling returns.

There are various strategies for fulfillment and the method you adopt for your business depends on the following factors:

  • The size of your business
  • The volume of orders you process
  • The nature of your products
  • The size of your products
  • The location of your customers

From receiving the order to handing off the product to your customer, the ecommerce fulfillment process has many moving parts, no matter the strategy you choose.

what is e-commerce fulfillment

Top 4 Trends Influencing Ecommerce Fulfillment

Ecommerce fulfillment is undergoing a lot of changes. Here are three trends influencing ecommerce fulfillment now and moving forward:

  • Increased significance of ecommerce fulfillment: As more customers prefer buying online and getting their orders delivered to their doorsteps, the efficiency and speed of order delivery will become a major ecommerce success factor.
  • Rise in automation and robotics in fulfillment: As the demand for fast order picking, packing and delivery increases, robots and automation are helping to meet this demand.
  • Increased adoption of augmented reality: More augmented reality (AR) in ecommerce order fulfillment is helping warehouse operators navigate products, pick orders and fulfill orders easily and making the landscape more competitive.
  • Better decision-making with data: Customer and market data is helping retailers and 3PL companies make better inventory forecasting decisions. And businesses that gather and make use of data will win.

At Crown LSP Group, we provide the resources to help ecommerce businesses stay flexible and responsive to trends and changes in their customer and market needs.

Related: The Future of Warehouse Automation & AI

What is Involved in the Fulfillment Process?

Whether you partner with a 3PL ecommerce fulfillment company, work with a dropshipper or fulfill your orders by yourself, the process follows the same pattern.

The online fulfillment process starts from when a customer places an order on your ecommerce site to when you deliver the accurate order to the customer. Typically, it includes the following steps:

1. Receiving and warehousing inventory

This stage of the fulfillment process ensures you have the space to house your inventory to fulfill customers’ orders later on.

Inventory warehousing involves moving your products to an ecommerce fulfillment warehouse or a self-run warehouse — a process called inbound logistics —  and storing the products awaiting your customers’ orders. For small businesses, this could be a garage or a small store for storing products and accessing them to fulfill orders. But for a big and growing ecommerce brand that processes hundreds of orders daily, you need dedicated warehousing space or to partner with an ecommerce fulfillment center.

Effective inventory warehousing ensures the safety of your products. You can also consider your warehouse’s proximity to your customers for speedy and cost-effective order fulfillment.

2. Storing and managing inventory

This stage of the fulfillment process ensures you always have products on the shelf. Inventory management involves monitoring, forecasting and restocking inventory. The goal is to maintain an optimal level of product in the warehouse.

Inventory management is essential because too much inventory leads to poor cash flow, more payment for storage and the selling of outdated products. On the other hand, too little inventory leads to backorders and unsatisfied customers.

3. Tracking and managing orders

Order management covers everything about receiving and tracking orders from your customers. Proper order management involves integrating your sales channels — whether Shopify, Amazon, eBay or other merchants — with your warehouse management system to ensure real-time notification and processing of orders.

4. Picking, packing and shipping orders

The steps in the order fulfillment process involve picking, packing and shipping the right product to your customers. This stage in the ecommerce fulfillment process kicks in immediately once a customer places an order. Once the order is received, the correct product is picked from the warehouse, packaged and handed off to logistics for delivery. Proper fulfillment of online orders ensures picking and promptly delivering the accurate product.

5. Delivering products to consumers 

Order fulfillment is the most important part of the ecommerce process because it puts you in direct contact with your customers. According to a study, 54% of customers would not place an order because of high delivery charges and 25% of customers won’t place an order if the delivery will take too long.

Efficient and satisfactory last-mile delivery leads to happy customers and positive word of mouth. Those benefits translate to more customers and revenue for your online business.

Small businesses can easily pull this off with self-fulfillment or partnering with a dropshipper. But big ecommerce brands who want a predictable and accurate order fulfillment process can guarantee this with a third-party ecommerce fulfillment company.

