HOW TO

Improve Fulfillment
To Level Up Your
Customer Experience

Custom content for Essendant by studioID

Is your business ready to fulfill its
digital future?

Whether you’re a new company whose value proposition

comes to life through an engaging digital experience or an
established brick-and-mortar retailer looking to expand
online, delighting customers in today’s marketplace requires
all fulfillment channels to be fully developed.

Yet fulfillment is not a core competency for many retailers.

As a result, these organizations risk fulfillment activities
falling short of customer expectations — degrading the
customer experience and challenging customer retention.

Consumers are unforgiving of bad fulfillment experiences

with a brand. Up to 85% will switch to a new company after
one poor delivery event.1 And two-thirds (66%) of retailers
think consumers are more likely to complain about the
delivery experience than the item they bought.2

B2B shippers face the same level of expectations, whether

it’s a single pallet or a full truckload of product. Many
shippers must contend with business customers’ on-time in-
full (OTIF) commitments, and missing those deadlines can
cost shippers the business.

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Retailers also face challenges in managing the ongoing
pressure to improve productivity and meet evolving
customer expectations for a fast and seamless fulfillment
experience. Headwinds for fulfillment excellence include:
• Capability shortcomings. Servicing customers in both
B2B and DTC channels, fulfilling across different units
from eaches to truckloads, and handling multiple
product formats including bulky, liquid and hazmats.
• Transportation depth. Managing an in-house fleet and
drivers along with maintaining diverse relationships,
including parcel, LTL and last-mile carriers.
• Capacity. Managing carrier relationships and capacity
availability to meet services commitments.
• Labor. Addressing competition for staffing, which
pushes up labor and benefits costs, putting pressure
on margins.
• Technology. Deploying multiple solutions to manage
orders, the warehouse and transportation, which
requires significant investments.
• Managing imports. Importing and distributing
containers throughout the U.S., requiring customs
knowledge and logistics expertise.
• Network footprint. Moving inventory closer to
customers, which reduces shipping costs but could
require significant investment.
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As companies hone their supply chain strategy, they face a
make-or-buy decision to improve fulfillment: Invest capital in
warehouse capacity and technology or work with a third-
party logistics provider (3PL) to manage a portion or all of
the fulfillment process.

“Because the cost of capital is so high, partnering with a 3PL

can help with many of those issues,” says Daniel Stanton,
a supply chain educator and consultant. “As a shipper,
you can focus on the challenges in which you need to be
investing time and energy to successfully deliver value to
your customers.”

With help from a third-party logistics provider (3PL), you

can turn fulfillment frustration into a competitive advantage.

“Everyone wants free shipping now, right?

So having the right 3PL relationship
is key because you need to handle
last-mile delivery efficiently or you’re
not competitive.”
Daniel Stanton
Supply Chain Educator and Consultant

4
What is a 3PL?

Third-party logistics providers, or 3PLs, have been a part
of the supply chain industry since the 1970s, providing
outsourced warehousing, distribution and fulfillment
services. Companies store products at the 3PL facility, and
the products are shipped directly to customers once they
place an order. A 3PL can handle drop shipping, parcel
deliveries, less-than-truckload and full truckload fulfillment.
The 3PL does not own or take possession of the products.
Instead, it provides services for its client companies.
A 3PL manages the back end, nuts and bolts of your
physical distribution, helping to support the brand promises
made through the front end of the sales process.
Engaging with a 3PL allows companies to focus on their
core competencies and direct capital expenditures to vital
areas of their businesses. A company can focus on product
development and marketing and leave the fulfillment to an
expert partner.
“With a 3PL, the sky’s the limit,” says Chris James, senior
director of fulfillment operations for Essendant, a leading
3PL fulfillment provider. “We will explore anything a
customer may need in the supply chain.”

“A 3PL is customer-facing, handling last-mile delivery and

drop shipping and fulfillment,” Stanton says. “The 3PL serves
as the interaction between your customer, your products or
services, and your firm.”

Companies may engage a 3PL to handle specific segments

of a company’s distribution channels while other channels
remain in-house. Some companies outsource all their
fulfillment operations.

