New business models have led organisations to change their course. With the fast changing eCommerce industry, 3PL businesses are struggling hard to meet the demands of their customers across APAC.
Download this insightful whitepaper to understand how 3PL businesses can overcome these challenges & enhance their operational excellence with new age technology solutions.
Challenges faced by 3pl businesses - an Anchanto Document
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W H I T E P A P E R
P R E S E N T A T I O N
DEMYSTIFYING THE
CHALLENGES FACED BY 3PL
BUSINESSES ACROSS APAC
2. 3PL players across Asia Paci!c are on the
cusp of a digitized ecosystem with changing
world order because of eCommerce.
The 3PL logistics market is set to grow by 8%
across Asia Paci!c by the year 2022, meaning
the region will account for highest growth in
the digital commerce market. Thus, all
logistics businesses hold a choice: either
tread with the growing eCommerce market
or hit redundancy with the conventional
business model and risk being obsolete.
With the advent of omni-channel distribution
and enhanced signi!cance of o"ering a seamless
customer experience, marketplaces have played
a vital role in deriving new business models.
Given the time-sensitive nature of
eCommerce and higher order of consumer
experience, a completely new ecosystem
has been taking shape from the past decade.
An ecosystem that have changed the
dynamics of the very market.
Use of technology, agility in rede!ning
new strategies that account for
improved supply chain and the
emergence of marketplace models have
all given rise to the need for a highly
optimised ful!llment logistics: thus,
making it imperative for 3PLs to upgrade
for a more advanced role. The time has
come for all major players in the supply
chain to align & future proof for new &
upcoming trends in eCommerce.
3. Although 3PLs partners have seamlessly mastered the
requirements and functioning of B2B, there is still a dearth of
understanding when it comes to B2C. As brands and retailers
move from conventional sales structure to adopting strategies
such as D2C & O2O, their changing expectations from the
logistics partners have put 3PL businesses under pressure
The Tale Of Two Models
While the eCommerce players are
gradually trying to adapt themselves,
there is an undue turbulence due to the
fast changing eCommerce business
needs. For the 3PL businesses serving
these players, the transition from its
conventional structure to swiftly meeting
newer expectations could lead to an
operational chaos.
With the emergence of the marketplace
model, brands and retailers are trying to
solve a number of challenges such as
scalability, managing seamless IT
integrations, threat of overselling and
underselling without a controlled visibility of
stock !ow across multiple channels. This
has compelled these businesses brand
commerce to "nd a better logistics solution.
As brands and retailers move from
conventional sales structure to adopting
strategies such as D2C & O2O, their changing
expectations from the logistics partners have
put 3PL businesses under pressure. While the
pressure for brands and retailers is rising
from the customer’s perspective, the same is
true for 3PLs from brands’ perspective.
eCommerce has witnessed voluminous
innovation changes in the last decade.
However, for a 3PL to adopt the
marketplace model is quite complex. A 3PL
partner with the ability to scale with the
brands’ volume is important as otherwise,
the customer’s demands may not be met.
The third-party logistics and order
ful"llment providers need to secure more
customers, as well as have infrastructure
and capabilities to serve them all.
4. As per 2019 Annual Study
Whilst 3PL businesses are busy tackling these operational
issues, brands and retailers are becoming information
hungry and demand centralized control and heavy insights
to channelize their moving inventory strategies.
Thus, a 3PL needs to be equipped with the changing
dynamics of today’s business needs. With digitized
eCommerce, brands and retailers are maintaining a high
degree of scrutiny integrating di!erent marketplaces, all in
real time. This has led to undue expectations from their 3PL
partners as well. In this age of "erce competition, everyone
is busy holding each other accountable which ultimately
relays onto the logistics providers.
98% 3PL providers that use 3PLs have contributed to
improving services to the ultimate customers.
89% of Shippers and
73% of 3PL Users and
91% 3PL providers agree that 3PLs provide new and
innovative ways to improve logistics e!ectiveness.
