Triple Win: How Consolidator Relationships Benefit Brands, Retailers, and 3PLs
In fulfillment, a consolidator is a third-party logistics company (3PL) that ships multiple brands to a single retailer. Instead of a brand shipping one purchase order to the retailer, a consolidator aggregates multiple brands into one full container load, a much more cost-effective way to transport goods.
Working with a 3PL that is a consolidator is win-win for brands and retailers. And it’s a win for the 3PL, too.
Here’s the breakdown.
Brand Benefits of Working With a 3PL Consolidator
The Retailer Pays for Shipping
For brands, this is huge. Their shipments are no longer pre-paid. For brands that consolidate to retailers like Sephora, Ulta, Dick’s Sporting Goods, or Macy’s, that translates into hundreds of dollars saved per week. For some, thousands. Because these retailers send their own trucks and cover the shipping costs, consolidated brands don’t have to work with less-than-truckload (LTL) carriers. They don’t have to deal with the time and expense that comes with managing their own B2B freight.
Access to the Right People
Breaking in with a major retailer typically isn’t easy for young upstart brands. However, a 3PL with deep consolidator experience and strong retailer relationships can help. For up-and-coming brands with big-time retailer aspirations, the right 3PL can help them understand when they might be ready for those conversations.
Retailer Benefits of Working With a Consolidator 3PL
Multiple Brands, Full Trucks
For a retailer, a relationship with a 3PL with the capability and the volume to consolidate multiple brands and, ultimately, fill trucks in one shipment is a huge win. Everyone knows full trucks are always better than less-than-full trucks.
Certainty
Say a retailer’s truck is coming to a warehouse on a Tuesday to pick up 13 purchase orders from 13 different brands. A consolidator can tell them on the Friday before what their estimates are and then provide them with updated numbers on Monday.
Because consolidator 3PLs have such frequent communication with their retailers, there are no surprises — retailer chargebacks or otherwise. No situation exists where the 3PL says, “Expect five pallets on Tuesday,” only to find out on Tuesday that there are 10.
Fewer Road Miles
Consolidators save retailers hundreds of thousands of road miles. Not only does that have material financial value for the retailer, but it also raises its sustainability profile — which, in turn, becomes a marketable value proposition to brands and customers.
Benefits of Being a Consolidator 3PL
Access to New Brands
In the same way that a 3PL’s consolidator relationships can help its brands get in with major retailers, those retailers often refer brands to the 3PL when they’re seeking a new fulfillment provider or adding new channels such as e-commerce or dropship. Retailers know a good track record when they see one — and if a fulfillment partner is able to help their brands gain market share, that’s good for everyone.
Predictability
So much of fulfillment is about being able to know what’s coming. Consolidator relationships allow a 3PL to staff properly and build a cadence. That cadence helps it consistently meet retailer requirements. If a 3PL can do the same thing every day and efficiently allocate resources as needed, it will be more cost effective, saving its brands money.
It’s Win-Win-Win
With consolidator relationships, brands, retailers and 3PLs win. Brands save meaningful dollars and strengthen relationships with retailers. In turn, retailers access products from multiple brands with less coordination, fewer road miles traveled, and reduced environmental impact. Finally, the 3PL wins, accessing new brands to partner with while enjoying a reliable level of predictability. It’s a symbiotic relationship all around.
Thom Campbell is the chief strategy officer at Capacity, a third-party logistics provider with facilities in New Jersey, California, Indiana, and the United Kingdom.
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Thom has worked to grow Capacity since its earliest days alongside his co-founders. He has held a number of roles, including leading client services, and currently oversees sales and marketing. Thom takes a special interest in attracting and retaining the people who make up Capacity’s extraordinarily passionate culture. Prior to Capacity, Thom was with Morgan Stanley for 7 years, managing investment banking and investor relations for institutional mutual funds. Before joining Morgan Stanley, Thom was at Bottomline Technologies, implementing electronic payment systems for major financial institutions. Prior to that he worked at the American Institute of Chemical Engineers. Thom holds a degree in English from Princeton University.