Rise of the 3PLs: How COVID-19 Is Driving the Need for Third-Party Fulfillment Expertise
COVID-19 has created an unprecedented level of growth for e-commerce. Here’s how 3PLs are responding to the demand.
Since Amazon became one of the biggest companies in the world, disrupting the way millions of people shop, global industries began to turn their focus to e-commerce. The change, though noticeable, was still gradual for most companies. Now, however, a new report claims COVID-19 has accelerated this shift by five years.
In Pitney Bowes’ State of the Consumer survey, the organization found that 54 percent of consumers shop online more than they did before the pandemic. And this isn’t expected to change much once restrictions lift. About 41 percent of that same survey group classify their lives as more or less “back to normal,” yet they’re still buying via digital storefronts. In fact, 45 percent of all consumers surveyed now accomplish more than half of their shopping online, nearly three times the adoption reported pre-pandemic.
Since lockdowns began in early 2020, online retailers have struggled to keep up with demand. Alternatively, traditional brick and mortar operations were forced to pivot their operations to stay relevant in this newfound digital-first retail world.
Months later, e-commerce brands are taking a close look at their supply chains, warehouse operations, logistics, and labor in an effort to grow and scale, while traditional retailers are busy developing a stronger digital fulfillment strategy to increase their chances of survival.
3PLS to the Rescue
The ability to fulfill orders quickly and accurately will make or break e-commerce and direct to consumer (DTC) companies in our current and post-COVID world. With the sudden increased demand and supply chain constraints induced by the pandemic, 3PLs are needed more than ever.
It’s no surprise that 3PL Central’s 2020 Benchmark report found that 79 percent of 3PL warehouses grew in 2020. Of that 79 percent, the companies that saw the most growth have a significantly higher concentration in retail, e-commerce, and omnichannel fulfillment. What’s more, the 3PLs that saw the most growth were 200 percent more likely to have established investment in or infrastructure for system integrations with online shopping carts and e-commerce marketplaces. Meanwhile, the 3PLs that concentrate on B2B fulfillment were at least twice as likely to have seen a decrease in order volume — or lose customers.
Now is the time for 3PLs to harness the increased demand for their expertise in the marketplace and drive growth for their companies. Those that offer the most dynamic services — while ensuring deliveries arrive on time and fully intact — have the biggest opportunity to take advantage of this moment. 3PLs benefit from strategic partnerships as well, particularly in the needs of packaging.
3PL’s Secret Weapon
Retailers and e-commerce brands know what their customers want, 3PLs know how to fulfill orders, and Pregis knows packaging.
With Pregis as a partner, 3PLs, and the brands they serve, can:
Reduce Damage Rates
The cost of reshipping a damaged package includes far more than the replacement merchandise, packaging, and shipping fees. By using the right protective packaging, you’ll also protect profits, customer satisfaction, a brand’s image, and most importantly, the environment.
Semi or fully automated packaging systems is one way to satisfy increased shipping demand. Polybagging machines drive packaging into warp speed, allowing teams to re-allocate labor to other key areas, thanks in part to the semi-autonomous features.
Pregis offers a full array of integration services to seamlessly incorporate Pregis’ packaging solutions directly into existing packaging lines, warehouse management, and predictive maintenance systems with real-time reporting. Our world-class application engineering services help customize packstations for maximum efficiency and dedicated field teams to address maintenance issues so that service is never interrupted.
Improve Customer and Brand Relationships
Pregis’ Inspyre paper void fill solution can be customized with branded artwork and colors to impress customers when unboxing. The HC Inspyre air cushioning also maximizes protection with proprietary square air chambers to make deliveries stand out.
Solve Problems and Innovate
Pregis IQ Center consults directly with customers to design, test and match them with effective packaging solutions to lower damage rates and ultimately re-shipping. With sustainability at the core of Pregis’ values, our EcoGauge calculator empowers our customers to understand and improve upon the environmental impact of their current fulfillment strategies,through eco-friendly solutions such as Renew and Easypack product lines, and shipping/packing best practices.
COVID-19 may have created a permanent shift in consumer behavior, so 3PLs need to be ready to take on this new DTC supply chain challenge on behalf of their customer base, and the marketplace.