When Amazon.com was founded in the year 1994, nobody has imagined that it will revolutionize the concept of later within a short period of 15 years. Then smartphones have accelerated this transformation. The apps of smartphones make online shopping easy and interactive. But this arises the requirement of a new type of business function which is equally important for success i.e. third-party logistics.
Why eCommerce company will not have their logistics but prefer the third party? The answer is simple and also complex. First of all, the eCommerce company don’t have a core competency in the logistics business. Logistic business needs a lot of capital investment and dedicated logistic management. So, if any eCommerce company will try to have their own logistics services. It will start affecting their prime business of online retailing because managing logistics network is a complex job and needs a lot of staff. With additional staff and warehouse, the cost of business will increase, and eCommerce company will be wasting its energy of logistic management instead of selling. To solve this problem and to serve the business right, nearly every eCommerce company prefers to have a 3PL partner. The advantages of having third party logistics are;
The third-party logistics partner will be expert of their job. So, by subcontracting your logistics function to the third party. Ecommerce company don’t have to hire a complete logistics department. Whereas minimum staff can coordinate all the logistics activities and eCommerce company don’t have to hire expert people to do this job. Yes, eCommerce company must have a contract with third-party logistics with detailed service level agreements, so that their business needs will be served properly. It is always sensible to hire an expert business partner rather developing your own logistics function.
Hiring 3PL Auckland makes economic sense. As eCommerce company will be hiring staff, acquire warehouse and develop fleet for delivery. Then it will need hefty capital investment, plus giving benefits to employee and maintenance of the fleet. This all will add up a huge part of operational cost. But instead, of this function will be outsourced to the third party then eCommerce company can draft a contract where the payment will be made only per package delivery. This will save a good amount of money to invest in other business functions like improving IT infrastructure.
Having the third party on board will provide utmost convenience. As the logistics business is complex and uncertain and requires a lot of human management. But when you don’t have to deal with day to day logistics operations, the workload for eCommerce company will reduce and they will be focusing more on selling strategy. Due to the diversity of customers in downstream, 3PL will be handling all physical good movement and that will reduce the lead time of order delivery.