3rd Party Logistics...Is that all you need? Is it enough?

Is it worth spending over 50% of your funds on on 3PL services that function at less than Max Potential? Or should you ensure maximum and optimal utilisation of e-commerce services along with 3PL services? By making decisions using Logistic intelligence.

There are too many definitions for 3rd Party Logistics services, the ambiguous part is some say “It’s all or at least a significant part of logistics services”, while others say “It’s just one, or a couple of services“, depending on who you ask. 

But, the main question is, 3rd Party Logistics...Is that all you need? Is it enough?‍

Well, we agree with Wikipedia, which says 3PL is the act of outsourcing activities related to Logistics and Distribution for part, or all of their supply chain management functions - which include Logistics Solution Providers (LSPs) and the shippers whose business processes they support.

What is a 3PL? Third-party logistics definition, process, and resources

What is third-party logistics?

What are 3rd party logistics is a question that can have different definitions across different sectors, but let us focus on the one that’s relevant in the e-commerce industry.

3rd Party Logistics refers to the outsourcing of logistics and supply chain management functions to a third-party provider. 

In this arrangement, companies rely on third-party logistics providers to handle various aspects of their logistics operations, such as transportation, warehousing, distribution, freight forwarding, customs brokerage, and other value-added services.

The 3PL order fulfilment process

The 3rd Party Logistics market in India works towards order fulfilment process and involves several key steps to ensure that customer orders are processed, picked, packed, and shipped accurately and efficiently. Right from how to avoid shopping cart abandonment to adding to cart but not buying, here's a general overview of the 3PL order fulfilment process:

  1. Receiving Orders:

Orders are received from customers through various channels such as online platforms, email, phone, or integrated systems.

Order information includes items purchased, quantities, shipping addresses, and any special instructions.

  1. Inventory Management:

The 3PL provider maintains an inventory of products on behalf of its clients. Inventory management systems track stock levels, locations, and movement of goods in real time.

Inventory levels are monitored to ensure that products are available to fulfil customer orders.

  1. Order Processing:

Orders are processed within the 3PL's system upon receipt. Order processing involves verifying order details, checking inventory availability, and allocating stock for fulfilment.

  1. Pick and Pack:

Once orders are processed, items are picked from their respective locations within the warehouse. Pickers use picking lists or handheld devices to locate and retrieve items.

Picked items are then packed into appropriate packaging materials, which may include boxes, envelopes, or other containers. Packing may involve adding packing materials, inserts, and labelling according to the specific requirements of the order.

  1. Quality Control:

Quality control checks may be performed to ensure the accuracy, completeness, and condition of items before shipping. This may involve visual inspections, scanning barcodes, or weighing packages to verify correct contents and quantities.

  1. Shipping and Delivery: 

Once orders are packed and quality-checked, shipping labels are generated and affixed to packages. Packages are handed over to shipping carriers for delivery to customers.

Tracking information is provided to customers so they can monitor the status of their shipments.

  1. Returns Management:

In cases where customers need to return items, the 3PL provider manages the returns process. Returned items are inspected, restocked, or processed for disposal or refurbishment as necessary.

Throughout the entire order fulfilment process, the 3PL provider utilizes technology, automation, and efficient workflows to minimize errors, reduce costs, and optimize delivery times. Effective communication and collaboration between the 3PL provider and its clients are also critical to ensure smooth operations and customer satisfaction.

Types of 3PLs

Third-party logistics (3PL) providers offer various types of services to support different aspects of supply chain management. These services can be categorized into different types of 3PLs based on the range and depth of services they offer. Here are some common types of 3PL providers:

  1. Transportation-Based 3PLs: These providers specialize in transportation services such as freight forwarding, trucking, air freight, ocean freight, and rail services. They focus primarily on moving goods from one location to another efficiently and cost-effectively.

  1. Warehouse/Distribution-Centered 3PLs: Warehouse-based 3rd party logistics market in India offers storage, distribution, and fulfilment services. They manage inventory, pick and pack orders, and handle shipping and receiving operations within their warehouse facilities.

  1. Forwarder-Based 3PLs: Forwarder-based 3PLs focus on international freight forwarding and customs brokerage services. They specialize in managing the complexities of cross-border shipping, customs compliance, and import/export documentation.

  1. Financial-Based 3PLs: Financial-based 3PLs offer services related to freight payment, auditing, and financial management of transportation expenses. They help companies optimize transportation costs, manage invoices, and ensure billing accuracy.

  1. Lead Logistics Providers (LLPs): LLPs take on a strategic role in managing and coordinating all aspects of a company's supply chain. They act as a single point of contact and accountability, overseeing multiple 3PLs and other logistics service providers to optimize supply chain performance.