6. Returning orders

Also known as return management, reverse logistics involves processing returned products, redelivering the product, refunding your customers and returning the product to the store for reselling.

Thirty percent of everything sold online is returned, either because of damage or wrong product delivery. How you handle reverse logistics influences customers’ satisfaction and their desire to keep buying from your store.

For example, 92% of customers say they would buy more from a store with a satisfactory return procedure. And 79% of customers say they appreciate free shipping for return products.

Ecommerce stores receive the most returns because customers often do not have physical contact with the product before buying. But a laid-out return policy can mitigate product returns for your business.

Return logistics can become complicated. While small ecommerce businesses can easily process returns in-house, big ecommerce brands would need to dedicate plenty of time and resources to effectively handling return products. One advantage of outsourcing the fulfillment process is that it frees you from this burden and creates more time for you to grow your business.

e-commerce fulfillment process explained

 

Considerations for Choosing a Fulfillment Strategy

The order fulfillment process you choose will depend on several factors. Each strategy will have its unique advantages depending on the following.

1. The size of your business

Smaller businesses or start-ups may not need a comprehensive order fulfillment strategy. They likely don’t have the order base to support the cost of outsourcing fulfillment.

However, if your business is scaling rapidly and you find order fulfillment challenging, dropshipping or partnering with a third-party logistics (3PL) company like Crown LSP Group can provide you with a cost-effective way to save time and money.

2. The type of products you sell 

The size and style of your products will directly affect your order fulfillment needs, especially when it comes to storage and shipping.

For example, products with hazardous materials have transportation limitations. Perishable items will have particular storage demands. The larger your items are, the more storage space you need and the more shipping may cost.

When choosing a fulfillment strategy, consider your product sizes and storage and shipping needs to fulfill them.

3. Your ability to keep track of your inventory

Inventory management includes tracking, storing, restocking and ordering new stock.

Selling out-of-stock merchandise could cost you a potential customer. However, ordering too many products could lead to unnecessary storage fees or a lack of storage space. If your items are perishable, this could lead to significant financial losses.

Dropshipping provides little to no control over inventory management, while a 3PL provider can take over inventory management so you can focus on marketing your business.

4. If you have warehouse space

Your choice of ecommerce fulfillment strategy might boil down to how and where you will store your products. Do you have the storage space for a reasonable stock level?

Small- to medium-sized businesses with smaller stock items may be able to store them in their basement or garage. Other times, the items may be too large or have specific temperature control needs. In those instances, outsourcing may make more sense.

Likewise, medium- to large-sized businesses with large order bases may benefit from partnering with a 3PL company as the cost of a bare-bones independent warehouse may not be financially lucrative.

5. How you will handle returns

As an ecommerce business owner, you will likely experience a high volume of returns, since customers cannot see the product before they buy. Customers love a solid return policy, so how you will handle returns is an important consideration. Processing returns includes providing a way for customers to send back damaged or unwanted items easily and for you to track the returns for stock planning.

If you manage returns in-house, you have control over the entire process, though it could be time-consuming, depending on the product type and the number of returns you receive. However, dropshipping affords the seller little to no control over the returns process and whether it will satisfy customers.

6. The cost of fulfilling orders

Your cost per order includes all costs associated with fulfilling an order, including fixed and variable costs, like the price you paid for the product, storage and shipping.

In some cases, outsourcing order fulfillment by dropshipping may make more sense if you want to keep the cost per order low as you won’t need to worry about the additional storage or shipping costs. You will only pay for the products you sell.

When you want more control over your products, in-house order fulfillment or partnering with a third-party logistics provider may make more sense.

Types of Order Fulfillment Strategies

The fulfillment strategy you adopt depends on your unique business needs. For big and growing ecommerce companies, there are several options including in-house fulfillment, dropshipping or choosing to partner with a third-party logistics company.

