Understanding the Opportunity and Challenges of eCommerce for the Mid-Market Company

Published : June 13, 2019

Multichannel

With a current market size of $514 billion and an anticipated CAGR of 7.8 percent, U.S. eCommerce revenues are anticipated to exceed $740 billion by 2023. Given the size and growth of eCommerce, it’s no longer a question of whether your company will be selling products online. Instead, given how vital eCommerce is becoming to your company’s success, how will you manage your eCommerce business today and in the future? Specifically, how will you create a fulfillment system that minimizes your costs, meets your customer’s expectations, and easily scales to meet the needs of your growing eCommerce business?

 

Even companies with large warehouse operations need to take a close look at their current fulfillment model -- designed to manage and move products in bulk – and ask themselves if they have the warehouse space, technology, and labor to create an efficient, cost-effective eCommerce fulfillment solution that stores, picks, consolidates, and ships smaller, more frequent orders, quickly and accurately?

Why 3PL?

For many companies the choice to move to a 3PL model is driven by an ever increasing need to maintain focus on their core competencies, and thus, rely on outside vendors to manage operations where internal expertise is limited. After all, a company that chooses to venture outside of their core focus and invest resources where it has little or no competitive advantage is at far greater risk of losing sight of what brought them success in the first place – driving product innovation, increasing value to their customer, and building efficiencies into internal processes.

Case in point: A recent report in Logistics Management showed that eCommerce 3PL use by Fortune 500 companies continues to increase, with 90 percent of companies utilizing at least one 3PL, a significant increase from 2001’s 46 percent rate. The report goes on to observe that the primary driver of 3PL adoption by companies is the ongoing demand to control costs and increase supply chain efficiency in their eCommerce businesses. Interestingly, the report in Logistics Management also shows that that one of the best predictors of 3PL use is company size. In other words, as you grow your mid-market company, you can expect your need for a 3PL eCommerce fulfillment solution to only increase. As a mid-market company this should be a warning that attempts to scale eCommerce fulfillment internally is likely to be a wasteful investment your company may never recover.

 

So, is 3PL eCommerce Right for Your Mid-Market Company?

Some compelling reasons to consider a 3PL:   

  • Flexibility: Perhaps your company made a small initial investment in eCommerce fulfillment but is now struggling to manage growth. Moving your eCommerce fulfillment to a 3PL will immediately provide you with the flexibility to scale your eCommerce business quickly without large internal investments in technology, labor and warehouse space. 
  • Increased Focus on Core Competencies: Efficient, cost-effective eCommerce solutions are readily available via a 3PL. So ask yourself: Does it make economic sense for your company to commit resources to re-inventing the wheel, or should you be focusing on what you do best, innovating and adding value to your products and services? 
  • Inventory Management: A 3PL is able to utilizes its expertise and systems to better manage your inbound freight delivery requirements, providing the ongoing reporting to better manage your inventory -- lowering your company’s warehousing and inventory costs while improving your production scheduling.
  • Omnichannel Risk Reduction: Perhaps your eCommerce business is already being run through Amazon, Walmart, or both? A 3PL will allow you to diversify your business into other channels, reducing the risk of having all your “eCommerce eggs” in one basket. However, with the reduced risk comes the increased complexity of managing each new channel. Instead of trying to manage each channel individually, it may be wise to consider partnering with an eCommerce agency that can create a consistent omnichannel strategy – which should deliver consistent branding, metrics, and reporting allowing you to more easily manage and analyze each business channel using the same yardstick.
  • Protecting Brand Integrity: With eCommerce your company’s brand equity will be directly impacted by your ability to get an order in your customer’s hands quickly, accurately, and in pristine condition. With retailers and distributors now out of the equation, eCommerce fulfillment is now as important to your customer’s satisfaction as the actual product being shipped.
  • Freight Cost Management: Quite simply, do you have the internal expertise to create an effective eCommerce freight strategy? The success of your company’s eCommerce program will be directly tied to your ability to minimize shipping costs while maximizing value to your customers. A 3PL will be able to analyze the best freight solutions based on your location, your customers’ locations, average shipment (size/weight), fulfillment volume and seasonality.

 

About Aero Fulfillment Services

For over 30 years, Aero has focused on adding value to our client’s businesses by providing the services that increase their fulfillment effectiveness and efficiency, while lowering their overall fulfillment costs. 

At Aero, our team takes pride in providing flexible, transparent, and innovative fulfillment processes with a focus on efficient IT solutions and rapid integration services. Aero is committed to meeting the unique fulfillment needs of our B2B and B2C clients, and ultimately, their end customers.

Interested in learning how Aero can add value to your business while reducing your fulfillment costs? Contact Aero Fulfillment Services today to schedule a free evaluation of your fulfillment processes and needs or to schedule a tour of our eCommerce optimized facility. 1-800-225-7145

 

Topics: Vendor Management, eCommerce, Supply Chain Efficiency, ecommerce fulfillment

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