Are Turnkey Logistics Solutions the Key to E-Commerce Success?
Facing the threat of closing their doors for good in 2020, retail businesses across America and all over the world pivoted to online sales.
For some small businesses, this turned into a full-scale shift to e-commerce. Retailers invested in ways to manage inventory and orders on their own – moving sales to ecommerce sites like Amazon and using logistics services to ship right to customers’ doorsteps.
While some created in-house supply chains, many smaller businesses opted instead to use pre-made logistics solutions. These are usually the courier services like DHL and Amazon that ship goods from manufacturers directly to customers through only one contract.
These prebuilt, standardized solutions, often referred to as turnkey solutions, caught on fast because they are designed to be ready to go right out of the box. There’s no trial and error required by businesses unused to managing logistics.
So are turnkey logistics services right for your business?
Let’s look at what employing turnkey logistics in your e-commerce business might look like and what to consider before purchasing such a solution.
What is turnkey logistics?
A turnkey service is a single service or contract that fulfills multiple tasks predictably and in a similar manner for multiple clients.
In the world of logistics, turnkey refers to a solution that includes everything you need for your logistics. This type of pre-packaged solution will often include:
- Warehouse management
- Picking, packing, and shipping
- Inventory and order management
Each part of a turnkey logistics service comes already integrated into all the other parts, making this type of solution simple to implement. On top of that, everything is under one contract, so you only have to deal with one point of contact for your logistics.
Furthermore, most major turnkey services like DHL and Amazon operate and own every aspect of their logistics. This lets them easily offer predictable pricing and shipping times and integrate analytics software into all parts of the process.
Should I purchase a turnkey logistics solution?
As an e-commerce retailer, you naturally want to reduce the cost of investing and developing elements of your supply chain — all while ensuring long-term stability.
Some other reasons might include:
- Improved inventory management
- Better quality assurance
- Supply chain stability
- Faster implementation speed
However, just because you want all of the above doesn’t always mean a turnkey service is the only solution to your problem.
Three things to consider before purchasing a turnkey logistics service:
#1 Do you need to customize your logistics?
The problem with any solution labeled as “turnkey” is that there is often little to no ability to customize and change it. To provide a fast, one-size-fits-all service, turnkey logistics are built with the general needs of many different clients in mind.
If you have specific requirements that other companies do not, such as the need to refrigerate your product, you’ll likely have trouble finding a turnkey logistics company that works for you.
#2 Is low-cost your highest priority?
Purchasing a courier service that integrates multiple elements of your supply chain drastically reduces the number of vendors you work with and the amount of oversight required. That reduces your internal costs since you won’t need to invest in the construction and maintenance of warehousing space, processes, engineers, or any other assets.
However, there are other, hidden costs to turnkey services. Because they are inflexible and work with large numbers of customers, they don’t need to set prices that pander to your business. They can raise rates at any time and if that happens, there is little your company can do besides switch services.
To make sure you find the right solutions at a price that works for your business, you may want to consider working with a fourth-party logistics provider.
#3 Do you only need a solution for a specific area or do you require a full-scale transformation?
Integrating analytics throughout every stage and between every system in your supply chain is key for your long-term success. Failure to properly integrate can lead to big losses from lost packages to delayed shipments.
However, while many turnkey logistics services have great internal analytics, they generally won’t integrate well with other parts of your supply chain. Some services like Amazon won’t even integrate with other storefronts. Turnkey services work best when they manage your entire supply chain and not so well in tandem with other services.
Turnkey Logistics Solution Types
Large-scale logistics used to be the territory of the few businesses with the money to afford it. Today’s turnkey solutions are designed so that businesses of any size can source and ship their goods anywhere in the world.
As it’s still a rapidly developing industry, turnkey logistics services only have two categories they can be broadly categorized into.
#1 Third-party providers
As mentioned earlier these are the most common services done by all-in-one couriers like Amazon and DHL.
Particularly with Amazon, this type of solution allows you to relinquish most of the responsibility surrounding logistics management. If you are selling your product on Amazon’s platform, all you need to do is select to use Amazon’s in-house fulfillment service (FBA) and you won’t have to lift a finger to get your product delivered to customers.
However, the third-party turnkey solution makes it easy to start selling online right away, but you are unable to customize fulfillment at all. Which couriers you use, where your inventory is stored, and what priority your order is given are all in the hands of the provider.
While solutions like these can be a huge help for businesses just getting started with logistics, they may not be the best for growing businesses that want more control. Fortunately, there’s a new option out there today.
#2 Fourth-party logistics partners
Fourth-party logistics providers are a new type of turnkey service created to offer more flexibility than courier services.
Unlike third-party solutions, these providers aren’t monolithic single-platform services. Instead, they have large arsenals of independent third-party partners (warehousing, fulfillment services, shipping) from which they pick to form your ideal logistics operation.
Working with a custom provider, you can have all the flexibility you want, coupled with a truly full-scale logistics solution. For those looking to differentiate their company and build brand value, this type of solution will be the best option.
Work with CBIP – a turnkey 4PL service for global supply chains
We created CBIP to provide growing businesses with a turnkey service that works with you at every stage of your growth.
When you sign a contract with us, we connect you with a team of thoroughly-vetted third-party providers at the prices, shipping times, and routes that work best for you through our proprietary six-step process.
Working with us gives you flexibility you can’t find with other on-contract logistics services.
Do you need to change where your goods are shipped or are unhappy with an element of our chain? We’ll work with our network to find a provider that’s a better fit.
Only want a service for one part of your supply chain? Unlike third-party turnkey services, we can integrate anywhere and work with your other providers and even connect our analytics software.
Ready to take control of your logistics? Get in contact with us today for a free consultation.