For fashion brands that manage their logistics in-house, scaling up their operations to meet growing demand can be a costly proposition. That’s why many brands turn to third-party fashion logistics providers to streamline fulfilment and improve the customer experience. But to ensure that this option is cost-effective in the long run, it’s important to assess how much value a fashion logistics provider could bring to your business.
To find out more, we spoke to Maxim Sion, Global Sales and Business Development Manager at Bleckmann. As a fashion entrepreneur, he’s no stranger to the difficulties that brands face in meeting the need to expand while balancing profitability and service quality. Read on to find out what costs you can expect – including the hidden ones – and how to evaluate the return on investment of outsourcing your fashion logistics.
Can outsourcing fashion logistics improve cost efficiency?
Outsourcing your logistics operations to a 3PL can be much more cost-effective than trying to expand your in-house capabilities. For example, a brand that manages logistics in-house would need to lease extra warehouse space and invest in more sophisticated equipment to keep up with demand. On the other hand, outsourcing to a third-party logistics (3PL) provider means you’re entering an established logistics ecosystem.
“Working with a specialist apparel 3PL means you can benefit from a flexible warehousing footprint, so you don’t have to worry about running out of space,” explains Maxim. “This way, you’ll be able to avoid bottlenecks and stock-outs, delivering an exceptional customer experience, even during peak periods. You can also save money since there’s no need to pay for warehouse space that you don’t use at quieter times.”
How else can a 3PL for fashion streamline your operations?
Another way in which an apparel 3PL can drive cost savings is through economies of scale. “If your 3PL has a well-established network of carrier partners, they can often secure better shipping rates for brands than they could get on their own,” continues Maxim. “They can also make it much cheaper to access efficiency-enhancing technology that would be prohibitively expensive for many brands, such as Bleckmann’s AutoStore.”
Finally, working with a specialist fashion logistics partner can unlock access to fashion-specific capabilities such as returns management, as well as value-added services – from product photography to garment repair and reconditioning. These services would be too expensive for many brands to develop in-house. But with a specialist 3PL, you can enhance your customer experience without significant upfront investment.
What influences the cost of outsourcing your fashion logistics?
When deciding whether to outsource your logistics, it’s important to understand what goes into the cost of 3PL services. Some of these costs are common across industries. These include the volume and frequency of orders, your desired geographic reach – and the associated shipping costs and duties – as well as shipping methods and speed of delivery. Shipping costs can also be affected by package size, weight, and the carrier used. Other common cost centres include storage fees, picking and packing charges, returns handling and IT integration – linking your brand’s digital ecosystem with the 3PL’s.
However, in the fashion industry, there are several additional factors to consider. The first is seasonality, as Maxim explains. “Fashion brands are particularly affected by fluctuations in demand during peak seasons, such as Black Friday or the festive period,” he explains “As a result, outsourcing costs can fluctuate accordingly. It’s therefore advisable to find a 3PL that specialises in fashion logistics. With a solid understanding of the industry’s unique dynamics, they can help you to optimise both cost and efficiency.”
Other fashion-specific costs to bear in mind include value-added services such as kitting, gift-wrapping, item personalisation and custom labelling. In addition, if your products are delicate and require specialised handling – or are classified as ‘dangerous goods’, e.g. perfume and aerosol deodorant – the necessary adaptations required may incur additional fees. Meanwhile, circular services such as garment renewal and repair can add costs, but these solutions can also reduce waste and increase profitability.
What are the hidden costs of outsourcing your fashion logistics?
While many of the costs associated with outsourcing are visible upfront, Maxim warns brands to be aware of hidden costs. “Some 3PLs may set minimum volume thresholds, with penalty fees imposed if these aren’t met,” he explains. “There are also onboarding costs to consider. On top of the fees themselves, there may be costly disruptions to service related to a slow onboarding process. That’s why it’s important to get cost transparency from any potential fashion logistics partner before signing a contract.”
Is outsourcing fashion logistics worth it for your brand?
When considering the cost of outsourcing logistics to a 3PL, it’s crucial to strike the right balance between cost and quality of service. “Outsourcing can reduce costs in terms of labour and infrastructure, and it can provide access to expertise and risk management that often isn’t available in-house,” Maxim continues. “Combined with improved delivery speed and product presentation, this can add up to a valuable partnership.”
However, it’s also important to keep a close eye on key performance indicators such as cost per order, fulfilment accuracy and delivery speed to ensure you’re getting good value from the partnership. To stay on track, it’s essential to have regular check-ins with your logistics provider, to assess your progress and make improvements where necessary.
The long-term value of a fashion logistics partner
When considering the potential cost of outsourcing, it’s key to think of long-term value. “The most effective 3PLs adapt their offerings to meet the evolving needs of their clients as they grow,” concludes Maxim. “On the other hand, if you keep your logistics in-house and then run into problems because you don’t have sufficient capacity, you’re likely to lose revenue and customers due to bottlenecks and delays. Prioritising scalability now can therefore help to streamline growth and ensure better value in the long term.”
Want to discover a cost-effective route to streamlining your fashion logistics operations? Visit our Bscale solution page or get in contact for a free consultation with one of our experts.
