With over three million stores worldwide, WooCommerce is one of the most popular eCommerce platforms, second only to Shopify. It’s an open-source system that’s user-friendly and adaptable, and merchants benefit from the vast WooCommerce ecosystem.
As your e-business grows, you will likely reach barriers with your technological and operational infrastructures. Technological growth ceilings can be overcome by investing in enterprise-level hosting, utilising Content Delivery Networks (CDN), and working with an appropriate WooCommerce development company. Operationally, online retailers can either expand their fulfilment warehouse, or entrust a third-party logistics (3PL) provider to pick, pack, and ship your products on your behalf, as you.
Some fulfilment providers only offer a self-service platform, whereas others act as strategic partners with dedicated account management. In this article, we will discuss what’s involved in 3PL, how to find the right provider, and how to determine whether outsourcing is the right strategic imperative to complement your WooCommerce business.
What is a 3PL?
3PLs are business process outsourcing (BPO) companies that specialise in storage, picking, packing, distribution, and increasingly, additional services such as customer service outsourcing, inventory analysis, returns, and customs clearance. They typically have their warehouse based in one country, but many major order fulfilment providers have multiple fulfilment centres in one and multiple geographic locations.
How popular is fulfilment outsourcing?
The 3PL market is predicted to nearly triple by 2030, outpacing overall eCommerce market growth, indicating increasing market penetration. Recent findings support this postulation; a study by DHL Supply Chain found that nearly half of companies use a combination of fulfilment insourcing and outsourcing. The same survey found 18% of companies were planning to outsource their logistics management in the next five years. More recently, this figure has risen, with 60% of online retailers outsourcing fulfilment services at least partially, and among them, 20% are outsourcing the entire order fulfilment process. As for WooCommerce retailers specifically, there needs to be current research on the popularity of this BPO partnership.
Things to check when looking for a WooCommerce 3PL
Multiple stages are involved in selecting the most suitable fulfilment house, onboarding, and monitoring its performance to ensure entrusting a 3PL delivers a strong return on investment and drives your business’s growth.
- The first step is to find an eCommerce fulfilment company that specialises in helping WooCommerce retailers scale their operations.
- Investigate their pricing structure – pricing is usually based on storage, picking, packing, distribution, and additional charges, which may be hidden, such as ‘goods-in’ processing, returns processing, integration, technological support, and dealing with customs paperwork.
- Check if they have a direct WooCommerce fulfilment integration, a plugin or whether they require a bespoke integration that would require developer resources.
- Read their customer success stories and third-party reviews, and speak to your developers and consultants to ask for word-of-mouth recommendations. Consider reaching out to the 3PL’s publicly visible clients, and check providers’ websites to see which order volumes and industry categories they can support.
- Check what makes the 3PL unique. Do they offer late order cut-off times and dashboards to provide insight into your supply chain activity? This could help you avoid understocking (which would lead to missing out on sales) and overstocking (which could lead to capital tied up in stock, potentially disastrous for retailers selling perishable items).
- While some 3PLs will work with SMEs shipping 30+ parcels per day, others will only assist mid-market retailers and major brands, which ship an average of 300+ daily orders. These minimum order thresholds can vary depending on your number of SKUs (stock-keeping units), dimensions, weight, value, and customer destinations.
- When negotiating a contract with a 3PL, you should agree on KPIs (key performance indicators), objectives and key results (OKRs) so that you can monitor performance metrics such as order-processing speed, picking accuracy, WISMOs (Where is my order? queries), and on-time delivery performance. Also, research which carriers they partner with; a diverse range of shipping providers will help you mitigate risk, and given the collaborative buying power of the 3PL’s client base, this should create economies of scale and grant you access to pooled volume discounted courier rates.
The potential disadvantages of outsourcing order fulfilment
3PLs aren’t suitable for all WooCommerce merchants. As highlighted in the last section, many retailers won’t meet the required order volumes. Thankfully, start-ups and low-volume SMEs, can utilise several methods to support their expansion:
- Micro fulfilment centres (MFCs) and resource sharing, in which retailers work with other, larger merchants, who rent out their spare warehouse capacity and provide end-to-end order fulfilment.
- Signing up with ad-hoc delivery specialists, such as Parcel2Go and Transglobal Express (UK), who can collect from your premises, even if you are only shipping one item per week.
- Introducing a dropshipping business model to increase your sales, is a method that won’t require investment in expansion of your current in-house warehousing operations.
Another important point is that outsourcing eCommerce fulfilment isn’t always necessary for large retailers. You may already have the required operations, and rather than entrusting a third party, it might make more sense to review your current picking and packing methods, invest in training your staff, automation, and the latest barcode scanning technology, and increase the efficiency of your fulfilment warehouse.
The future of WooCommerce fulfilment and how 3PLs can help you exceed consumers’ expectations
Today’s online shoppers are a fussy bunch. They anticipate fast and free shipping, sustainability, many in-flight delivery options, and increasing product customisation levels. For some product verticals, such as fashion and clothing, returns are crucial, placing pressure on fulfilment providers to offer additional services such as textile cleaning, ironing, repackaging, and order reprocessing, ready for resale. Going forward, retail decision-makers will also place pressure on fulfilment centres to help future-proof their inventory management, and increase order processing efficiency, through automation, adoption of artificial intelligence, and deeper levels of supply chain integration, such as expanding into a Manufacturer-to-Consumer (M2C) business model, in which the 3PL will also produce the product for the retailer. With 77% of negative reviews related to ‘after the checkout’, order processing is arguably the most delicate element of your operations. As a result, finding the right 3PL can be the difference between acquiring and retaining customers, which is crucial to the success of your WooCommerce business.
