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Growth calendar    Apr 14, 2022

How does the fulfilment network overtake traditional third-party logistics (3PL)?

Overview of the advantages that ecommerce businesses can gain thanks to a fulfilment network.

Today's market offers many solutions for eCommerce businesses planning to expand sales abroad. Over the years, logistics operators have developed lots of additional features and services to meet their expectations.

In turn, every ecommerce business looking for the best fulfilment solution must spend a lot of time comparing the services provided by various logistics operators. At first, the differences between offers may seem unimportant - most of them will relate to the essential elements of the fulfilment process: storage, picking and packaging, delivery, and additional services such as return handling. But on closer observation and more detailed analysis, the limitations of traditional third-party solutions become apparent.

This article highlights those aspects that are less obvious at first glance.

What is a third-party logistics company?

To get into the details of this comparison, we must start by briefly explaining what a third-party logistics provider is.

At its simplest, a 3PL company provides to other businesses (ecommerce stores) logistics services including inventory management, storage, and order fulfilment. The term is most commonly used to describe the outsourcing of ecommerce logistics processes. This means that an online store owner is no longer concerned about warehouse space, collecting orders, or shipping at competitive prices.

How does the fulfilment network work?

For a complete understanding of what comes next in this article, it is worth taking a moment to look at the following definition. A fulfilment network basically means access to the services of many third-party logistics providers with wide coverage, often spanning entire continents.

Depending on the speed of business development and a growing demand for the products offered, an online retailer is free to expand its sphere of influence. They have a single point of contact (customer service assistant) and access to a management system, giving a complete overview of orders and their statuses.

3PL vs fulfilment network: what might you miss?

We all know that logistics operations in the supply chain are not easy. They have many stages and require a lot of resources: people, time, and equipment. As a result, many ecommerce retailers decide to work with fulfilment services providers in order to generate cost savings.

However, it can then turn out that finding the right company is much more complicated than expected. Each of them has different rates, various warehouse capacities, offers different additional services, and often sets a high entry threshold.

Let us assume that a business owner or their employees accepts this challenge and decides to calculate and compare offers from a few suppliers on their own. What else should they consider? What might they not know?

Geographical coverage

Certainly not every ecommerce store will think about it at the beginning of its growth, but it's likely to prove crucial soon after. Most third-party logistics companies can provide services in a chosen location, e.g. within a certain geographic area or in neighbouring countries.

However, they may not always maintain warehouses in these locations, and products are shipped to foreign markets not from local distribution centers, but their home country.

The reach of a single operator is simply limited and providing fulfillment services in countries that seem promising can be impossible.

In a fulfillment network, it looks different. Thanks to the fact that there are numerous provider-partners, spreading the stock over several markets ceases to be a problem. It gives a lot of competitive advantages, so the retailer can:

  • decide to sell at places of high potential when the time is right,
  • set shipping costs at the same level as local players,
  • offer a delivery time between 24 and 48 hours even for far destinations,
  • choose a greener solution - domestic deliveries mean a reduced carbon footprint.

New markets sales trials

International sales have another aspect: sales tests in a new market. It's necessary to confront plans and expectations with reality by checking how the marketing works, ensuring that the core product set was chosen properly, and identifying any weak points to improve the process.

This may seem obvious, but some logistics providers set a minimum volume of products that should be stocked locally. For smaller ecommerce businesses this will make a colossal impact, since it could turn out that a large amount of their stock (more than they anticipated) has to be sent to the other side of the continent with no guarantee of a sale.

With a fulfilment network, such surprises simply don't happen because the main purpose here is to support online retailers and help them sell abroad in the easiest possible way.

Indefinite term contract

Let's also look at another hypothetical situation. What happens if the plan fails? What if the market isn’t ready for a certain offer, if advertising requires too much funding, or if prices on the local market are too low?

At times such as those it's crucial to have an emergency exit, which in this case means the possibility to cancel the contract at any time. Unfortunately, many 3PLs still don't give this opportunity - quite the opposite of a fulfilment network.

Launch date and integration costs

We have already mentioned that finding the right third-party fulfilment partner is time-consuming due to the number of factors that need to be compared. The search time itself isn't the only aspect that might keep business owners up at night.

Frequently, an exceptionally long time that is in fact lost for the business passes between the signing of the agreement and the launch of services. Moreover, many logistics operators charge extra for integrating their systems with the customer's software.

With in-network solutions, thanks to technological advancement and software possession, new customer (online retailer) introductions are fast, smooth, and without unnecessary stress or additional costs.

Growth & new sales channels opening

When we talk about the future, it's clear that we are planning business development. And growth often means entering new sales channels to increase customer satisfaction.

From a fulfilment operations perspective, the ability to link multi-channel sales through a single tool that allows effective order management and monitoring of the fulfilment stage is essential. Although we live in a high-tech world, only a few operators can provide this kind of system. It’s therefore worthwhile making sure that such a solution is also within reach.

A proper management system can ensure full control of inventory in each warehouse, provide information about returns (reverse logistics), and track orders from processing to the final customer delivery.

Solutions designed to match your needs

The ecommerce sector is evolving rapidly, and its global growth will accelerate in the coming years, As such, demand for smooth customer order fulfilment across the world will certainly increase too.

Choosing between third-party logistics providers and a fulfillment network is already fundamental for online businesses in the context of supply chain management. Competitive advantage solutions are the most significant here.

This is exactly what the Linker Cloud Fulfillment Network offers:

  • transparent pricing,
  • operational flexibility,
  • access to several markets at the same time,
  • no logistical minimums,
  • one agreement, one point of contact,
  • intuitive and user-friendly management system,
  • full integration support,
  • expert advice.

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Our platform is a living tool, created for ecommerce and its requirements. We are constantly working on further improvements and are proud of how much it can streamline our customers' work.

Don’t delay - pick the right fulfilment company now.

Business Development Manager at Linker Cloud. Experienced in logistics, passionate about supply chain and new technologies.

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