Blog Posts Want to Reduce Reliance on Marketplaces? 3PLs Can Help


Overview

  • Brands are focused on reducing their reliance on third-party marketplaces.
  • Selling on their own ecommerce platform better allows them to grow their businesses.
  • Third-party logistics providers (3PLs) can help brands to support direct-to-consumer (D2C) sales.

With more consumers shopping online, many brands have increased their use of third-party marketplaces like Amazon and Ebay. However, nearly two-thirds (64 percent) say that reducing their dependence on marketplaces is one of their top two priorities in the next six months, a recent study by Geodis and Accenture shows.

Why are brands anxious to shift sales from marketplaces to their own website?

When selling through a third-party platform, brands lose the ability to communicate directly with their customers – a capability that is vital for building brand loyalty and the repeat business required for growth.

Companies can better engage with their customers and regain control of the brand experience by selling on their own website. And consumers are hungry for this connection. In fact, 81 percent of shoppers say they want to buy products directly from brands.

In addition, using their own ecommerce platform allows brands to maintain their own customer data and better ensure data security.

Brands are likely to earn higher margins by selling fast-moving items directly to consumers – especially as order volume grows. They’ll also avoid high fees for storage and order processing.

What is preventing brands from selling direct-to-consumer (D2C)?

The prospect of delivering on consumer expectations can be daunting. Roughly half of brands (52 percent) opt to sell via online marketplaces because they believe that their logistics capabilities would limit their ecommerce potential. The increasing complexity of D2C warehousing and fulfillment operations is challenging to handle in-house.

How can logistics outsourcing help brands to sell directly to their customers?

Third-party logistics providers (3PLs) that specialize in ecommerce fulfillment typically have the right resources, infrastructure and expertise to support D2C sales.

  • Responsive service
  • To ensure a positive customer experience, a 3PL with a shared-space environment can scale space and labor to meet customer demand and business growth.

    Top-tier systems and fulfillment automation will help to speed throughput. A robust order management system (OMS) can provide customers with real-time information on inventory levels and order status. It can also help to process a high volume of returns when needed.

  • Support fast, free deliveries
  • A 3PL will have greater buying power than an individual brand and be better able to negotiate competitive rates. They will also have a thorough understanding of pricing considerations and be able to mitigate the impact of rate increases and surcharges. With a strategic distribution network, a 3PL can position products closer to customers to reduce transit time and cost.

    It is important to note that, in the heat of the coronavirus pandemic, Amazon imposed shipping restrictions on sellers who utilized its order fulfillment services. For many, outbound shipping times extended for weeks.

  • Brand protection
  • Unlike third-party marketplaces with thousands of sellers, 3PLs have a vested interest in the brands they support and should serve as an extension of the brand. A reputable partner will work diligently to ensure the quality and accuracy of every order processed. Utilizing proven processes and Lean practices can help to uphold brand integrity.

    Third-party marketplaces are a convenient option for smaller brands with a low order volume. However, as business grows, an exclusive reliance on marketplace sales is not likely to be sustainable. Partnering with a 3PL can give brands the logistics capabilities they need to realize their full potential.

Related to: Selling on Amazon, Selling online