To thrive as an ecommerce business today, you must be able to deal with constant changes and challenges in your supply chain caused by various factors, including:
- Seasonal spikes – During periods like the end-of-year holiday shopping season, ecommerce businesses experience a surge in orders. In the final two months of 2022, for example, online shoppers spent a record-breaking $211 billion, marking a 3.5% increase from the previous year. In order to deliver orders on time to customers during the holidays and other peak periods, your ecommerce business must have the capacity (in terms of your workforce, warehousing, fulfillment operations, etc.) to handle significant spikes in demand.
- Supply chain issues – Severe weather events, labor shortages, Covid-19, and other factors have caused supply chain volatility and disruptions in recent years – and this trend is expected to continue. To cope with these unpredictable supply chain dynamics, your ecommerce business needs to have operational agility.
Many ecommerce companies enlist third-party logistics (3PL) providers to help them handle their logistics operations (including order fulfillment and inventory management).
Traditionally, however, engaging a 3PL required that you to enter into a long-term contract with storage and throughput commitments and hefty price tags.
In recent years, a new breed of 3PL has emerged, offering a menu of on-demand services that you can pick and choose from depending on changing supply chain dynamics and your evolving business needs. One of these 3PLs is Amazon Multi-Channel Fulfillment (MCF), which allows you to use Amazon’s fulfillment network on demand to store, pick, pack, ship, and deliver your orders from off-Amazon channels.
An increasing number of ecommerce businesses are choosing to use 3PLs on demand – whenever and wherever they need additional logistics capabilities.
In this blog, we explore the three key benefits of using an on-demand 3PL provider to handle your ecommerce order fulfillment.
#1: Flexibility
One of the primary benefits of engaging a 3PL to provide on-demand order fulfillment is that it gives your business the flexibility you need to cope with sudden swings in demand and unpredictable supply chain shifts.
If you handle your order fulfillment in-house or outsource this to a traditional, contract-based 3PL, you have limited capacity (in terms of your workforce, warehouse storage space, and picking, packing, and shipping resources). You can probably get by operating with these capacity constraints – until you hit a surge in demand, like during the holiday peak shopping season. During these times, you must be able to quickly expand your capacity so that you can manage high order volumes and meet customer expectations for a speedy, seamless fulfillment experience – and a 3PL that offers on-demand fulfillment services can help you with this.
By engaging MCF, for example, you can:
- Leverage the world’s largest fulfillment network – which has over 2,000 facilities (including more than 200 fulfillment centers, 120,000 trucks, vans, and planes, and 1,275,000 associates and partners – on demand to fulfill your customer orders whenever and wherever they are placed.
- Give your customers the first-class Amazon fulfillment experience that they know and love, across all your off-Amazon channels (including your brand website and social media stores) and throughout the year (even during the holiday shopping season).
- Get simple, pay-as-you-go pricing for storage and fulfillment – with no contracts or hidden fees.
Online costume retailer HalloweenCostumes.com uses MCF to provide the storage and fulfillment capacity needed to efficiently handle a 15x increase in order volume during the company’s peak shopping season (from 6,000 orders per day in the off season to up to 100,000 orders per day during the three months leading up to Halloween). Read the case study.
HalloweenCostumes.com’s Chief Financial Officer Matthew Burkett explained, “We have been growing so fast that our operations reached its limit to handle the influx of peak season orders. We knew we needed a 3PL to not only help diversify our supply chain, but also to supply additional operational capacity and personnel to guarantee our fulfillment runs smoothly during peak.”
“I would recommend MCF for companies looking for help during peak season. MCF does a great job of offering us the flexibility we need depending on our seasonal volume so that we have a successful holiday, every time,” he added.
Using a 3PL that provides on-demand fulfillment services can not only give you the capacity you need to manage surges in demand during peak periods, it can also give you the ability to easily scale down your operations during slow shopping periods.
With the on-demand model, you are not locked into long-term contracts and obligated to adhere to volume and throughput commitments with your 3PL provider. You have the flexibility to throttle up, slow down, or switch off your 3PL services at any point in time – depending on your fluctuating supply chain dynamics and changing business needs.
#2: Efficiency
The second key benefit of using a 3PL for on-demand ecommerce fulfillment is that it can enable you to achieve greater operational efficiency and reduce overhead costs.
Managing your order fulfillment in-house can be challenging and costly – but engaging a 3PL can help you streamline your operations and improve your bottom line.
By engaging a 3PL to provide on-demand fulfillment services, you can:
- Optimize the efficiency of your order fulfillment operations from online checkout to delivery at your customers’ doorsteps.
- Eliminate the need to hire staff to manage your order fulfillment as well as the need to make significant investments in logistics infrastructure and equipment – thereby cutting your overhead costs.
This was the case for smart home device retailer Wyze, which saw a dramatic improvement of over 50% in click-to-delivery speeds as well as a significant drop in operating costs after using MCF (along with order management solution Pipe17). Watch the customer success story video.
Wyze’s Principal Technical Program Manager Eric Morris summed it up: “With MCF and Pipe17, we’ve been able to automate our order fulfillment process, cut our delivery times in half, and leverage Amazon’s fulfillment network to provide a Prime-like experience for customers – while, at the same time, reducing overhead in terms of full-time employees needed to manage our order fulfillment operations.”
By allowing you to tap into your 3PL provider’s network, resources, and expert team whenever you need them, on-demand 3PL services can enable you to boost your operational efficiency and your bottom line.
#3: Ability to scale
Another important benefit of using a 3PL for on-demand fulfillment is that it can give you the capability to easily and effectively scale your business across new markets, product lines, and sales channels.
Let’s face it: The business world is constantly changing and – in order to capitalize on new opportunities – you must be able to adapt your business plans and adopt new ones as well.
Whenever, wherever, and however you want to expand your ecommerce business, 3PLs that offer on-demand services are there to provide the logistics support you need.
MCF – which offers on-demand fulfillment services in 10 different countries around the world – can help fuel your global growth and expansion.
Aromatan, a fragrance business, grew across multiple countries and ecommerce channels with MCF as its 3PL. Read the case study.
Aromatan’s CEO Taha Nabee commented: “MCF has been instrumental in helping Aromatan transform into a digital-first, global, multi-channel fragrance brand. I would recommend MCF to any ecommerce business as it provides a great path to reach consumers around the world, through any channel. With MCF, we can easily expand our business across different countries and ecommerce channels.”
Conclusion
By giving you greater flexibility, efficiency, and the ability to scale your operations, 3PLs that provide on-demand fulfillment services can help support your growth in today’s unpredictable business landscape.
No matter where your ecommerce journey takes you or what supply chain challenges you encounter along the way, an on-demand 3PL fulfillment provider – like MCF – can offer you the capacity and capability you need to succeed.