In-House Strategy

With in-house fulfillment, you do everything by yourself — warehousing, inventory and order management, order fulfillment and return management. You own your warehouse, purchase the needed insurance, software and equipment and hire and manage the staff needed. This process works well for small businesses but presents challenges for big and growing ecommerce brands.

Here are some things to keep in mind with an in-house strategy for your ecommerce business:

  • Operating a fulfillment warehouse is expensive: For an ecommerce business processing lots of orders daily, you’d need significant warehouse space, warehouse staff, equipment and tools to operate an effective and smooth in-house ecommerce fulfillment strategy. You’d also need to purchase workers’ compensation, fire insurance, auto, professional insurance and other insurances to protect your workers and inventory in the event of an accident or incident. Those necessary extras require financial and managerial resources that can otherwise be used in expanding your business.
  • Running a fulfillment warehouse demands time: Receiving inventory, storing, managing stock, packing and delivering orders accurately in-house demands excess time that can otherwise be used for marketing, working on your product or hiring the best talents for your business.
  • Scaling in-house fulfillment is expensive and slow: Scaling an in-house fulfillment warehouse to meet your customer orders demands funds and takes time. To meet increasing customer orders even with a dedicated warehouse, you’d need to build or lease a larger warehouse, hire more staff and purchase the needed equipment. This process can take time and may not be fast enough to meet your growing customer orders. If sales drop, you’d end up paying for warehouse space and tools that you may never use.

Dropshipping

Most ecommerce businesses go for dropshipping as an alternative to a self-fulfillment strategy. With dropshipping, you don’t buy or store inventory. Instead, you simply put the product up for sale on your site. When you receive an order, you channel it to the dropshipper that operates a fulfillment center and delivers the product to your customer.

Dropshipping is a very fast ecommerce fulfillment method for small businesses, but it poses various challenges for large and growing businesses. With dropshipping, you have zero control over:

  • Product quality: You do not control the quality of products delivered to your customers or the quality of services your customers receive. In cases of poor customer experience, you, not the fulfillment centers, bear the heat.
  • Customization and branding: Since another company handles the fulfillment operations, fulfillment warehousing and order fulfillment, most times you do not control the customization and branding of the product.
  • Inventory: You do not control your dropshipper’s stock level. If the dropshipper does not have the inventory needed to fulfill your customers’ orders, you may leave a lot of money on the table and grow a pile of disappointed customers.

Third-Party Logistics (3PL)

With a third-party fulfillment strategy, a 3PL provider handles all aspects of the order fulfillment process. This includes storing and managing your inventory, receiving and fulfilling customer orders and handling return logistics.

Partnering with a third-party fulfillment company ensures your inventory is properly stored and managed. You get up-to-date information on your inventory to ensure you have the right amount to meet your present and future customer demands.

Some of the common considerations when choosing a 3PL fulfillment strategy include:

  • Cost-effectiveness: With a 3PL company, you only pay for the space you use and for orders processed. All other expenses are covered by the 3PL order fulfillment center and factored into your fees.
  • Easy to scale: As your sales and inventory volume increase, you can easily pay for more space and staff. If sales decline, you can easily cut down on your expense. At every point, you pay as you use.
  • Versatile warehouse space: You can easily move from one fulfillment warehouse to another to get closer to your customers, deliver faster and operate more cost-effectively.
  • Access to skilled professionals: A 3PL company hires and manages warehouse and order fulfillment professionals so that you do not have to.
  • Time to run your business: Outsourcing your order fulfillment carves out more time for you to focus on marketing, stocking the best quality product and growing your business.

 

why you should choose 3pl fulfillment warehousing

Signs That You Should Outsource Fulfillment

Are you wondering if your ecommerce business could benefit from outsourcing order fulfillment? You may only need to outsource one or a few aspects. Our ecommerce fulfillment guide offers a few considerations to keep in mind.

