Inventory Management

3 reasons to hold stock in a 3PL warehouse

Cin7 Team Uncategorized Leave a Comment

It’s a sign of the times that 3PL warehouse space has expanded in major markets over the years. Driven largely by the growth of eCommerce, online startups turn to 3PLs to keep cost and complexity under control. Meanwhile, more mature and multichannel brands will also use 3PLs to scale up and hold products closer to where their customers live.

When brands really need a 3PL warehouse

Creating a great a product is a good start. Getting that product to customers through the quickest and smoothest roue possible is just as important. So choosing where you hold your products depends to a great deal on where your customers are, how many products you sell and how best to spend your capital. Every business is different, but here are three use cases Cin7 comes across when brands put some or all of their inventory into a 3PL warehouse.

When it’s cost-effective

This is the most common and obvious factor. When is running a warehouse more cost effective than outsourcing to a 3PL? We’ve come across fast-growing eCommerce brands that start out managing their own warehouse, but as sales boom and fulfillment becomes more complex, they find a 3PL warehouse a better choice. Higher volume requires additional space, which means a higher capital investment in real estate. Outsourcing offers an affordable and scalable alternative to investing in a bigger warehouse.

When things get complicated

Similarly, operational costs and demand on staff time increase with sales growth. Brands starting out may rely on a small staff to wear many hats at the same time. So as these companies grow, routine picking and packing eat up more of their time. Additionally, the more complicated a product (and its packaging, for example), the greater the demand on staff time. A company can choose to increase staff, adding to costs. Or, as we’ve seen, turn to a 3PL warehouse with the staffing in place to manage those operations.

When customers are far away

Finally, there’s the problem of holding products closer to customers in new geographies. We see this among brands that start selling in higher volume across multiple domestic regions or in a new overseas market. They will use one more 3PLs in conjunction with their own warehouses to shorten supply chains in these regions without the cost and staffing requirements of running multiple warehouses themselves.

Cin7 and the 3PL

Keep inventory in line with orders when you outource your warehousing. Use Cin7 to maintain inventory visibility and automate eCommerce order fulfillment in outsourced warehouses with our integrations to global, regional and specialist 3PLs. Click below to learn more about how Cin7 can help your brand.


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