The e-commerce business landscape is ever-evolving, with one glaring truth: peak seasons bring immense opportunities and challenges. As online retailers gear up for these high-demand periods, one critical aspect often makes or breaks their success- fulfillment logistics.
Handling the surge in orders, ensuring timely deliveries, and maintaining exceptional customer service can be overwhelming, especially when dealing with the holiday rush and special promotions.
This is where Third-Party Logistics (3PL) companies step in to offer their expertise and resources to ease the burden.
In this article, we’ll explore the crucial role that 3PL companies play in peak season fulfillment.
As a business owner, what are the questions that you should ask your 3PL provider to ensure a seamless operation during this busy season?
Navigating the peaks in e-commerce sales is similar to riding a roller coaster.
The exhilarating surge in orders is met with the daunting task of fulfilling them in the most efficient way possible. While growth during peak season is the goal, it often brings with it a few challenges such as: managing sudden spikes in order volume, optimizing inventory, and guaranteeing on-time deliveries.
Customer expectations are at an all-time high, with 22% of customers dropping out of an online session when shipping is slow. This makes it essential for retailers to rise to the occasion and deliver an exceptional shopping experience.
It’s precisely during these times that fulfillment logistics with a trusted 3PL company play a pivotal role in ensuring the success of your e-commerce business’ reputation and profitability.
If you’re currently working with a 3PL provider, you might find it unnecessary to evaluate their performance as the holiday season approaches. After all, why consider it when you have a strong working relationship and they consistently meet your performance expectations?
But even if your 3PL partner excels in coordinating your order fulfillment throughout the year, handling the demands during peak season is a different challenge.
As the peak season approaches, it’s crucial to engage in a conversation with your 3PL partner to touch base and assess their readiness for effectively managing your holiday fulfillment strategy.
To help prepare you for the upcoming holiday season, here are 6 questions you should ask your 3PL provider:
Retail is inherently cyclical, with activity surging in the months leading up to the end of the year. Hence, any seasoned fulfillment partner should possess the capacity to efficiently handle a surge in order volume within their fulfillment centers.
In practical terms, your 3PL partner should be proactive in analyzing sales and inventory data from previous years to discern the resources needed to meet customer demand effectively.
Here are some aspects that should be considered:
It’s essential to ask about your 3PL’s warehouse capacity and technology infrastructure. Are they equipped to efficiently handle and store the increased inventory that comes during peak season?
Having systems in place to mitigate the risk of possible equipment failure can disrupt operations. Getting a clear picture of how robust their physical infrastructure is ensures that they are ready to tackle a surge in order during the busiest times of the year.
With a sudden surge comes an increased demand for labor to ensure that products are picked, packed, and shipped promptly to ensure swift deliveries. Should your 3PL provider fail to scale up their warehouse staff during the holiday season, you’re more likely to encounter processing and shipping delays.
In the current tight labor market, it’s prudent to inquire into your 3PL’s fulfillment automation capabilities and understand how these could reduce their reliance on seasonal labor.
Having customer support readily available in the realm of e-commerce is paramount to ensure a positive customer experience.
This becomes even more critical during the holiday season when you’re likely to have a large proportion of first-time customers and heightened anxiety regarding on-time deliveries.
While a 3PL provider typically maintains preferred carrier partnerships throughout the year, it’s prudent to inquire whether they plan to broaden their selection during the peak shipping season. This question becomes especially relevant when unexpected fees inflate your shipping costs.
Peak season surcharges come into effect during the busiest periods, as a means for parcel carriers to navigate the increased operational demands that come with the holiday season. It’s worth noting that several shipping carriers may apply distinct surcharge structures.
Having a 3PL provider that has the multi-carrier platform to assist your e-commerce business in comparing these options becomes invaluable as they help you save on shipping costs.
Accurate inventory management is a cornerstone of successful logistics operations. With the peak season, the pace of inventory replenishment escalates.
Brands must ensure their 3PL partner’s ability to proactively manage this surge in inventory activity.
An efficient inventory management system should be an integral part of the services that your 3PL partner provides.
This system should be seamlessly integrated with your online store to facilitate real-time updates of inventory levels and reflect the latest sales or returns activities. This synchronization allows to you closely monitor order volume so that you can ensure adequate inventory levels to fulfill your pending orders.