1. Unpredictable sales cycles and seasonality

Frequent unused storage space, excess products with no room or unpredictable sales cycles can wreak havoc on your ecommerce business. Plus, an unfulfilled order could negatively impact customer retention. If it’s challenging to keep up with stock management, it may be time to consider outsourcing fulfillment with a 3PL provider.

A third-party logistics company will manage stock and track order trends to accurately predict the type and amount of stock you will need. Additionally, data insights from a 3PL provider can help you forecast sales dips so you don’t end up splurging on products you may not sell at certain times of the year.

2. Expansion of your target customer base

Nationwide and international shipping expenses can quickly add up, especially if you have a large, spread-out customer base. If you plan to expand your ecommerce business and ship across the U.S. or internationally, outsourcing fulfillment with a third-party logistics company may be the right order fulfillment solution.

A 3PL provider like Crown LSP Group can quickly and efficiently open a warehousing center nearer to your target customer base. We reduce shipping costs and ensure you have the stock available to support growth.

3. Costs that are challenging to predict or control

Most retail businesses have slower sales seasons, including ecommerce businesses. Depending on the products you sell, predicting or controlling costs associated with inventory and order fulfillment may be difficult.

For example, during slower months, you may not need as much storage space for your inventory. Unfortunately, unused warehouse space is lost money. Conversely, you may have an unexpected surge in sales without the stock, storage space or warehousing personnel you need to fulfill orders efficiently.

A third-party logistics provider can cost-effectively accommodate any unexpected dips or surges in order, storage and personnel demands.

4. Overstocking or understocking your inventory

Assuring you have the necessary kind and amount of stock at the right time is paramount to long-term business success. Overstocking could lead to increased storage costs while understocking could lead to a dissatisfied customer base if it happens too frequently.

It may be time to outsource order fulfillment if you’ve found it challenging to predict the amount of stock you need at specific points in the year. A 3PL company can monitor your inventory, track your orders and predict the amount and kind of stock you need and when.

5. Returns are becoming too hard to handle

Returns are inevitable for ecommerce businesses. There are many reasons your customers might return their products. The item could be damaged or different than they expected. Either way, if the seller is handling returns in-house, they are responsible for customer support, processing the return and restocking or updating inventory data.

Handling returns can quickly become time-consuming and unmanageable, especially if your company processes hundreds of orders or is scaling rapidly. A third-party logistics company can provide customer support, the process returns and manages inventory updates to dedicate your time to other aspects of your ecommerce business.

6. Not enough resources to handle the demand

When you can’t fulfill orders or meet customer demands, your business might suffer. Suppose you’ve found your company doesn’t have or can’t reasonably afford the warehousing facilities, technology or the number of personnel necessary to support a rapid influx of sales. In that case, it is time to outsource your ecommerce order fulfillment.

Whether you’ve experienced an unexpected surge or decline in sales, a third-party logistics provider will help you meet fluctuating storage needs, manage stock and have the staff to fulfill your orders and returns. You will only pay for the resources you need at any given time with the help of a 3PL provider.

7. You can’t focus on running your business

You must focus on the key responsibilities of successfully running an ecommerce business. Outsourcing will free up time, money and resources you can funnel into critical elements like marketing and customer relationship management. You can also maintain superior customer service.

work with a trusted 3pl provider

Work With a Trusted 3PL Provider Today!

As a leader among third-party logistics providers, Crown LSP Group is your true distribution solution company. We provide customized supply chain services like warehousing, transportation and logistics, value-added services and on-site warehouse operations for your unique business needs. Our North Carolina location ensures cost-effective inbound logistics and speedy delivery to your customers anywhere in the United States.

We have been providing the best warehousing and last-mile delivery services for retailers like you for over 30 years. We provide all the inventory management and order fulfillment resources you need to run a successful ecommerce business. Our goal is to become your long-term logistics partner.

We know your business needs are unique. We’ll work with you to provide a customer ecommerce fulfillment strategy that benefits you and your customers in the long and short term.

Contact us today to discuss your order fulfillment strategy and request a free quote.

Request a Quote Today

Read more