Pushed by Amazon to compete with free delivery, often in two days or less, and to provide subscription-based offerings (such as curated box-of-the-month products or routine replenishment of consumables) atop incredibly slim margins, more omni-channel and e-commerce retailers are turning to third-party logistics and fulfillment service providers (3PLs) for fulfillment solutions.
“Just about everybody in retail is being dragged along by what Amazon does” says Robert Lieb, professor of supply chain management at Northeastern University who has surveyed 3PL CEOs for nearly 25 years. “They are trying to respond with an omni-channel solution to maintain brick-and-mortar stores, but also be competitive in e-commerce.”
“Because a lot of retailers—particularly small ones—can’t afford to put together their own stand-alone e-commerce business with the geographic and inventory positioning capability to meet same-day/next-day delivery expectations, they’re asking 3PLs to help,” Lieb adds, noting it’s become the fastest growing part of the 3PL business in the last five years. “Last year, of the 3PLs I surveyed, almost 14% of their revenue consisted of e-commerce. The year before it was 18%.”