January 11, 2023
Freight & Logistics -
Understanding Third-Party Warehousing | OneLink Holdings
Are you looking for a 3PL warehouse? Here’s what you need to know about third-party warehousing and how it can benefit your online business.
Are you sick of storing your stock in your living room or bedroom? We have the solution for you! Third-party warehousing is a popular option for online shop owners who need to manage their inventory. It is an outsourced service that allows you to store and manage your inventory with a third-party provider, allowing you to focus on other important aspects of your business. But before you decide if this is the right choice for your business, let’s break down the advantages and disadvantages of third-party warehousing.
Using a third-party warehouse can be the perfect solution for small businesses including start-ups and ecommerce businesses. You don’t need to be a large business such as Target or Big W to partner with a warehousing service; you can get warehousing facilities, processes and fulfilment services without the big company label.
Advantages of 3rd Party Warehousing
Cost Savings –
Using a third-party warehouse can be more cost effective than managing your own warehouse since it eliminates the costs associated with owning and operating a large warehouse space. You can also reduce the cost associated with employing your own staff to carry out your logistics and packing. Additionally, most warehouses have already established relationships with carriers that can help reduce shipping costs for customers.
Flexible Labour Options –
A third-party warehouse provider will typically have access to more labour than what you could acquire in house, which means they can better meet peak demand times without having to worry about labour shortages or extra costs associated with hiring additional workers during busy periods. This also allows you to better serve customers by providing faster delivery times.
Scalability –
Outsourcing to a third-party warehouse allows you to easily scale up or down depending on seasonal demands without having to worry about investing in more space or hiring more workers than necessary. This makes it easier for online shops to handle spikes in demand without sacrificing quality or customer service levels.
Value Added Services –
A third party warehouse provider will generally offer a number of other services which you may not have the resources or materials to do in house. These services vary depending on provider, however can include personalized packaging, personalized gift cards and a number of packaging materials and methods. All of which add value to your product and make a positive impact on your customers experience.
Disadvantages of 3rd Party Warehousing
Loss Of Control –
By outsourcing your inventory management needs, you are giving up some control over how your inventory is managed and stored. You may not have access to real-time data about your inventory levels as well as the ability to make quick decisions about stock levels and ordering processes that could affect customer service levels negatively if not handled properly by the warehouse provider.
Security Risks –
Your products are now being stored in another company’s facility, meaning there is potential for theft or damage from mishandling due to negligence on the part of the third-party provider’s employees. You should always make sure that any potential providers have good security measures in place before signing any contracts with them.
Communication Issues –
As with any outsourced service, communication between parties can be difficult at times due to time zone differences or language barriers between countries where the warehouses may be located overseas compared with where your company is based out of domestically. This can cause delays in updates on inventory status and other important information that could potentially affect customer satisfaction levels negatively if not handled properly by all parties involved in the transaction process between online shop owners and their chosen third-party warehouses abroad.
What to consider when selecting a 3PL provider
There are hundreds of 3PL warehousing providers which can make it difficult to choose the best option for your business. Here are a few things to look at when choosing your 3PL warehouse provider:
Business Volumes
By looking at your business volumes, you can choose a provider that is going to best suit your businesses performance requirements. Ensure the provider can handle your current operations and be able to scale your warehousing according to demand.
Past Performances and Reviews
Client reviews are priceless when it comes to seeing what providers are the best and worst. If a provider has multiple bad reviews and unhappy clients, stay clear. If you can find multiple positive reviews, then the provider must be efficient and reliable. Pay special attention to the ratio of delayed deliveries, their problem-solving abilities and client communication. Also pay attention to the length of time the client has used the provider, as those loyal longstanding clients have been able to build positive and productive connections.
Technology
If your business is using technology to help with inventory management, make sure you choose a provider who also uses this service.
Ultimately, it’s up to each individual business owner whether they want to use a third-party warehousing service or not. There are certainly pros and cons when it comes to using these services but at the end of the day it boils down to how well each individual situation fits into yours specifically so take some time researching different options available before making a decision one way or another so that you can find the best fit for your business needs!
Written By
OneLink Holdings team
With our experience it puts us in a very unique position in being able to take your business from idea to reality, or if you’re part of the way there we can help with a number of individual areas in your business.
