This is something that we’ve seen happen to a lot of our clients. When they first start out in e-commerce - whether they already have an existing retail presence or whether they’re starting out as a pureplay seller - they’re attracted to the ease and flexibility that 3PLs have to offer. On paper, this is true. 3PLs are great at taking a lot of the thought and the planning involved with setting up an e-commerce fulfilment operation out of the hands of the owners. They do everything. But that’s one of the main problems.
There comes a time for a lot of e-commerce companies when they realise that they’re not loyal to their 3PL. They also realise that the system doesn’t always have their best interests at heart. But despite this, they feel trapped. They want to find a way to get out.
It can seem like a Catch 22 situation: you want to give 3PLs control over their warehouse to make your life easier but, at the same time, you want to be able to manage their fulfilment when things go wrong, or when you're experiencing periods of rapid growth. The truth is, you can’t have it both ways.
3PLs have limits. While it would be dishonest to make blanket statements about every company out there, this is generally the picture that we get from our clients when they talk to us about making the switch from working with a 3PL to taking their fulfilment in-house:
While getting your fulfilment right is one of your main priorities, you’re never a 3PL’s number one priority. If you’re an online brand, looking to grow to a set target, you’ll need buy-in from a 3PL to support your growth plan. Finding this is incredibly difficult.
There are 3PLs that exist to support small companies. There are 3PLs which serve larger corporations. There are very few, if any, which are able to support the scaling of a company as it grows from a small business to larger entity.
Pressure is expected in a warehouse. Sales peaks are expected. So when there are high-pressure situations or an influx of sales, you don’t want the systems that you work with to buckle because they can’t handle demand. This happens far too often with 3PLs.
This is a big problem. Data is the lifeblood of most e-commerce companies. By having it all stored with a 3PL, you’re not in control of it. You need to own your data: being dependant on third parties is a dangerous game to play.
All of our clients who have made the switch from working with a 3PL to moving their fulfilment operations in-house with a dedicated e-commerce WMS did so because the benefits of making the change far outweighed the negatives. Here are 5 of the biggest benefits:
Simply by making the switch from working with a 3PL to moving fulfilment management in-house, you can make easy savings of 15-20%. This is also taking into account the cost that goes into investing in new systems. Combine the operational savings with the clear monetary advantages to working with an e-commerce WMS that easily integrates with all other critical systems and that prioritises cost efficiency above everything else, and the decision to move fulfilment in-house makes a lot of financial sense.
Ownership can never be overrated. One of our clients, a pureplay sportswear brand, stated that one of the biggest reasons that it was moving away from working with its 3PL was so that it could own its final customer touchpoints. Before working with Peoplevox’s robust WMS, there was a black hole between the point that a purchase was made and an order delivered. It realised that the only way to ensure that end-to-end consumer expectations were met was by having complete ownership over all fulfilment processes.
This ownership, in turn, had (and continues to have) a positive impact on our client's CSAT scores. When it’s known that every single process within the warehouse is working to ensure that the customer gets the products that they ordered quickly and accurately, the amount of related complaints completely dissipates. And by matching consumer expectations, loyalty improves and the number of repeat orders increases. Get it right, and customers come back. Safeguarding all aspects of fulfilment is a strong way to ensure this happens.
Peoplevox’s WMS is used by 130+ companies in 24 different countries. Although the implementation process is rigorous, it’s generally completed within 12 weeks. Which means that its impact can be felt, fast. We also offer 24/7 support, so our caring service team is always there if there are ever any questions that need answering. By investing in Peoplevox, our clients know that they’re not paying a vendor for some software. They’re investing in a partner dedicated to helping them scale.
When a business first starts out, it’s completely understandable that the employees won’t be able to handle everything that’s thrown at them. In this regard, a 3PL can make complete sense. Less to worry about. But as your company grows and stock levels, consumer demand and employee numbers become more predictable and dependable, it makes sense to walk away from the 3PL. It makes sense to use your available human resource. Better control, better results, better use of spend.