  1. Value-Added 3PLs: Value-added 3PLs provide additional services beyond transportation and warehousing, such as packaging, labelling, kitting, assembly, product customization, and reverse logistics (returns management).

There are more types of 3PLs that provide a range of options for businesses looking to outsource various aspects of their supply chain management. Companies often choose 3PL partners based on their specific needs, industry requirements, geographic coverage, and service capabilities.

3rd Party Logistics...Is that all you need? Is it enough?

Every single 3rd party logistics market in India service when it comes to assisting in e-commerce and logistics is a specialisation. 

And just like one can’t have a PhD in every field, one can’t be adept at every aspect of today’s logistical needs/essentials. Which is why brands reach out to 3PLs.

But is it worth spending over 50% of your funds on something that services at less than Max Potential?

‍Simply put - “3PLs are Ineffective or Least Effective without Collaboration.”

Because 3PL lacks the Data.

1. They do NOT know the brand for what it is.

2. They do NOT have the information to optimise themselves in order to suit a brand..

3. They do NOT know the hitches brand’s face as a whole.

How do you bring about that teamwork?

  1. You need to connect the various different 3PLs you use, to your brand
  2. Follow the thread of involvement for each and every order, over a period of time, and analyse
  3. Understand & learn the roles of the various individual 3PL entities, to maximise their potential and improve combined efficiency. 
  4. Gather and compile info through every iteration & reiteration - that is when you get the data to calibrate and optimise every minor aspect based on what works for your brand.

Integrating a system that can compile the collective efforts of the 3PL services, and to tune them to the needs of your brand is the specialisation of Pragma. ‍

3rd Party Logistics...Is that all you need? Is it enough?

What Pragma brings to the table

  1. Aggregation of 3PL actions
  2. Preparation in Accordance to Brand Data
  3. Selective Optimization
  4. Open-up Scope for Testing‍

What are the benefits of working with a 3PL?

1) Real-time communication to Police Partners - 

To keep your customers in the loop. To keep the Logistics provider in the loop.

Maintaining a smooth customer journey for every order.

This way there’s no miscommunication, no fake scenarios, and no fulfilment-related issues.

Sample Problem - NDR (Non-delivery Report)

Issue - Over 45% of NDRs are reported stating “Delivery wasn’t attempted” by customers.

Where Delivery Partners are required to attempt deliveries at least thrice in most cases. 

And not doing so places them on notice for SLA breach (Service-Level Agreement).

Solution - This is countered by keeping the 3rd party logistics companies or partners in check for every order. Where a verification is received from the customer for each attempt. And the 3rd Party Logistics provider is notified in case of a false attempt.

Meaning -

  • No attempt was made.
  • The customer was not informed of the change in delivery time.
  • Delivery partner contacted the customer but didn’t attempt delivery etc

Communication Channels - This is where Omnichannel Reach comes handy.

Where you can communicate through the customers’ choice mode - WhatsApp Broadcast, Facebook, Instagram, Email, or VoIP.

Where these channels act as a service medium for -

1. High-value transaction notifications and

2. Customer support

(Promotional content too)

Offering - 

  • Formatted text messages
  • Media messages (audio, video, document, image, stickers)
  • Group messages
  • Media message templates
  • Messages can be sent in a pre-defined language or localised to the user's device language settings.
    Thereby answering a wider audience base.

And the best of all - is WhatsApp Automation. To enhance the consumer experience, reduce costs, and ultimately improve operational efficiency.

This service achieves real-time communication + histories that the internal teams can refer back to whenever they need it.

Monitoring - 

SLA criteria of your 3rd party logistics companies at every stage.

  • Checking every objective
  • Scope services covered
  • Optimise responsibilities through performance metrics (response time, resolution time, etc.)

2) Reduce losses through elimination of RTOs

‍Monitoring various stages of an order journey with our algorithm, you get over 300 layers of verification protocols - to effectively cut down RTOs by 60%.

  • Customer info check -

    Here, details such as address and phone number are verified. And if the delivery address is a temporary address such as a hostel, resort, PG, etc, then the order is automatically flagged.

  • Prior data analysis -

    Most orders are not first orders, meaning, there is pre-existing information on previous purchases (from various eCommerce sites).

    Pragma can now tell the number of previous order cancellations if the same order was placed in multiple sites etc., and red flag orders if suspicious - this way you can review the flagged order and accept or reject them.

  • Log data analysis -

    This step is to reduce impulsive purchases, which directly impact RTOs when they fall under the COD mode of payment - if the order is not received, the product will have to be shipped back and the seller will incur losses.

