5 Mistakes that can Stop Growth for a 3PL Business

While e-commerce logistics players are all gung-ho across Asia given the rise of local and cross-border online selling in almost all economies, traditional logistics players are facing the heat in the same markets. 3PLs for long have enjoyed their honeymoon with brick-and-mortar retail and are now experiencing turbulence in the new-age e-commerce era. The reasons for this dip in their fortunes are many and a majority of them lie within their business model, inability to read the changing trends in modern logistics, and reluctance in metamorphosing as per market requirements.

As traditional logistics industry struggles and tries to find ways of survival in the face of industry upheavals and competition, there are a few crucial mindset changes that 3PL players need to effect and ignoring which may very well put the final nails in their coffin. Given the importance in and dependence of brick-and-mortar businesses that the traditional logistics industry has enjoyed for decades, it wasn’t in a mind frame to acknowledge the sudden emergence of e-commerce. Online selling and buying has completely altered the business landscape across continents and has impacted many a business model, of which the 3PL industry is a major one. E-commerce serves the needs and requirements of the new-age citizen and hence needs logistics that is more suited to its business model. An earlier post, Dissimilarities in Traditional and E-commerce Logistics that are Killing the Former, highlights the basic differences between the two logistics models and offers good learning for 3PL players. Traditional players need to take all these into account and change their operation model to suit the changing demands of retail. Businesses world over have understood the role e-commerce is going to play in the future and it can be called revolutionary, to say the least. Hence, it is imperative for traditional logistics players to understand and admit the emergence of e-commerce and delve deeper to introspect where they lack. 3PLs can actually turn the e-commerce challenge into an unprecedented opportunity by updating their processes and model to suit the needs of e-commerce logistics, which is fundamentally different from their current one. This is crucial because they just cannot anymore rely on the growth forecasts of their traditional B2B business, which is sure not to happen. Physical retail is on the decline because e-commerce is on the rise. Sooner or later, e-commerce will grab a major chunk of all retail and 3PLs depending on their traditional customer base will be left licking their self-inflicted wounds.

Secondly, even when 3PLs make efforts to embrace the new model and change themselves at various levels to lure online sellers, brands, and marketplaces, they will have to ensure that the change is total and not superficial. To start with, they will have to shed the flab of their deep rooted philosophies in terms of customer experience. This is because their entire customer base will get shifted from B2B to B2C, which is a different ball game altogether. Individual online customers root for certain sellers, brands, and marketplaces in the e-commerce arena because for them, their shopping experience does not end with buying a product online; rather, a large part of their satisfaction and happiness is associated with timely product delivery. Today’s consumer wants to save time and money and hence shops online instead of visiting physical retail outlets. They want to possess the product at the earliest and hence, 3PLs will have to adapt to this huge change in their perception of a customer. While they have been accustomed to offer customer service that was reactive and rigid in the B2B model, in their new manifestation, they’ll have to perfect the art of responsive and flexible customer service in order to be picked by businesses as logistics partners.

Another important change that traditional 3PLs are sure to experience in the new retail order is that the scales weigh heavily in favor of the customer. Unlike the golden period when customers would lineup at their doorstep for bulk logistics solutions, the scenario for logistics players is anything but similar now. In the presence of hoards of e-commerce logistics companies and innovative startups, traditional 3PL players need to be ready to make double the efforts to approach and convince customers about competencies vis-à-vis their abilities to fulfill their requirements. In the flatter world, e-commerce sellers and marketplaces are spoilt for choice when it comes to logistics, though reliability is an issue in certain parts of Asia. In this scenario, 3PLs need to chalk out and implement definite plans of approaching customers and converting them by leveraging their experience in the domain.

In their battle for survival and growth, traditional 3PLs will also have to wage wars with new-age startups like Delhivery that have kind of perfected their offerings to suit the ever-changing logistics requirements of online sellers and marketplaces. 3PLs will do themselves a huge favor by not dismissing these new kids on the block as one-time wonders that’ll eventually fade away. This is because changing scenarios in the region are pushing governments to encourage a culture that is giving birth to wonderful startups. These fledglings are eager to serve the e-commerce sector with newer solutions that wow their customers. Another reason that makes customers prefer startups is that they are nimble enough and offer customized solutions to their clients. The asset-heavy traditional 3PL players need to unlearn and relearn such new rules of the new game, because these are important ones that endear logistics players to customers.

The fifth mistake that traditional 3PL businesses can do to seal their fate is to turn their back on technology upgradation. This one’s the gravest of them all because e-commerce stands on the solid foundations of technology. Technology is changing the world at a rapid pace and is permeating every aspect of business too. Traditional methods cannot match the pace of newer ones and the scale and volume of current transactions is just beyond the reach of archaic processes. E-commerce demands smarter, faster, and reliable solutions that minimize human intervention to fulfill transactions. Drones are replacing delivery boys even as business collaboration is becoming the order of the day. Old 3PLs need to broaden their horizon and see the big picture that’s changing swiftly. They need to shun their thoughts of today and look beyond tomorrow to remain in business in this dynamic scenario. They need to embrace new technology with open arms in order to survive and flourish.

If traditional 3PLs fail to take note of these basic mistakes and choose to be in sweet oblivion, they’ll be committing nothing less than hara-kiri.


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