Are you planning to scale your e-commerce business, but all your time is spent managing inventory and putting out shipping contracts? Are you having difficulty with logistics and fulfillment of bulk orders? Is fast and efficient shipping getting in your way of becoming customers’ favorite?
Third-party logistics (3PL) is for you! It manages your inventory and picks, packs, and ships products for your business!
In this article, we will break down what 3PL is, how it helps, and what services are included. We will also dive into how to select the 3PL service suited for your business and the best practices for working with 3PL companies.
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What is 3PL?
Third-party logistics, 3PL, is a service where businesses delegate their e-commerce logistics processes and supply chain management. It is often used interchangeably with fulfillment centers.
3PL companies offer different e-commerce fulfillment services based on your business needs: inventory management, warehousing, packing, shipping, freight, returns, and customer support.
The prime goal of 3PL is to automate the order fulfillment process for businesses. You store your stock in a 3PL warehouse, and the 3PL provider handles your product’s picking, packing, and shipping.
With the pressure of fulfillment and delivery taken off, the entrepreneur has more time to focus on core areas like product development, marketing, and business growth.
3PL is rapidly gaining popularity among e-commerce businesses. Shopify’s 2022 Future of Commerce report shows that about 37% of merchants planned to hire 3PL fulfillment providers next year.
What Are The Services a 3PL Provides?
3PL Logistics offers multiple services, varying depending on your requirements and contract. Here are a few standard fulfillment services provided by 3PL providers.
1. Warehousing And Inventory Management
A 3PL service offers warehousing and inventory management services for your business. Depending on your needs, 3PL providers can provide different warehousing solutions, such as temperature-controlled or hazardous material storage.
It also allows you to track your Inventory in real time through e-commerce platform integration. Insights into inventory movement and trends enable you to make data-driven decisions on production and restocking.
3PL can also help you with a distributed inventory. It means storing your Inventory across multiple fulfillment centers so the order is shipped from the warehouse closest to the shipping destination.
2. Order Management and Fulfillment
A 3PL is responsible for taking your products to the hands of customers. It receives orders from e-commerce platforms, processes, packs, and ships products.
3PL companies use advanced technology solutions, like Order Management Solutions (OMS), to track Inventory across multiple warehouses. You can integrate the solution with your platform to monitor inventory levels, data insights, and delivery tracking.
3. 2-Day Shipping
As most customers demand fast and affordable shipping, 3PL comes in handy. Most 3PLs have their fleet for shipping or work with reputable carriers to coordinate your shipping and fulfillment.
It helps you make good on the promise of 2-day delivery through distributed Inventory and price negotiation with the shipping carrier. A 3PL also performs order and delivery confirmation and tracks the shipping in real-time.
4. Kitting And Customization
Third-party logistics providers offer kitting and customization to help businesses provide a better customer experience. From adding your branded stickers to offering customized gift notes to making custom packaging for the order, 3PL provides the best delivery experience.
5. Reverse Logistics ( Returns)
A 3PL can also handle reverse logistics for you. It takes care of your returned orders and restocks or disposes of them as needed. It also streamlines your returned order with the Inventory through returns software and provides direct insights into returns and exchanges.
3PL Benefits: How Does 3PL Help Your Business?
There are several advantages of working with third-party logistics. Let’s discuss a few!
1. Cut Down On Costs
You can save money on warehouse leases, labor costs, technology, machinery, and transportation by overruling in-house fulfillment. You can upscale or downscale your shelf space without additional resources.
Moreover, due to industry influence, 3PL can negotiate discounts for their clients. So you can also save money on shipping and logistics.
3. Get Logistics Expertise
They know logistics, so you don’t have to!
3PL providers know the ins and outs of the industry, have trained staff, and have an extended network. From packaging suppliers to regulatory queries to transportation documentation, your 3PL handles all the arenas of logistics for you.
3. Enables Business Expansion
If you plan to expand to new domestic or international markets, 3PL can come in handy. With their vast fulfillment center network, you can tap into a new market without going through the nuances of logistics yourself. 3PL can help you with documentation, regulatory, logistics operations, and customer support.
4. Protects Against Supply Chain Disruption
Since they have pre-standing fulfillment centers and carrier contracts, 3PLs are less threatened by global supply chain disruptions. Hence, your business also suffers less from shipping surcharges and delays, improving customer service.
