3PL Ecommerce Fulfillment: Best Practices to Overcome Complex Challenges
Ecommerce businesses face a complex logistics landscape, where timely deliveries and efficient operations are critical to success. Third-party logistics (3PL) providers have become indispensable allies in this process, offering specialized services to streamline eCommerce fulfillment. As a result, 3PL services are in high demand.
New 3PL companies are popping up every day. According to IBISWorld, there are 69,703 3PL businesses in the US as of 2024, a .9% increase from 2023. Further, the 3PL market has been growing and there are no signs of slowing down. It is expected to reach $1.78 trillion by 2030, with a CAGR of 5.48% from 2025-2030.
Many things are propelling this steady growth, but the increase in eCommerce is the leading factor.
Ecommerce fulfillment should be a major priority for every 3PL company. With growth comes growing pains, though. Here are some common challenges and best practices for effective 3PL warehouse management.
Understanding 3PL eCommerce Fulfillment
3PL eCommerce fulfillment involves outsourcing eCommerce logistic operations to a specialized service provider. 3PLs handle warehousing, inventory management, order processing, shipping, returns, and more for their clients.
By partnering with a 3PL, eCommerce businesses can focus on growth, leaving the complex nature of logistics and the supply chain to their 3PL partners that specialize in those areas.
Challenges in 3PL eCommerce Fulfillment
Seamless 3PL warehouse management is vital for operational efficiency, real-time tracking, and customer satisfaction. Managing eCommerce fulfillment through 3PL services also come with its share of hurdles. Here are some common challenges and strategies to address them.
1. Integration Complexities
3PL and eCommerce companies rely on a variety of technologies to run efficiently. All these platforms need to communicate for information to flow seamlessly. However, one or more pieces of software can experience a syncing issue or other performance problems. This can result in lost or corrupted data, disrupting your business.
Advanced warehouse management systems (WMS), like LVS, enable businesses to maintain visibility, reducing stockouts and overstocking issues.
2. Inventory Visibility
Real-time inventory tracking is critical to ensuring the right amount of stock is available to fill orders and that enough is on hand to avoid missed sales opportunities. Keeping track of SKUs can quickly become very challenging, especially as the number of SKUs and channels grows.
Mantis offers advanced inventory tracking, enabling 3PLs and eCommerce businesses to maintain visibility throughout the supply chain.
3. Scalability
Weather, holidays, and other seasonal events cause demand fluctuations for certain products at different times of the year. Environmental factors can cause unexpected surges as well. These rapid changes in demand strain 3PL capacities.
Ecommerce companies should partner with Warehouse Management System providers that offer scalable solutions. This ensures your business can predict demand fluctuations and adapt without compromising service quality.
4. Shipping and Delivery Delays
Order processing, picking, and packing are only one part of fulfillment. To be competitive, products still need to get from warehouses to consumers quickly. Unforeseen bottlenecks in the shipping process lead to missed delivery deadlines, which hurts brand reputations and results in lost business and higher returns.
Collaborating with 3PL and WMS providers with strong carrier networks and efficient logistics strategies mitigates delays. LVS has Parcel Management capabilities that blend order fulfillment and shipping into one process, offering access to nearly 20 major carriers.
5. Returns Management
Efficiently handling returns is essential for maintaining customer loyalty. Returns processing can become a costly and time-consuming challenge without a clear strategy in place.
Our WMS offers robust returns capabilities. LVS helps identify returned goods and their packing details. It then correlates them to specific order shipments and sales orders. LVS also reveals the put-away locations, whether the inventory should be cross-docked for future shipments and more.
6 Ways to Build Effective 3PL eCommerce Fulfillment
By implementing these best practices, eCommerce businesses can optimize their fulfillment operations and enhance customer satisfaction:
1. Choose the Right 3PL Partner
Whether you are a retailer with an eCommerce channel or a direct-to-consumer (DTC) eCommerce company, you can see significant benefits from working with a 3PL if you aren’t already. Selecting a 3PL provider with expertise in eCommerce fulfillment is crucial. Before choosing your partner or switching to a new one, carefully evaluate their capabilities, technology integrations, and track record to ensure alignment with your business needs.
Know your business needs in advance. Determine what areas you can’t live without and what capabilities would be nice but aren’t critical now. Also, decide which features you don’t need or want. Prioritize your list before beginning your search to avoid wasting time evaluating 3PL partners that are not a fit.