5. Keeping Up With The
Infrastructure
Brands, retailers and all warehouse holders
are re!ning order-ful!llment strategy.
Although this is an ongoing process for most
organizations, satisfying demand for a wider
range of products and ever-faster delivery is
enough to keep most shippers busy.
Evaluating new technology and equipment,
and considering process changes that can
help them whisk orders through the pipeline
to the end-consumer has become a need of
the hour. And although technology plays a
larger role than ever in that process, experts
caution that companies looking to make
improvements should take a fundamentals-
based approach to evaluating their ful!llment
strategies in order to make the right moves.
Thus, evolving the role of 3PL from a
speci!c portfolio to running a full-"edged
ful!llment centre with intuitive insights can
alter the paradigm of 3PL businesses. With
new entrants and channels in play, one can
build onto an entire ecosystem that closely
follows the multi-modal purchase journey;
be it end consumer or retail stakeholders.
In accordance with the above argument,
therefore, 3PLs need to take a step back
and analyse the business forces that are
challenging their existence.
Brands and retailers want convenience and value, in order
to seek a high level of visibility with accrued insights
employing their customers, competition and di!erent
sales channels.
6. Managing IT Integrations
Multichannel eCommerce is a hard bargain
to execute. With the number of sales
channels rising day on day, 3PLs need to
stay updated with every new channel.
Firstly, it needs to be informed about the
newest upgrades that the existing sales
channel or a marketplace executes.
While they are trying to juggle between
brand commerce, end consumer
experience and streamline their work!ows;
it gets harder to have a dedicated task
force working on these integrations.
Secondly, investing in these integrations
cost-wise also becomes harder. As such,
approaching di"erent companies to
cope with all these critical hindrances is
a tough nut to crack.
With bigger players working along every
single integration at huge costs, it is
harder for 3PL businesses who are in
the transformation phase. Instead,
partnering with aggregators that
complement their requirements
enabled with a marketplace ecosystem
will prove to be a Hail Mary for them.
The advent of newer technologies is an
exciting possibility for rede#ning the
boundary between physical and digital
consumption. As it becomes cheaper
and more accessible, it will allow 3PL
businesses to add robust capabilities to
physical work!ows. Seamless and
integrated adoption will enable 3PL
businesses to create custom o"erings
and experiences unique to every
customer.
As brands and retailers want to improve on control
and visibility, it gets di!cult for 3PL businesses to
invest their resources in managing di"erent channels
with frequent upgradations.
7. Almost every warehouse across APAC has
solved the challenges puzzle for B2B orders or
large volumes of orders. Its dynamics thus,
were precise and aligned to speci!c industry,
speci!c quantity and speci!c working.
The transition from conventional operational models,
to including hybrid structure as per changing methods
requires agility and centralized hold. While it can be
achieved, how e!ective is it for 3PLs to focus their
e!orts on allied processes instead of its core
functions?
Realign SOPs and
Processes
8. Overall, the operations gap appears to have
altered the course of action for them. This
observation deserves further attention, as it
has been apparent for some time that 3PLs
need to dissociate from one single !ow and
adapt to di"erent industries, di"erent
services all under one roof. As much is the
consideration of their tailored needs, more
pro#ciency can be maintained. As such,
logistics services indicating modi#ed work
!ows will mean better sustenance.
Associating di"erent needs and
considerations as per industry wide
categories enables scalable, !exible and
consistent inventory and stock movement.
Illustrating the needs of the products in a
single facility without altering the course of
business model, will assist 3PLs to ful#ll
every customer, brand and retailer with a
little to no turbulence of operations.
Additionally, creating a perfect operation
prism will be a win-win situation to all its
actors viz. 3PL, marketplace, brands/
retailers.
9. In this digitized day and age, a robust and seamless
system is an obvious choice for every consumer.
While the domino of consumer experience topples
in the multi-channel supply chain, it is ultimately
burdened onto 3PL businesses to foresee its
complete execution.