    To avoid that, Pragma would use the duration of the consumers' time on your site along with other data to make the decision.

3) Simplifying Logistics through Geoanalysis

Understand what's happening in any area you target

  • Locations with Maximum User churn out
  • Is it expensive to deliver in the region
  • Where you have lots of idle assets
  • Should you expand to a region with similar potential
  • Find where occasionally cancellations occur vs repeated cancellations etcetera

“Losing money on shipping may be a part of business, but finding a way to minimise that loss is up to you.”

The data gained from Geo analytics can render ideal solutions for fuel adjustments in logistics, moderating post-shipping accessorial charges and more. 

Adding this information to your existing sales data, inventory, customer profiles, demographic profiles, mailing lists and others can improve performance greatly.

Integrating your data with Geographical data can reveal where you have your customers, around what locations, what specific product/service they are looking for, and when they make their purchases - meaning, is it during a holiday celebrated widely in the region or any such data?

Data aggregator  → Analytics engine

4) Integrating a system for seamless Returns

It is simply a System developed to handle product returns efficiently while monitoring various intricate aspects. Some of them include Categorising requests into returns/refunds/exchanges.
For example: Equal exchange, Full refund.

  • Warehouse data on specific product necessities (SKUs). 
  • Closest distribution house for a cost-effective delivery.
  • Real-time monitoring of order status and progress.
  • Identifying fraud and tampering.

5) Zero Drop-off Analysis

‍Analysing the situation that leads to a customer dropping from a purchase process is NOT an objective of a 3rd Party Logistics.

Pragma enables the brand by extracting the necessities from the various 3PLs to come up with the various reasons behind major drop-offs.

  1. Implementing effective Abandoned Cart Recovery

68.63% of online shopping carts are abandoned, with over $4 trillion in purchases left behind!

BUT.. 63% of all abandoned carts are recoverable.

  • Pragma analyses the key dropoff stages where customers abandon carts
  • The data provides you the ability to take the right approach, and choose the right channel - WhatsApp, Facebook, Instagram, SMS or Email
  • And you can further optimise by segregating Abandoned Cart Recovery - by segmenting users based on region/demographic/age/past purchases etc., and target them with different marketing approaches  
  • Send cart recovery notification addressing the drop-off reasons based on analysis, compensating with offers
  1. Implementing a personalised checkout experience

It’s key to implement a checkout process that suits the individual. 

An ideal checkout process involves the least friction & seamless payment among many like in the 1Click Checkout.

‍But adding the element of customer experience to the checkout process requires Personalisation. This is achieved through analysis -

  • Whether they are Repeat Shopper/Subscriber/VIP Members
  • The type of Device they use (for example ease of payment mode varies between PC & mobile)
  • Choice of delivery option (mode of delivery, speed etc)
  • The Channel of approach (via social media, ad promotions, website etc)
  • Choice of payment (BNPL, UPI etc) with the Location of the individual (analyse the major mode of payment used in the area)

Most of the personalisation is addressed through brand data coupled with the 3PL logistics solutions data, working together to establish the right system.‍

  1. Supply chain optimization tests to function as a whole

When a brand employs 2 or more 3PLlogistics solutions entities to accomplish a perfect customer journey, it doesn’t work without tests.‍

But to understand the influence a change in one 3PL has on the other and as a whole needs external examination.

  • The delivery efficiency that varies with 3PL partners can be studied to give you the optimal 3PL that could suit your brand
  • The changes in the supply chain with climate, region, time, holiday, and other criteria to prepare for demand, tweak marketing etc.
  • Establish percentage of drop-off in the areas of pre-purchase, post-purchase, and post-delivery in order to optimise services.

With the wants & needs of e-commerce changing every day, this helps keep track of the…

Normal - Demand that remains relatively unaffected on the day-to-day

Unusual - Sudden increased interests, but just a fluctuation that returns to normal after a period

New Normal - Consumer interests that have increased and remain high

To Wrap it UP -

Ensure maximum and optimal utilisation of e-commerce services along with 3PL services. By making decisions using Logistic intelligence.

  • Providing you with the information to customise functions of your 3PL services to work as a whole instead of separate units
  • Optimising them for the reverse logistics essentials based on location and other criteria
  • Effectively managing RTOs and NDRs. (RTOs sometimes cost 5-10 times the cost of fulfilment, and brands don’t need that)
  • Coordinating through a secure communication channel where the customers are all kept in the loop throughout purchase/refund/exchange journeys

Connecting the dots the right and desired way is the goal. 

The dots are the 3PLs. And with Pragma, you see the big picture. 

Simplifying all of E-commerce!

Talk to our experts for a customised solution that can maximise your sales funnel

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