2. Prioritize Integration and Communication
Seamless system integration between your business and the 3PL is foundational. Evaluate every new technology before purchasing to ensure it integrates with your existing tech stack.
Communication between the 3PL and your company is just as critical. Clear communication channels further ensure both parties are aligned in meeting customer expectations. Potential 3PL partners should demonstrate they can communicate clearly throughout your selection process. If they aren’t keeping you in the loop or are withholding information at this stage, that’s a red flag.
3. Leverage Advanced Warehouse Management Systems (WMS)
Only select 3PLs with a reliable warehouse management system (WMS). A robust WMS supports real-time inventory tracking, order processing, and reporting. This empowers businesses to make data-driven decisions and reduce errors. Our WMS software is used by many 3PLs that specialize in eCommerce. Contact us to get recommendations for your specific needs.
4. Optimize Packaging and Shipping Processes
Streamlined picking and packaging operations minimize costs. Consider using 3PLs with a WMS that can offer smart and affordable warehouse automation solutions like voice picking, pick-to-light, put-walls, sort-to-light, smart pick carts, smart glasses, RFID, Automated Material Handling Systems (AMHS) such as Shuttles, Carousels, Mini-Loads, Mobile Selves & AGV-like robotics, Sorters, Packing line systems, etc., and more depending on your needs. These technologies streamline picking and packing, saving time and money.
Further, you can partner with carriers or work with 3PLs that do so. Partnering with carriers for competitive shipping rates and timely deliveries further boosts customer satisfaction.
5. Implement a Returns Management Strategy
Today, things like bracketing and wardrobing are common consumer trends in eCommerce. Bracketing is when shoppers buy the same item in multiple sizes and colors, keeping the one they like best and returning the rest. Wardrobing is when consumers buy something, wear it once (or more), and return it. Even if consumers stopped these trends, returns would still be an unavoidable aspect of the eCommerce business.
To combat high returns, partner with a 3PL eCommerce fulfillment center that can handle reverse logistics for you. When optimized properly, your returns process can generate revenue and create resale opportunities that would be missed if merchandise piled up at the warehouse without being restocked. Work with your 3PL to develop a clear plan for handling returns efficiently. Use data insights to identify trends and reduce return rates over time.
6. Monitor Performance Regularly
What gets measured improves. Measure what you can track, analyze the results, and make changes to find improvements. In eCommerce fulfillment, this is done by establishing key performance indicators (KPIs) such as order execution time, inventory accuracy, and customer satisfaction. Review these metrics often to hit your goals and focus on continuous improvement.
Tips for Selecting the Right 3PL Partner
Choosing the right 3PL provider can make or break your eCommerce fulfillment strategy. Here are key factors to consider:
Evaluate their experience and expertise in eCommerce fulfillment.
Look for a 3PL provider with a proven track record in eCommerce. An experienced partner will understand the nuances of online retail, including the demands of fast shipping, accurate order fulfillment, and handling returns efficiently.
Ensure their systems are compatible with your eCommerce platform and other software.
Your 3PL partner’s systems should seamlessly integrate with your eCommerce platform and other operational tools. Evaluate their technology stack during the selection process and ask for a demonstration of how it works.
Assess their ability to scale with your business during peak periods.
As your business grows or encounters seasonal fluctuations, your 3PL provider must be able to scale operations accordingly. Ask about their ability to handle peak periods and whether they have the infrastructure to expand with you.
Review their service level agreements (SLAs) and past performance metrics.
Review the provider’s service-level agreements (SLAs) and KPIs to gauge their reliability. These metrics should include delivery accuracy, order processing speed, and customer satisfaction rates at a minimum.
Check client testimonials and reputation in the industry.
Research the provider’s reputation within the eCommerce industry. Read client reviews, ask for references, and look for any non-paid awards or recognition they’ve received. A positive reputation indicates trustworthiness and consistent performance.
Achieving Success in 3PL eCommerce Fulfillment
By understanding the challenges, adopting best practices, and partnering with the right 3PL provider, businesses can streamline operations, reduce costs, and enhance customer satisfaction. Seamless 3PL warehouse management combined with robust systems and strategic planning enables eCommerce brands to thrive in an ever-evolving market.
Ready to optimize your eCommerce fulfillment? Contact our team for recommendations on 3PL providers that can meet your needs. Start your journey toward streamlined logistics and customer satisfaction today!
