Can small businesses finally afford automated fulfillment like big companies?
The answer is increasingly becoming “yes.” In the past, fulfillment automation was a luxury only big companies could afford. It was (and still tends to be) expensive, complicated, and requires a lot of space. This created a tough situation for smaller businesses: they still needed faster shipping to compete but didn’t have enough orders (lots of orders) to make investment in technology worth the cost.
The situation has changed since 3PLs started investing heavily in advanced automation technologies. Here is how it makes automated fulfillment more accessible and affordable for businesses of all sizes.
The growing relevance of warehouse automation
With shipping expectations like today, if you can’t fulfill orders quickly and accurately, you’re toast.
Customers now expect lightning-fast deliveries, and they don’t care if you’re Amazon or a small online boutique – they want their orders, and they want them now.
So whether you’re shipping ten orders a day or ten thousand, some level of automation is becoming essential.
As your business grows, the number of orders also increases, and you need to stay flexible – that’s essentially what automation gives you. Busy days in warehouses, like peak seasons or sudden spikes in demand, typically expose the critical weakness of manual warehousing – inability to scale effectively.
No matter how skilled your workforce is, any manual work (especially as intense as in a warehouse) is prone to mistakes, especially when rushing to meet tight deadlines. And undoubtedly, high reliance on human operation is bound to heavy expenses that rise steadily. In 2022, the average hourly wage for warehouse staff was $14.97; in 2023 it rose to $15.78. In 2024 the average hourly wage for warehouse staff is $16.95.
Automation can potentially fill all these gaps, allowing businesses to do more with less human labor. The technology in warehouses has the potential to reduce shipping and handling times by up to 50%. The same goes for smart systems with order and inventory management capabilities. With technology backup like this, you can process thousands of orders per hour with minimal errors, a feat simply impossible with human labor alone.
Challenges in implementing warehouse automation
Automating your warehouses isn’t a quick fix; it’s a major long-term project and investment. Overlooking this can severely harm your business.
The biggest catch with transition from manual to automated processes is that it requires significant upfront investment, both in terms of capital and time. Costs of purchasing and installing automated systems can be substantial (reportedly about $10,000 for installation and customization) for a small business. This turns automation into a risky move, especially considering that there is no guarantee these investments will pay off over time.
Beyond the financial aspect, the new technology is supposed to be integrated with existing systems and workflows. System integration, on the other hand, requires a complete overhaul of warehouse layout and operations, causing temporary disruptions to productivity. Poor integration can lead to chaos in the warehouse, causing confusion and mistakes. Frequent technical issues might stop work entirely.
Meanwhile, your warehouse team may resist the technological overhaul due to fear of job loss or unfamiliarity with new technology. Training staff to operate and maintain automated systems is crucial but can be time-consuming and costly. Moreover, finding skilled technicians to manage and troubleshoot these complex systems can be difficult.
One more point is customization. Every warehouse has unique needs, fulfillment requirements, and variable seasonal demands. Machines cannot always provide flexibility needed for specific retailers. Yet tailoring systems to specific requirements of your warehouse can be complex and expensive.
So it takes a lot to achieve the sufficient level of fulfillment automation – cost, expertise, time, to name a few. Yet despite resources thrown in, it remains a risky move that may not guarantee what you expect. Also, choosing automation means creating a big new area you need to watch closely. You’ll have to make sure it’s working well enough to be worth the money you spent on it.
How 3PL providers are lowering the entry barrier
Instead of paying the initial costs and taking risks for warehouse automation, you can let a 3PL handle it. They will invest in the technology for you as part of their service.
Unlike retailers, who have various strategic priorities, logistics is 3PL’s core focus. When online shopping got big, they saw a chance to make money. That’s why they got better at technology faster than individual retailers did.
They spent years and lots of money building huge, high-tech warehouses. Today, these are facilities that span hundreds of thousands of square feet, packed with various technologies and advanced order and inventory management systems ready for use at lower costs.
They’ve spent years integrating different technologies into the fulfillment workflow and optimizing their operations. Now they are ready to spread the cost of their advanced automation across many clients, optimizing their fulfillment and making it more economical for everyone involved.
No massive upfront investments is required
If a store wanted to do what 3PLs do, they’d need to buy or build huge facilities, several optimally. Then they’d have to fill those warehouses with expensive equipment, conveyors,
automated storage and retrieval systems, RFID, warehouse systems, etc. They’d also need to hire experts to pack and ship items. All of this costs a lot of money. But with 3PLs, stores don’t have to pay or focus largely on that. Instead, they can just pay for the service they need, when they need it.
Big operations
During busy seasons like holidays, retailers can quickly ramp up their use of 3PL services without owning extra warehouse space year-round. This means they are not paying for unused space during slower periods. This flexibility also helps as the store and number of orders grows. No bigger warehouses or more equipment are required. Instead, retail can simply increase their use of 3PL services. Their fulfillment partner already has all that in-place.
Rich expertise at the table
Their expertise extends beyond just having the technology. These providers have become masters at quickly onboarding new clients, integrating with various eCommerce platforms, and adapting their automated systems to handle different types of products. Whether it’s clothing, electronics, or perishable goods, they’ve developed the know-how to automate the handling of almost anything.
Flexible automatization
Obviously, you cannot automate everything overnight. 3PL allows people to gradually – adopt a little bit of automation, and use more as they grow, rather than make a large upfront investment.
3PL fulfillment automation capabilities
3Pl providers use various technologies to help retailers manage their fulfillment operations.
Technologies used within warehouses (conveyor belts, robotic pickers, and automated sorting systems) are just the tip of an iceberg. What really makes things tick is the integration of advanced systems that enable real-time order and inventory tracking. This integration creates a seamless flow of data, allowing for instant updates on inventory levels, order status, and shipment progress.
For instance, Canadian 3PL provider ShipTop uses a proprietary solution that integrates with the client’s existing platforms, It also has omnichannel capabilities integration and with clients’ sales channels and marketplaces. It keeps both parties consistently updated on inventory, number of orders in each channel, and fulfillment statuses.
When an order comes in, ShipTop’s system identifies the product location, guides warehouse staff to pick and pack the item, selects the best (and the most affordable) shipping method, and updates all relevant information. This happens rapidly and with minimal human intervention.
Throughout this process, both the retailer and the customer can track progress. The system provides constant updates, from order confirmation to delivery, providing transparency at each step.
This integrated, and automated approach is what allows modern fulfillment to handle large volumes of orders quickly and accurately. Small retailers can use it to compete with larger companies by offering efficient order processing and delivery without needing a large team or infrastructure.