It’s a question many entrepreneurs face. While the preconceived barriers to growth involve optimising marketing and product development efforts, getting order processing, and the operational infrastructure that underpins it right is often overlooked. Although no silver bullet, working with a third-party logistics (3PL) provider can help minimise overheads, accelerate order processing, enhance customer experience, and as will be explained, even increase conversion rates.

But 3PL isn’t suitable, or available, for every business. You need to be shipping at least 10 orders per day on average, and most fulfilment centres demand 30. Mid-market and enterprise-level warehouses require as many as 300 daily deliveries. This is because like you, eCommerce 3PLs have their own overheads, such as the warehouse itself, energy bills, human resources, inventory and warehouse management technology.

Developing one’s own warehousing infrastructure is highly capital-intensive, and for a growing eCommerce enterprise that lacks liquidity, often requires external investment or a hefty loan. Another option for start-ups is to rent warehouse space from other, larger retailers; this is known as micro-fulfilment.

If your business is in its premature stages, your only option will be to insource order fulfilment. But this is usually fine because your order volumes will be quite low, and you will also have the option to expand your product range through dropshipping (this is where you list third-party products on your own digital real estate, and when an order is made, a manufacturer (M2C), distributor or wholesaler ships your product on your behalf, as a white label service). DIY fulfilment allows the entrepreneur to retain greater control of their supply chain, however this can lead to a lack of focus on high-level executive areas of business management, such as competitor analysis, new product development, digital marketing, strategy, vision, finance and procurement.

Finding the right order fulfilment specialist

If you’ve decided 3PL is right for you, the first step is to establish your current order volumes, seasonality of demand, and predicted future growth, not just in terms of your orders but your product range too. Consider whether they only have a UK fulfilment centre, or have their own presence overseas, or at the very least partner warehouses. When searching for an eCommerce fulfilment provider, it’s important to deduce whether they specialise in your eCommerce platform, such as Shopify. It’s also useful to check if they help businesses in your space, such as luxury homewares or sporting goods. Other than analysing each candidate provider’s third-party client reviews, also assess their employee feedback, and reach out to their publicly visibly clients as displayed in their case studies.

3PLs are diverse. Some purely look after the goods intake, picking, packing and distribution of goods, whereas others reach deeper into the supply chain, with services such as:

• Returns management
• Outsourced customer service
• Customs clearance solutions
• Packaging and courier contract procurement
• eCommerce technology stack consultancy
• Bespoke packaging
• Inventory analysis technology (see video below)

In the above example, this provider gives retailers software that monitors their order volumes, volatility and responsiveness of suppliers to deduce when, and when not to re-order goods for stock replenishment. This helps entrepreneurs make more profitable decisions by avoiding understocking, which leads to missed sales, and overstocking, which means capital unnecessarily tied up in inventory that could be better redeployed to other areas.

How eCommerce fulfilment works

• Step 1 – Sign the contract and agree terms: Once you’ve decided on a particular 3PL, it’s crucial that you align expectations and establish both KPIs and OKRs based on metrics such as order accuracy, order processing speed, on-time delivery performance and customer satisfaction. This way you will be able to monitor performance in real-time and on periodical bases.
• Step 2 – Integrate systems and establish communication channels – Integrate your sales channels such as Shopify, eBay, Amazon, and/or order management system (OMS) with the 3PL’s warehouse management system (WMS) so that SKUs can be synchronised with picking locations.
• Step 3 – Ship your stock to the fulfilment warehouse – this could involve utilising a haulage company to shift pallets in bulk from your own premises, suppliers or your previous 3PL.
• Step 4 – Goods-in team will receive your goods ready for allocation in specific picking locations. Orders can now begin flowing in. Once the warehouse receives an order, the picking team will collect individual or grouped products, and then take them to the packing bench ready for packaging.
• Step 5 – Once the order is packaged, the packing team will generate and apply a shipping label. At this point, your customer will receive a shipping notification.
• Step 6 – Parcels, packets and mail are grouped by carrier, ready for collection by the 3PL’s courier partners. The later into the evening this happens, your conversion rate can increase as much as 15%. The below eCommerce fulfilment case study details why:

As your shipments pass through the courier network, depending on service selection your online shoppers will have access to in-flight delivery options such as timed delivery windows, ‘leave safe’ options, and images of the shipment as it passed through the carrier infrastructure along conveyor belts.

The future of fulfilment outsourcing

By 2027, 26% of warehouses will be automated, which will make insourcing harder to justify. The 3PL industry is set to more than triple in market size over the next decade, outgrowing online retail itself, indicating greater popularity as a proportion of eCommerce merchants. This means fertile grown for fulfilment specialists, and variety for established retail decision-makers and entrepreneurs alike.

Consumers are increasingly demanding fast, free, environmentally-friendly shipping and items to always be in stock. They also anticipate consistent, omnichannel customer experiences. For retailers to thrive, working with a 3PL can be the growth driver they’ve been searching for. But don’t be fooled, scaling an eCommerce business has many other key ingredients. For some, efficient order processing can be the catalyst for explosive growth. For others, it could be going viral on TikTok, or appearing on Dragons’ Den. For most online sellers, carefully balancing all of the different growth drivers should eventually lead to sustainable growth and profit.

What is most important of all is that leaders don’t become entrenched in the day-to-day running of their business, and can delegate effectively down the company hierarchy, or to outsourcing specialists.