All shippers have a set of performance metrics or key performance indicators (KPIs) to work toward on the fulfillment front. On-time in-full (OTIF) is one broad goal for every order, while order accuracy, days to delivery, returns turnaround time, meeting next-day shipping commitments, and other metrics also factor into the equation.
Hitting these goals can be difficult in today’s fast-paced fulfillment environment, and particularly if fulfillment is not a core competency for the shipper. The online retailer whose business has grown rapidly over the last two years, the manufacturer that focuses on producing quality products, and the brick-and-mortar store that’s had to shift over to more online sales may all struggle with new fulfillment realities.
Knowing this, the third-party logistics (3PL) sector has been stepping up its game and offering a broader portfolio of services to a wider variety of customers. Once the domain of very high-volume operations, now even the small business that sells apparel online realizes the value of outsourcing some or all of its fulfillment operations to a reliable third party.
The e-commerce boom has clearly driven more companies to explore the 3PL route. Expected to cross the $1 trillion mark for the first time ever in 2022—a milestone that was originally set for 2024, but that was moved up courtesy of the pandemic—U.S. e-commerce sales have been on a tear.
Globally, e-commerce sales are expected to total $5.5 trillion worldwide in 2022—a number that’s expected to continue growing over the next few years. According to Shopify, more than 20% of the total global retail sales in 2022 will be generated online. That means more than $0.22 of every $1 spent on retail goods this year will be transacted over the Internet.
“Over the past year, we’ve seen e-commerce retail sales continue to ride the momentum of 2020, in which sales increased very drastically due to pandemic related restrictions and the closure of brick-and-mortar stores,” says Nia Hudson, research analyst at Transport Intelligence Ltd. (TI). “Customers continue to shop online more, and for a greater number of categories than ever before. As a result, an increasing number of businesses are choosing to move online to capture a wider audience, particularly small- to mid-sized enterprises.”