If you own an e-commerce business, you know how integral order fulfillment is to your business. As the business grows, though, he may find that fulfilling customer orders through in-house logistics is not feasible. This is where 3PL logistics comes in!
This article provides all the knowledge you need to be able to decide whether relying on a 3PL is the right choice for your business.
WHAT IS 3PL LOGISTICS?
Logistics 3PL (Third Party Logistics), also known as third-party logistics or third-party logistics denotes the outsourcing of e-commerce logistics processes to a third-party company, including inventory management, warehousing and fulfillment.
It is not known for sure who coined the term ” Third Party Logistics “, but companies began to trend toward outsourcing logistics services to third parties in the 1970s and 1980s. With the introduction and growth of e-commerce in the 1990s and 2000s, the term 3PL became ubiquitous and 3PL companies expanded their services. The supply chain integration of warehousing operations and transportation services became what we now call third-party logistics.
WHAT ARE THE ADVANTAGES OF WORKING WITH A 3PL?
Managing the packaging and shipping of products on your own can be difficult and expensive. In addition, with Amazon’s growing influence in the marketplace, e-commerce companies need to offer fast and convenient shipping in order to compete. 3PLs specialize in supply chain management, helping these companies streamline the shipping process for greater cost management and improved logistics efficiency
So it becomes clear that there are many advantages to outsourcing the fulfillment process to a 3PL.
Let’s look at them in more detail:
- Saving time and money
As an e-commerce business grows, fulfilling orders on your own can be very expensive. These costs include warehouse space, forklifts and other equipment, warehouse management software (WMS), workers, and liability insurance.
By investing in a partnership with a 3PL, you eliminate all these costs required for in-house fulfillment.
Another very important factor to take into account is the time savings that come from outsourcing fulfillment tasks to a 3PL operator. Instead of spending time packing boxes, standing in line at the post office, or building a fulfillment infrastructure, working with a 3PL gives back time to focus on more strategic initiatives, such as product development and marketing.
- Leveraging industry experience
An ecommerce professional, chances are he or she will not have time to become proficient in shipping and logistics as well. So the best solution might be to hire a 3PL company composed of e-commerce logistics professionals who are knowledgeable and up-to-date on the latest trends and complexities of the industry.
3PLs also have the technical resources and partner network (including marketing agencies, custom packaging suppliers, and others) that enables them to continuously improve supply chain efficiency and help e-commerce success.
- Expanding the reach
If you only sell in one state, you limit the potential of an e-commerce business. Working with a 3PL can help you expand the reach of your business.
3PL companies have an expansive network of fulfillment centers that in-house fulfillment does not. This can help reduce the cost of shipping and order transit time.
Shipping orders from a single location can also mean higher costs for packages that travel through multiple shipping zones.
- International practice management
For international sales, a 3PL can deal with documentation, customs, duties and other problems that may arise at interstate borders. Prompt resolution of these issues prevents delays in shipments and thus an uncalculated expenditure of costs and resources.
WHO SHOULD CONSIDER OUTSOURCING LOGISTICS TO A 3PL?
Almost all ecommerce stores-regardless of ecommerce platform, industry or product category-can benefit from fulfillment outsourcing.
Listed below are the three signs that it is time for an e-commerce company to outsource fulfillment to a 3PL operator:
- More than 100 orders shipped per month
Although there is no magic number, if an e-commerce order volume has increased and you cannot keep up, it is time to outsource logistics.
- You no longer have space to store inventory
As the volume of orders grows, you need more stock on hand at all times. If you place orders from home, it can be difficult to find storage space. A 3PL warehouse may be the solution that avoids a garage or living room filled to the brim with products.
Outsourcing inventory storage and order fulfillment to a 3PL can help you stay organized and manage inventory more efficiently. You will also be able to grow your product line without having concerns about inventory storage limits.
- You want to offer customers quick and inexpensive shipping
One must always keep these statistics in mind:
Combining these trends with the fact that popular online retailers offer two-day shipping and free shipping options, it becomes clear: Customers expect fast and convenient one-click shipping.
Suppose, then, that you are currently handling order fulfillment in-house. In that case, you might have difficulty getting to the post office even once a day, let alone often enough to offer customers quick shipping options.
With a 3PL managing the logistics of order fulfillment, you are able to offer one-day, two-day, and perhaps even same-day delivery.
HOW TO CHOOSE A 3PL OPERATOR
There are 3 main aspects that you need to consider when choosing a 3PL operator, and they are:
- Price: The tariff of logistics operators varies according to the type of goods, the type of shipment (urgent or not) and the destination.
- Scalability: how well a logistics operator is able to adapt to its needs should be assessed. A key aspect is the ability for efficient response in the face of increased activity for sustainable business growth.
- Technology: It is important to rely on logistics operators who use technology and automation to carry out the processes of both warehousing and preparing and shipping orders.
Choosing the right 3PL company is of paramount importance for the development of your e-commerce business. For this reason, it is important to consider all variables and not be guided only by the best economic proposal.