5
Identify your potential for
fulfillment engagement
In the fulfillment landscape, 3PL customers typically fall
into two categories: the “must-haves” and the discretionary
users. In either case, delivery excellence is critical for
customer satisfaction. A recent survey found that when an
order is late, 41% of consumers blame the brand and only
32% think the courier is responsible.3
A “must-have” company doesn’t have any in-house
fulfillment capabilities. It may be a specialized manufacturer
or a digitally native vertical brand. The company focuses on
its core mission and relies wholly on outsourced fulfillment
services. These companies understand the value a 3PL
brings to their fulfillment process. It can be faster for a
“must-have” company to ramp up sales with a 3PL than to
build its own infrastructure, generating cash flow to support
business development.
Discretionary 3PL users may perform some fulfillment
in-house and outsource other segments. For example, a
manufacturer or distributor that shipped pallet loads to
retail distribution centers may have bolted on e-commerce
parcel fulfillment during the pandemic. Their systems are
set up for large quantities, but smaller caseloads or eaches
are inefficient. They look to a 3PL to manage e-commerce
orders. Some may rely on a 3PL to manage seasonal surges
during the holiday season or back-to-school shopping.
Working through these types of demand spikes can be
challenging for a business.
For B2B shippers, OTIF commitments are critical. Whether
you’re moving a pallet or truckload to a distribution or
retail location, meeting delivery windows and quantity
commitments requires a fulfillment process that’s set up for
the challenge. Otherwise, your company could face fines
and even lose the business entirely. An experienced 3PL
can help improve your OTIF performance to meet those
commitments and retain the revenue stream.
“In some cases, you can do some of it yourself, but in most
cases, you need to weave together the right combination of
partners that bring the right skills, expertise and value to the
table so you can orchestrate a supply chain that delivers the
best value to your customers,” Stanton says.
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How a 3PL improves efficiency
and customer experience
A 3PL typically offers the following fulfillment services
customized to a company’s business requirements:
Receiving. A company sends product to a 3PL
facility, where it is added to the inventory. The
product may come directly from a manufacturer
and other suppliers. The 3PL manages the
product’s location so it can be efficiently picked
and packed for customer shipment.
Warehousing. The 3PL stores the product
where it can be easily accessed for distribution,
according to specific product requirements such as
climate control.
Picking. The 3PL selects products from bins,
shelves, pallets or other material handling
structures according to customer orders in
compliance with the client’s standards for accuracy
and timeliness.
Packing. After picking, the items are packed for
shipment in cartons, pallets or the most suitable
format for the shipping method. Cartons and
packing materials can be customized to maintain
the client’s brand image.
Drop shipping. Fills orders from a distributor’s
inventory with guaranteed delivery, reducing the
need for the merchant to carry inventory.
E-commerce shipping. A 3PL can handle multiple
units of measure to pick pallets, cases and eaches.
Value-added services (returns, kitting,
customization). Depending on the client’s
needs, a 3PL can perform additional activities
such as managing returns, combining multiple
items into a kit, and customizing products and
packing materials.
“Shippers’ needs are unique — and 3PLs
have the versatility to meet them. It’s not
a one-size-fits-all approach.”
Chris James
Senior Director of Fulfillment Operations, Essendant
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How a 3PL can turn fulfillment into a
competitive advantage

As we all know, Amazon is the industry standard for

turning fulfillment into a competitive advantage. While the
e-commerce giant is a unique example, many companies
can adopt some best practices to transform their operations
to meet expectations for services such as two-day delivery
and product tracking.

Partnering with a leading 3PL can help ensure the customer

relationship that begins with digital e-commerce is fulfilled
on the physical side of the transaction. Look to a 3PL
partner to provide these advantages:

• Industry expertise. Whether you rely on a 3PL for

some or all of your fulfillment operations, they have
capabilities that most companies don’t develop for
themselves, such as information technology, better
processes, experienced staff and dedicated facilities.
“Because a 3PL focuses on these things every day, they
are likely more efficient and cost-effective than what you
can do internally,” Stanton says.

