The idea of an online business can be more than fulfilling. It promises you unconditional profits, a good reputation and much more than that. All you have to do is make the smart decisions along your way. One of which is leveraging the benefits of 3PL distribution centres. While you might have heard about warehousing, the idea of a distribution centre sounds confusing. But, don’t worry, we’ve got you covered!
There are many benefits of 3PL distribution centres. While some of these can help you scale your online business, others can cut down costs immediately. However, they are synonymously used with warehouses. Whether you’re just starting out or have been selling for a while, if you deal with physical inventory, you’ll need space to store your products.
If you’re selling for your home, you might have an extra room, where you are storing your inventory. However, as your business expands, hiring a space becomes mandatory. Moreover, this is regardless of the fact that you are manufacturing your inventory or sourcing from a supplier.
The only exception exists when you’re dropshipping. Because this is when you don’t have to get into the hassles of inventory. Your supplier directly ships the order to the customer’s doorstep and there is not much that you have to do.
In all other cases, storage becomes fundamental. And while most sellers look for low costs storage options, it isn’t always wise. You might not realize the issues of a warehouse and agree to rent it just because you are lured with the price. But, it is always important to member the impact a warehouse can have on your inventory.
Warehouse vs a Distribution Centre
When choosing a warehouse there are several considerations involved-
- Accessing the risks associated with your warehouse
- The hygiene conditions and any pest infestations
- Location of the warehouse with respect to the orders you’re receiving
- Storage costs and environment conditions for different types of goods
- Safety enablement for workers and more
This often involves a lot of time. And if you’re a small business, you might not even want to invest in a warehouse with substantial costs. So, is there a way out? With the benefits of 3PL distribution centre, you can forget about the hassles of a warehouse.
But first, you also need to analyze the needs of your business. If you are someone who is manufacturing goods regularly, warehouses will be a good option for you. But that doesn’t mean you deprive yourself of the benefits of a 3PL distribution centre. We’ll come to that in the next section.
While on the other hand, if you are someone who is just getting started in the market and souring from the supplier, leverage the benefits of 3PL distribution centre. So, now let’s’ try to understand the difference between a warehouse and a distribution centre in more details.
Precise Difference Between a Warehouse and a Distribution Centre
Primarily, a warehouse is used to store your inventory. So, if you have raw materials or finished products that you are planning to sell to the customer, store them in a warehouse. This doesn’t involve the movement of goods. Obviously, you’ll take the goods out when you receive orders. But, that doesn’t mean that your warehouse has any role to play in it.
In other words, warehouses are typically designed to store goods for as long as you want. If you receive any orders, you start shipping them. However, if you don’t they just keep lying in your warehouse. You are charged whether monthly or based on the space you occupy in your warehouse. Therefore, apart from the risk assessment of the space, your inventory just stays at one palace.
A distribution centre on the other hand is entirely different. No doubt that you send your inventory for storage at this place, but it is only temporary. In other words when you send your products to a distribution centre, you don’t mean them to stay for long. The distribution center therefore, acts as a bridge between the seller and the customer. Here’s how-
Suppose that you’ve partnered with a wholesaler or manufacturer. They ship the products to you as you receive the demand from the customer. However, they ship to the location where your business is actually located.
So, if you are conducting your business activities from Mumbai, your manufacturer will send you the products there. It is from there, that you store them and ship them to the customer’s address. But, there are several problems associated with this. Your customer will receive the product quite delayed. Moreover, your shipping costs will rise. So, if your customer from Chandigarh orders a product, the shipping distance will be huge.
The several factors involved in this process will be-
- Shipping costs will be unprecedentedly high
- There will be a risk to eh inventory in transit when shipping longer distances
- You cannot ship perishable goods
- The estimated time to deliver a product will be much greater
- The customer satisfaction will be impacted
All these will adversely impact the growth of your business. And in the ever competitive market, nobody wants that.
What Could Have You Done Differently?
In such situations, when your goal is to maximize your reach to the customers, it is best that you ship to an intermediate location. For example, let’s say that you are receiving a lot of orders from North India. Why not ask your seller to ship some products there? This is where you leverage the benefits of 3PL distribution centre.
With the benefit of 3PL distribution centre, you can ask your supplier to ship the product there. And because you know that the demand is high, these products won’t be staying at the distribution centre for long. Therefore, this serves the fundamental purpose of the distribution centre, which is to help you meet the requirements of customers more easily.
While a warehouse is where you store your products permanently, a distribution centre can be a temporary storage space, helping you cut down your inventory costs. In terms of operations, a 3PL distribution centre is more complex than a warehouse. There are several fast pace processes going on there. As a result of which, these centres leverage the latest technology.
If you are making use of the benefits of 3PL distribution centre, you are also harnessing their cutting edge technology indirectly. Some of the areas where the technology is extensively used are –
- Inventory management
- Transportation and delivery
- Order processing and fulfillment
From the distribution centre, your products are directly delivered to the customer.
What are the Benefits of 3PL Distribution Centre?
Let’s finally come to the myriad benefits of a distribution centre. If you want to utilize the benefits of 3PL distribution centre for your online business, you must partner with one. You cannot completely hire a distribution centre. And that’s because it will involve a lot of costs and efforts. So, unless you’re Amazon, start by finding the 3Pl distribution centres in the geographical region where you get most of your orders.
Reduce Business Costs
When you are leveraging the benefits of 3PL distribution centre, you are reducing your business costs. Imagine the shipping costs incurred in delivering a product to far off locations. There will be a lot of effort and costs involved in the process. Moreover, this would also mean a lot of business risks. As a result of this, your business costs rise. With the benefits of 3PL distribution centre you ship from the nearest location to the customer. Therefore, overall business costs reduce.
Make Better Decisions
When your efforts and money is being utilized into meeting the minimum of customer requirements, there is hardly anything you can do. Therefore, you end up with little or no innovation in your business. However, this can prove to be a bad idea. Remember that to carve a niche for yourself, you have to think creatively and adapt to the market strategies.
Leverage the Technology
One of the benefits of a 3PL distribution centre is technology. 3Pl distribution centres have advanced technology in several aspects. From delivery to storage and transportation, they use cutting edge products and techniques to deliver faster and efficiently. When you are shipping from theri centre, you are ultimately utilizing their resources for your business.
Focus on Customer Satisfaction
When you’re providing your customers with good products at low or no shipping rates with fastest deliveries, you are raising the customer satisfaction. Your customers will be happy with your business and spread it with word of mouth.
Scale Your Business
With the benefits of 3PL distribution centre you get to scale your business. You have less hassles related to your inventory. As a result of which, you can think and invest in growth strategies,
Earn a Better Reputation
A better reputation in the market comes from customer satisfaction. When your customers are more satisfied, you earn a good reputation. Shipping with benefits of 3PL distribution centre can help you earn this edge.
Establish Competitive Edge
Establish a competitive advantage in the market with the benefits of 3PL distribution centre. You can use their technology to drive faster and better than your competitors. This will lend you a competitive edge.
Do your research well before you partner with a distribution centre. Take a look at the benefits of 3PL distribution centre in your target geographical area. Then negotiate the rates based on daily deliveries. Remember to partner with a business that values customers and prioritizes their needs.
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