For growing companies, outsourcing logistics to a 3PL can ensure resilience, scalability, efficiency, cost control and customer satisfaction. Whether you need your 3PL to handle inventory management, warehousing, fulfillment, packing and shipping, outsourcing these internal processes to an expert can optimize them and help you focus on core business activities.
However, outsourcing also comes with risks and challenges; the benefits or drawbacks will depend on the provider you decide to work with. In this blog, we'll explore the advantages and disadvantages of 3PL services and provide some helpful guidance on when outsourcing logistics could be the right choice for your business.
Potential advantages and disadvantages of 3PL services
There are benefits and drawbacks to consider when outsourcing fulfillment, so the decision to outsource logistics isn’t clear-cut for all companies. In fact, the disadvantages might outweigh the advantages in certain cases, complicating the decision even further. Below, we’ve compared some of the top factors a business should consider.
Advantages & disadvantages of 3PL services |
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| Advantages | Disadvantages | |||
| Scalability | Your 3PL can enable your business to scale up or down as needed during seasonal demand or seasonal growth. | Scalability may require long-term contracts that can be restrictive if your business needs unexpectedly change. | ||
| Cost savings | Access to your 3PL’s negotiated shipping rates can help reduce costs. | Outsourcing costs and fees can be high, potentially outweighing savings for smaller companies. | ||
| Technology | Your 3PL might provide access to cutting-edge technology, such as proprietary warehouse management system (WMS) software, real-time tracking, advanced data analytics and more. | Integration challenges might occur if your 3PL’s technology is incompatible with your IT infrastructure and systems. | ||
| Geographic reach | Nationwide or global fulfillment can reduce shipping time. | Limited control over where inventory is stored, potentially leading to shipping delays. |
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| Business support | Outsourcing can enable your business to focus back on core business activities. | Outsourcing removes a level of direct control over fulfillment processes. | ||
| Expertise | Many 3PLs have logistics expertise, carrier partnerships, regulatory knowledge and more. | Not all 3PLs provide the same level of service, and a poor choice can lead to disappointments and unexpected disruptions. | ||
When the disadvantages outweigh the advantages
While outsourcing to a 3PL can provide several benefits, it's not the right choice for every business. Businesses that lack stability in order volume, have highly specialized needs or require complete control over their fulfillment operations might find certain challenges and disadvantages outweigh the benefits of outsourcing.
For example, startups with low order volumes may find outsourcing costs too high. Further, companies that offer highly customized, fragile or highly regulated products might face unexpected challenges if their 3PL can not support those unique requirements.
If a company is heavily invested in its own logistics infrastructure, switching to a 3PL might not provide enough cost savings to justify the move. Ultimately, the decision to outsource boils down to whether or not a 3PL provider can optimize the efficiency of your business's internal processes.
Is it time for you to outsource fulfillment logistics to a 3PL?
There are clear signs that indicate when it might be a good time to outsource to a 3PL provider. Below, we’ve listed some of the top challenges companies face when handling fulfillment in-house and suggest when it might be time to outsource some or all of your logistics operations.
When you should consider outsourcing logistics to a 3PL provider |
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| Struggling with order volume | If your team can’t keep up with demand, bottlenecks and delays, it can damage the customer experience. A 3PL can help support business resilience and enable you to handle peak periods without disruptions. | |
| Inconsistent shipping times | Customers want fast and reliable shipping options. If you’re currently unable to offer this to clients, working with a 3PL with strong carrier partnerships can improve delivery time and reduce costs. | |
| Limited storage space | Running out of storage space or needing to rent additional space is costly. A 3PL could provide you with access to scalable warehouse solutions across multiple strategic locations. | |
| High shipping costs | Are you struggling with high shipping costs? A 3PL can negotiate better carrier rates, optimize shipping routes and reduce overall logistics expenses. | |
| Fulfillment errors | Scaling operations can increase the number of mistakes. Working with a tech-enabled 3PL can help reduce errors and improve fulfillment accuracy. | |
| Managing returns | Reverse logistics can be complicated and expensive. A 3PL who specializes in the returns process can overcome challenges and ensure happy customers. | |
| Omnichannel fulfillment | Managing multiple sales channels, such as ecommerce, marketplaces and retail stores requires a centralized fulfillment strategy that many leading 3PLs can provide. |
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Choose Cart.com
Outsourcing to a 3PL provider can lower costs, improve efficiency and give your business a competitive advantage. However, providers’ services aren’t created equal. Choosing the right service is crucial to maximizing benefits, reducing risks and navigating potential future challenges.
Cart.com provides best-in-class 3PL services, advanced fulfillment technology and access to a nationwide fulfillment network—all designed to support fast-growing businesses and brands. Whether you need scalable storage solutions to optimize your in-house fulfillment processes or to branch out into omnichannel fulfillment with fewer disruptions, our team of experts is ready to help.
Contact our team today to learn how you can expand and optimize your business operations.
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