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• Expense reduction. Working with a 3PL can move
fulfillment costs from a capital expense to an operating
expense so companies don’t have to invest in their own
facilities. A 3PL can scale up and down for seasonal
surges and peak demand. Also, labor costs are carried
by the 3PL, reducing overhead expenses. With efficient
warehouse processes and technology, fulfillment costs
could end up being less than in-house options.
• Network design. Locating inventory closer to customers
is cost-efficient, supporting fast delivery with lower
shipping costs. A 3PL typically has a presence in
major logistics hubs nationwide, with facilities already
equipped with the infrastructure and technology to
handle last-mile delivery.
“Network design is one of the biggest challenges most
shippers have,” James says. “You must have a fulfillment
partner that is in your markets with nodes that can
satisfy your customer base and your service offerings.”
Optimized network design can also reduce costs for
inbound shipments. Strategically located warehouses
reduce zone rates and lead times so product is available
faster and at a lower cost.
• Omnichannel commerce. A 3PL can support fulfillment
through multiple channels, including traditional
e-commerce parcel delivery and drop shipping, as well
as click-and-collect options such as BOPIS, BOPAC
and lockers. A selection of well-executed options gives
customers a better experience, leading to improved
retention. Data analysis can pinpoint which products
should be inventoried at which location based on
historical and predicted volumes.
• Scalability. Shippers can leverage a 3PL’s embedded
footprint and infrastructure to add or reduce capacity
as business requirements change. Ramping up to handle
peak season e-commerce or support a product launch
can happen without long-term investments.
• Visibility and transparency. Visibility is the ability to see
inside your supply chain, and transparency is being able
to share information with other parties. A 3PL should
have the technology and processes to collect and
synchronize data and share it internally and externally.
• Customer satisfaction. The Amazon effect leaves
customers expecting consistent, fast deliveries with
near real-time communication. “We’re past the point
where customers will tolerate mediocre e-commerce
fulfillment,” Stanton says. For B2B shippers, a 3PL can
boost OTIF rates. James says Essendant helped one
fulfillment customer improve their OTIF rate from the
mid-80% range to 96%.
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Take the next step to
better fulfillment
Transforming fulfillment with a 3PL relationship is about
more than cutting costs. It should focus on value, service
and quality. For many companies, the fulfillment process is
one of the primary connections with customers. Your 3PL
partner ensures that the relationship lives up to your brand
promises, fostering customer loyalty over the long haul.
“It’s not just about price. Make sure you understand the value
that could be gained from the relationship,” Essendant’s
James says. “The 3PL may bring things to the table that you
didn’t know you wanted or needed.”
With consumers making buying decisions based on delivery
time and costs, the ultimate goal is to tap into a 3PL for
their capabilities, technology and workforce based on your
unique needs.
“Your relationship with a 3PL is not a commodity
relationship; it’s a business partnership,” Stanton says. “You
need a partner that aligns well with your business, your
culture and your strategy, as well as somebody that’s
providing value so you can both succeed in the relationship.”
With over 100 years as a wholesale distributor, Essendant
offers its logistics expertise as a 3PL fulfillment provider. A
broad range of customers across industry verticals count
on Essendant to manage and deliver products to customers
each day.
Get started with Essendant today
10
Sources
1
“FarEye Study Says Retailers Risk Losing 85% of Online
Shoppers Due to Poor Delivery Experience,” Business
Wire, July 18, 2023, https://www.businesswire.com/news/
home/20220715005443/en/FarEye-Study-Says-Retailers-
Risk-Losing-85-of-Online-Shoppers-Due-to-Poor-Delivery-
Experience.

2
“Fixing Failed Deliveries: Stamping Out Faulty Fulfilment,”
Loqate, https://info.loqate.com/hubfs/Loqate_Fixing%20
failed%20deliveries.pdf.

3
“Fixing Failed Deliveries: Stamping Out Faulty Fulfilment,”
Loqate, https://info.loqate.com/hubfs/Loqate_Fixing%20
failed%20deliveries.pdf.

11
Essendant is a distribution company that provides
wholesale distribution and fulfillment services to resellers
and manufacturers, helping them expand their paths to
growth, improve their customer experience, and optimize
their supply chain to meet the demands of commerce
today. Essendant empowers customers with best-in-class
distribution capabilities for accurate and timely delivery
anywhere in the U.S., system integrations that enable
commerce from point of sale to delivery, and a broad
product assortment stocked for optimal distribution
throughout its network. With 100 years of experience,
Essendant fuels growth for over 10K customers including
independent resellers, retailers, B2B distributors, and
eCommerce businesses, ranging from startups to
multinational corporations.

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