From deciding what to charge your customers, to figuring out insurance and tracking, this comprehensive guide will walk you step-by-step through the entire process for working with logistics companies.
Working with logistics companies can be intimidating if you’ve never done it before. We chatted with Paul Van Remortel from Ottawa Logistics to find out everything you’ve been too afraid to ask. Here’s what we learned.
The benefits of using third-party logistics
The benefits of working with a third-party logistics company
The obvious benefit of using a third-party logistics (3PL) company is that you don’t have to do it yourself. But the benefit really goes deeper than that. Outsourcing warehousing and fulfillment can have a meaningful impact on your business’s growth.
Avoid long-term leases
Many logistic companies offer flexible pricing. This means that as you grow—or go through slow periods—they will be able to adapt to your needs and adjust the cost accordingly. Renting your own warehouse space usually requires more of a commitment.
“First, companies don’t have to lock into long-term fixed warehouse leases. Instead, our customers only pay month-to-month for the amount of space they occupy, which saves them money, especially when inventory levels fall during non-peak seasons.”
No staff required
When you fulfill and ship your own orders, you’ll likely need to hire staff as you scale. Managing staff takes time. If your business is still in flux, you may be wary of promising someone a job. Instead, you can outsource the work to a logistics company and let them be responsible for finding and hiring good people.
“Second, companies don’t have to manage warehouse staff and personnel. We manage all of the labor needed for receiving, inventory management, and order processing and shipping.”
Be more effective
Chances are, you didn’t start a business because you’re really good at packing boxes. There are other skills you bring to the table that are harder to outsource. When you let someone else take care of logistical details, you can focus on the things that will have a greater impact on your bottom line.
“Third, by using a professional logistics provider, companies have more time to devote to other important business functions. For ecommerce merchants, this valuable time can be spent on product sourcing, sales, or online marketing activities instead of back-end logistics.”
Although doing it yourself is mostly free, in the long run, hiring a logistics company can save you money as you grow. If they’re operating at a larger scale than you, you can benefit from their efficiencies and leverage their buying power on packaging and shipping costs.
“Fourth, outsourcing will likely save companies money, either through lower warehousing costs, decreased employee costs and taxes, or lower shipping costs received because logistics companies leverage their combined shipping volume to obtain lower overall rates.”
- When is the right time to switch to third-party logistics?
- When should you switch to a third-party logistics company?
Most companies start out fulfilling their own orders, and some eventually add a third-party solution as they scale. The problem is, it’s difficult to know when to make the switch. Especially if you’re bootstrapping your business.
It turns out, businesses of many sizes can benefit from warehousing and fulfillment services. There are a variety of companies to choose from, some of which specialize in smaller or larger-scale operations.