Outsource to a 3PL
Hot spots in e-Fulfullment
-- Modern Materials Handling, 5/15/2002
To avoid making large capital investments initially, startup e-fulfillment operations often turn to third-party logistics (3PL) distribution firms. A 3PL provides fulfillment expertise, while startup personnel manage the Web site, marketing efforts and other front end functions.
But there are many variations upon this basic formula. Grocery Gateway is one example. It began as an on-line grocery serving Toronto-area customers in 1999. When this pure-play strategy fell short of corporate growth goals, however, the company added a 3PL capability. As a 3PL (see sidebar - Grocery Gateway is much more than groceries ) it now fulfills orders for furniture, file cabinets and other office products for Staples Business Depot.
Reliance upon 3PLs isn't just limited to startups, to be sure. Large, older businesses outsource as needed. And sometimes they do so with others in their field. Booksellers Amazon.com and Borders operate a co-branded Website with Amazon doing the order fulfillment.
Royal Appliance Mfg. Company's Dirt Devil subsidiary has outsourced e-fulfillment and customer relationship management for its new product launches to Fulfillment Plus (see sidebar below - A 3PL for floor scrubbers and finding family roots).
Elsewhere, Canadian Tire has distribution and inventory systems to replenish 440 stores with pallets and cases. But these systems 'weren't set up to ship individual items to consumers,' says Bruce Johnson, vice president, distribution and express auto parts.
So Canadian Tire uses a two-step process. First, its DCs pick inventory needed for fulfilling on-line orders. Then that inventory is shipped to a second facility managed by 3PL provider, Kuehne & Nagel. It fills the on-line orders, making the final shipments to customers by parcel delivery carriers.
Click here to read the sidebar on Grocery Gateway

Click here to view the Video Clip of Grocery Gateway's distribution center in Toronoto.
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