Stress due to growing
digitized economy
10. While countries across APAC are at
various stages of their technological
development and consumers have widely
diverging levels of digital literacy, the
similarities of consumer expectations
across the world remains more familiar
than being di!erent. Consumers,
irrespective of their background,
increasingly expect a seamless shopping
experience, which minimizes the time they
spend on retail chores to ensure instant
grati"cation of their desires.
As such, brands and retailers want
convenience and value, and seek a high
level of visibility with accrued insights
employing their customers, competition
and di!erent sales channels.
If 3PL having to focus on sales and
marketing as well can be susceptible to
their operations glitches. While an e#cient
supply chain focuses on being cost-
e!ective and predictable, an agile supply
chain is $exible and adaptable. Adopting a
scalable and $exible system, thus freeing
them from complementary chores whilst
focusing on what’s needed will therefore
prove to be bene"cial.
11. The gross spending structure of APAC is increasing,
which has added a more favourable business structure
to international trade and commerce. Yet, 3PLs are still
struggling to adapt to the cross-border landscape
whilst balancing their local operations.
Cross-border
Landscape
12. Ecommerce in the APAC region is booming, and
this enormous online market will grow exponentially
to reach USD 1.2 trillion by 2022. Incidentally, the
demographics is in favour of this spending habit;
half the region’s people are between the ages of 18
to 35 – and coming into their prime spending years.
Understanding consumerism and patterns of
potential, brands and retailers would want to
enhance a global outreach. As such, 3PLs also need
to adapt accordingly. Therefore, getting to know
the nitty-gritties of cross-border eCommerce,
custom policies, rules of origin, cultural clusters will
enable them to strategize globally thus improving
their standards of business.
Many a times, shippers outsource a wide range
of logistics services,
With the most prevalent being:
Domestic transportation
International transportation
Warehousing
Freight forwarding
Customs brokerage
71%
69%
50%
40%
81%
APAC Study of 3PL
13. The Implication Of
Demand Hygiene
Demand hygiene means the factors that are not
noticeable but, its absence can cause a severe
bull-whip e!ect; ultimately arm-wrestling the 3PLs.
Therefore
Real time analytics
Data driven insights
Channel-wise performance
Peak season ful!llment
are such factors that brands
have scrutinized 3PL with.
1
2
For any business to be e"cient, understanding their customers is
key to their success. With the raging demand coming from brands
and retailers, 3PLs are struggling to scale. The challenge of crafting
a state-of-the-art supply chain means balancing the need to
reduce costs while improving agility to serve multiple customers
across segments. Crafting a supply chain that e#ectively balances
these competing needs has been a critical challenge for almost all
3PL partners for decades.
Demand hygiene means the factors that are not noticeable but,
its absence can cause a severe bull-whip e#ect; ultimately arm-
wrestling the 3PLs.
3
4
14. Although it may seem too particular, brands still want to have
access to it.
As such, brands and retailers tend to partner with 3PL who can
deliver above data or best !nd insourcing logistics. In
previously mentioned 2019 annual study of 3PL, it also
mentions that 27% of respondents feel that control would
diminish if the right data is not delivered ; 22% suggest they
have more logistics expertise than most 3PL providers; 18%
are concerned that it would be too di"cult to integrate their
prevailing systems, thus having visibility and control issues.
While brands may not want to address the logistical challenges,
their expectations from 3PL are still highly complex.
22%
27%
15. If consumers ask for same day delivery, split orders or
partial order ful!llment, accordingly marketplaces have
adapted their SLAs based on their user patterns. As
such, it falls on to the brands to be followed onto
which ultimately is executed by 3PL.
The Ever Growing
Challenges
16. Ecommerce has been prevalent for almost 40
years now. The ever-evolving demand generation
and technology disruption model has given us a
huge scope for developing it into an ecosystem.
However, with every innovation, newer set of
challenges have been discovered. Incidentally,
the theory of di!usion of innovation also
mentions the dilemma of its actors based on it.