Challenges Of Working With 3PL Providers
While a 3PL service offers many benefits, there are also a few downsides. These are some challenges that occur while outsourcing your logistics.
1. High Upfront Cost
While 3PL saves you money in the long run, there can be massive upfront payments. A monthly minimum spend is required, account setup fee, transportation cost, warehousing fee, packaging, and shipping charges.
2. Different Workflows
3PLs work as per their own hours and workflow. While they know better how to meet your logistics needs, it can get irritating sometimes if it differs from what you need or expect.
3. Dependent On Their Reputation
You are tied to the reputation of the 3PL you work with. How they handle order influx, manage customer support, and compensate for setbacks and delays. Always choose a 3PL provider that has an established reputation in the industry.
How To Choose The Best 3PL Provider For Your E-commerce Business?
When you choose a 3PL provider, you choose a business partner. Not only your logistics operations but your brand value and customer experience are at stake. Thus, choosing someone who can support you in growing your e-commerce business is vital.
The right 3PL company can be a game changer for logistics and supply chain management. But how to choose the right partner when the options are endless? It sure can be confusing, but these tips can help you score the perfect fit for your logistics needs.
1. Evaluate Their 3PL Services
When choosing a 3PL provider, look for a long-term partnership. Search for a fulfillment partner that can stand by with your changing needs as you grow your business. Choose a reliable, efficient, fast, and scalable 3PL that can cater to increasing customer demand.
Look for a 3PL service offering extensive supply chain management and conventional pick, pack, and ship. From inventory management to real-time inventory tracking to data insights to customer experience, your 3PL service should be able to optimize your supply chain.
Focus on their niche specialty, types of warehouses, their capacity, and if their service suits your product. How they handle reverse logistics and relevant customer support is also essential. In short, ensure that your 3PL provider can manage seamless logistics processes and better customer experience.
2. 3PL Fulfillment Centers Location
The number and location of the fulfillment centers owned by 3PL are crucial to your shipping coordination. Look for a provider with a strong presence in your high-business areas to reduce delivery costs and improve delivery time.
For example, if you have country-wide shipping destinations, an extensive network of warehouses across multiple areas can help you provide your customers with fast shipping at affordable rates.
Besides, wider 3PL locations would be great if you scale up your shipping zone. It is particularly important for distributed Inventory and 2-day shipping.
4. 3PL Technology Integration
The most important factor in choosing a 3PL is how seamless and integrated their fulfillment solutions are with your existing software.
Integrated systems ensure automated fulfillment, shipping, and inventory management, reducing errors and saving time. Check out which platform a 3PL uses, how they integrate with your order management system, and how you can leverage insights and data analytics.
A tech-enabled 3PL can go beyond traditional pick, pack, and ship, offering extensive e-commerce supply chains management, such as automated order fulfillment and inventory tracking.
NextSmartShip – An Answer To All Your 3PL Needs!
If you are looking for a 3PL partner for your e-commerce business, look no further than NextSmartShip!
Here’s why NextSmartShip is perfect for outsourcing your logistics processes.
Economical
NextSmartShip offers an economical 3PL solution that saves you tons of money. It has no setup fee, receiving fee, or minimum order request. Moreover, it provides you with free warehousing for the first 60 days.
Two-day Shipping
NextSmartShip has multiple fulfillment centers across Europe, the USA, China, and Australia. With this wide range of fulfillment centers and over 70 courier partners, it promises delivery within two days of ordering.
Integrations
It supports most e-commerce platforms, including Shopify, Wix, Amazon, Etsy, and Walmart. No matter what platform you use, NextSmartShip can integrate easily with it.
Inventory Management
Besides traditional 3PL services- pick, pack, and ship- NextSmartShip offers inventory management and monitoring. You also get alerts when a product is understocked.
Fulfillment Tracking
It offers a tracking solution where you can know the exact status of your product in real-time and how long it would take to receive it.
Reverse Logistics (Returns)
NextSmartShip also offers reverse logistics. When your customer returns a product, you can decide whether to put it back on the shelf or discard it, and NextSmartShip will do that for you. You can also track the returned product through your dashboard.
Sign up at NextSmartShip and sort all your logistics needs out!
