Recent months have seen increased interest in Third-Party Logistics companies, which were already in high demand before the pandemic. According to DigitalCommerce360, as of 2020, e-commerce was up 44% year over year. As a result of increased demand, e-commerce companies are growing at such a fast rate that there is a great need for fulfillment and storage space. According to CBRE Research, a $1 billion increase in e-commerce sales requires 1.25 million square feet of warehouse space. From 2019 to 2020, the 3PL industry grew by $18.7 billion from $212.8 billion to $231.5. This means that there is a strong correlation between e-commerce and third-party logistics growth. 3PL companies are not only becoming more prolific in the industry, but they are also expanding and growing both in number and services offered. There is no sign that e-commerce growth will slow down any time soon, so it's time to adapt to a rapidly evolving industry and stop the growing pains before they start.
4 Ways to Limit 3PL Growing Pains:
Finances, Finances, Finances
To grow a business, it is imperative to understand your finances backward and forward. If you cannot do this, you will not be able to grow the business. The goal of a 3PL, whether new or established, is to develop and grow! To grow your business, you need more warehouse space or more productive employees, both of which require investment. Know your business ROI on every asset, and don't overstretch yourself. A responsible growth strategy begins with an understanding of your bottom line. It might be time to speak up with your clients if you feel you're growing too fast, and ask each one if they would be willing to commit to a 4-5 year contract so you can expand with confidence and keep your bottom line tight.
Connect with a Commercial Real Estate Agent
While plenty of warehouse space is available for your 3PL, it does not mean that you will not find it difficult to locate the right location. Shipping from a site that helps reduce shipping costs is a great way to save money on shipping depending on your clients and their clients' needs. Consider working with a real estate agent who specializes in commercial or warehouse space. When you want to grow your business, hiring an expert is imperative. Nothing is more frustrating than renting or buying the wrong property, only to be contractually obligated to stay there.
Offer a Specific or Unique Value Proposition
The vast majority of 3PLs specialize in certain areas. Regardless of the size of your company, you have tailored your supply chain to suit a particular industry. If you have a specialized area of expertise, you will likely attract the right clients for your business and streamline your logistics process. Imagine that you are a retail-specific 3PL, and you sign a customer who sells ice cream, which has a different process and warehouse space set up. It would not be financially possible to switch for one customer. There are certain industries in which it is more difficult to pair, so make sure you understand the strengths of your 3PL to be successful and be the go-to provider in this sector.
Connect with Valuable Logistic Partners
3PLs know how important it is to have excellent partners. Carriers play a critical role in determining your shipping costs and ensuring that you receive reliable service and reasonable pricing. Your packaging supply partners are there to assist you in accurately packaging your clients' goods. The software partners you work with can assist you in managing orders, funneling orders through multiple marketplaces, and so much more. 3PLs have much software to juggle, which can be complicated when the company grows. The right software should integrate all other integrations to make your business run smoothly. A shipping solution provides you with a great opportunity to house all your important software, allowing you to streamline your operation and save on shipping costs. Working with a shipping solution that supports your partners enables you to streamline your business processes in all fields. You will be amazed at the benefits you will receive when you hire the best shipping solution for your 3PL.
Increasingly, fewer and fewer businesses are planning to return to the workplace, which has led to a rise in commercial real estate to meet new demands, such as e-commerce. The chances are that if you are thinking of starting or are already operating a 3PL, you have probably already been over-burdened by the business. Take a long-term view of your business and look for opportunities for growth in innovative ways. By effectively taking advantage of the changing purchasing behavior of consumers, you will increase your profitability and be as seamless as possible with your fulfillment.