Thus, laggards i.e. late users always need what is
the best out of the best, only then they are open
to adopt new things.
As such, consumers have adopted eCommerce
with speci"c demands that have risen to be
ful"lled by 3PL in association with marketplace
and brands.
Thus, if consumers ask for same day delivery,
split orders or partial order ful"llment,
accordingly marketplaces have adapted their
SLAs based on their user patterns. As such, it
falls on to the brands to be followed onto which
ultimately is executed by 3PL.
48%
42% 37%
67%
Hence, it is imperative for last mile carriers to
evolve with these changing requirements.
To help meet such goals, many 3PLs have
integrated technologies. Among 3PLs, the largest
percentage—67%—are investing in WMS. The
same number is investing in TMS, followed by
supply chain visibility (48%), ERP (42%), mobile
applications (37%) and WMS add-ons (34%). Thus,
while they are trying to balance all need base
challenges, competitions are working towards a
strong edge with these adoptions as well.
17. With the powerful shift of control towards
consumers, 3PL also needs to join this
bandwagon and minimize their challenges.
Incubation Of Lighter And
Disruptive Technologies
Smooth hando!s of information minimize the risk of
disruption. The majority of 3PLs referred issues with data
sharing between the two parties contributed to customer
satisfaction issues.
18. Other consequences include late payments,
not renewing a contract and negative word
of mouth. This in turn a!ects the brand
experience, due to which brands are extra
careful about them.
Software-as-a-Service technology has
changed the face of retail with its highly
con"gurable capabilities and robustness.
With the powerful shift of control towards
consumers, 3PLs also need to join this
bandwagon without further delays.
Anchanto’s SaaS platforms are built to
enable businesses manage their end-to-end
eCommerce operations. The full-suite
Warehouse Management System – Wareo -
especially enables logistics players to
“digitize” their work #ow patterns, and serve
B2B and B2C players through a centralised
dashboard.
Its helps businesses to eliminate all their
challenges; and deliver seamless services to
multiple businesses such as brands, retailers,
sellers, SMEs, without having to invest in any
additional hard assets or resources.
19. Seeing Ahead Is
Getting Ahead
Is a powerful & modern platform that incorporates
these attributes with innovation, intelligence, &
state-of-the-art technology, to transform existing
warehouses into highly productive distribution &
ful!llment centres for B2B & B2C commerce.
With newer opportunities already knocking at the
door, businesses need a robust system that can work
with other ecosystem players and facilitate seamless
logistics. In the future, digital commerce will be
centralized to retail operations in APAC.
But it will not simply replace the existing physical
channels: brands expect an integrated, omnichannel
experience to be able to cater to their customers. In
the more mature markets, we are already able to see
the future landscape of the digital retail market. As
such the focus will be on customization, connectivity,
collaboration and convergence.
20. Anchanto Wareo is a powerful & modern platform that
incorporates these attributes with innovation, intelligence, &
state-of-the-art technology, to transform existing
warehouses into highly productive distribution & ful!llment
centres for B2B & B2C commerce.
Anchanto Wareo enables businesses to eliminate operation
turbulence and is fully integrated with
The system equips any ful!llment centre capable of serving
customers across multiple segments such as fashion apparels,
or temperature sensitive products like pharmaceuticals or even
multi-asset warehouses with the same cloud-based WMS. The
built-in integrations helps businesses save costs and scale
according to convenience, speci!cations and business "ows.
100+ multiple eCommerce players
Marketplaces
Webstores
Last-mile carriers
ERPs such as SAP & Tally
21. Closing Thoughts
To keep pace with tomorrow’s demands, 3PL businesses need to
build up their systems into a full-!edged commerce and operations
playbooks. They must re-evaluate their current technologies and
online strategies to address o"ine to online, multichannel
management or even develop strategic partnerships. The classic
example to this is a highly scalable, adaptive and resourceful
ecosystem that !uently takes shape with the future environment.
22. www.anchanto.com
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