Couriers & Freight’s 3PL dashboard allows you to have real-time visibility of your inventory levels so you can make informed decisions and manage your supply chain better.
This is a strategic process to evaluate and optimize a company’s Stock Keeping Units (SKUs). The unique codes or identifiers assigned to each distinct product or variant are called SKUs.
SKU Rationalization is the process of pruning SKUs in your product database that do not offer high returns. This allows you to free up storage space for better-performing product inventory during the peak season. Your 3PL partner should be able to assist you in identifying which SKUs should be retained or discontinued based on historical sales data.
Most 3PL companies add a shrinkage allowance to their Service Level Agreements (SLAs). This allows them to set a defined percentage to account for stock losses due to damage, loss or theft.
It’s important to recognize that shrinkage rates tend to increase during the peak season because of multiple factors. Thus, it’s advisable to engage in a conversation with your 3PL partner to clarify their strategies for lessening shrinkage at the very least.
While your regular inventory may not require specialized packaging or kitting, the holiday season often brings a different set of demands. Ask if your 3PL partner can provide value-added services such as gift kits, subscription boxes, and product bundles.
Custom packaging is a standout value-add, especially during the holidays when consumers anticipate offerings like free gift wrapping or promotional packaging.
This would not only distinguish your brand during a competitive time but would also add a touch of festive charm to your products. But it’s important to assess whether your 3PL partner can cater to this demand in their fulfillment process.
While it adds to your appeal, it may also extend order processing time - a critical consideration during peak demand periods. Discuss with your partner whether they have processes in place to effectively manage a custom fulfillment strategy.
Grouping multiple products into bundles is a well-favored holiday strategy. This allows e-commerce brands to repurpose excess inventory and enhance customer convenience.
However, kitting adds an extra layer to the fulfillment process as these product kits typically require manual assembly and packaging unless they are pre-produced sets from your supplier. Given the additional labor involved, kitting may incur an added expense in your fulfillment service.
There is often an increase in return rates due to the fact that gift-giving can be the major proportion of people buying things online. To prevent the buildup of a massive return backlog, inquire whether your 3PL partner has streamlined processes for managing returns.
One effective strategy is to include a Return Shipping Label in each package.
This eliminates the need for customers to seek authorization from customer support which can result in significant post-holiday return delays.
Trusted 3PL partners like Courier & Freight can offer this service and can seamlessly integrate a Return Shipping Label into their packing process to ensure a smooth post-holiday return experience for your customers.
Lead time measures the duration from order receipt to final delivery to your customers. This is a crucial metric for evaluating the efficiency of your 3PL partner.
It’s also important to recognize that lead times often extend during the holidays due to heightened sales activity.
Leading to the holidays, customers anticipate faster delivery options, such as two-day shipping or even same-day delivery. Meeting these stringent delivery timelines leaves minimal room for error or delay in your fulfillment process.
To ensure that your e-commerce business can fulfill these high customer expectations, collaborate with your 3PL partner and confirm their ability to meet these timeframes.
Revisit your Service Level Agreement (SLA) that you’ve established with your 3PL partner at the onset of your partnership. This initial agreement includes the expectations for their fulfillment services and includes crucial KPIs such as Shrinkage, Allowance, Time To Ship, Perfect Order Rate, Inventory Accuracy, and Shipping Timeframes, among others.
During the peak holiday season, 3PL providers have the discretion to add service requirements to accommodate higher order volumes. This is the main reason why it’s important to revisit your SLA and clarify with your 3PL partner whether there are amendments to be done on your current SLA.
By asking pertinent questions about peak season fulfillment, you can evaluate the capacity of your 3PL partner to handle surges in preparation for the holidays. It’s the strategic partnership and proactive planning that will empower your e-commerce business to navigate the holiday rush with confidence.
With logistics and supply chain operations experience since 2009, Couriers & Freight Australia is your best 3PL provider in Australia.
Servicing more than 128,000 accounts with locations in 21 countries, Couriers & Freight has the experience, infrastructure, and technology to be your ideal 3PL partner so you can navigate the peak season fulfillment and reap the rewards of your hard work throughout the year.