When it comes to ecommerce businesses fulfilling their orders, they can either choose to use a third-party logistics (3PL) company or do it in-house and ship orders directly from their office or warehouse.
Similar to this is dropshipping, whereby the retailer fulfills the order and ships the item directly to the customer. With these coming with their own sets of pros and cons, coming to a decision as to which option is best for your eCommerce requires a certain level of research and analysis.
Shipping / Dropshipping
This is the option that almost 30 percent of eCommerce businesses use. They either buy the stock and dispatch it from their own premises or have it despatched directly to their customers from the retailer.
Dropshipping in particular is something that smaller eCommerce businesses do when first starting out as there is less capital output required, i.e. they only need to buy the stock once a purchase has been made.
If the supply chain runs smoothly, then this is an effective way of running an eCommerce business. However, as any entrepreneur will tell you, in the world of business, things do not always go according to plan.
For instance, when shipping stock in from abroad, there is the risk that deliveries can be late and this can happen for a whole host of reasons, including weather conditions, geo global politics, or international warfare the list is endless.
To keep an eye on when exactly your ocean freight will arrive and to see if it is delayed at all, eCommerce businesses can use the Vizion API tool. It automatically pushes detailed container tracking information to whatever software you use in order to provide comprehensive visibility.
Third-Party Logistics (3pl) Companies
With this option, eCommerce businesses use the service of another company to handle all of the warehousing, packaging, and shipping of their orders. They are essentially an intermediary between eCommerce businesses and their customers. For business owners in California, they opt for California warehousing to fulfill customer orders for them.
The stock that an eCommerce business sells is sent to the 3PL company to the house. Once an order is placed with the eCommerce business it automatically goes through to the system used by the 3PL and they then begin to package and dispatch the order.
Which Option to Choose?
The great majority of established eCommerce businesses actually opt for the thor party logistics company option. This is especially true when the goods that they sell are shipped in from the Far East. i.e. China. Doing this reduced the amount of time that their customers have to wait in order to receive the item that they ordered.
However, for those eCommerce businesses that are just starting out and do not necessarily have the capital to purchase large amounts of stock and have them shipped to where they are, dropshipping provides a cheaper option.
Doing the order fulfillment in-house gives eCommerce businesses a greater level of control over their operations and how their items go out.
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