Third-party logistics or 3PL is a common term within the logistics industry. It essentially means outsourcing logistics services from a third-party provider.
Order fulfillment is an integral part of any e-commerce business. However, managing the packaging and shipping of products in-house can be difficult and costly, which means it isn’t always the best strategy. If you want to grow your business, consider outsourcing order fulfillment to a third-party logistics (3PL) company.
Third-party logistics specialize in supply chain management, which includes processes such as inventory management, warehousing, and fulfillment. They can help clients streamline the shipping process for efficiency and cost-effectiveness.
Beyond shipping orders, 3PL fulfillment services vary. Some companies can manage your inventory and sync it with your online store. Some have several warehouse locations and can route orders to the closest 3PL warehouse to optimize fulfillment. All 3PLs offer services for managing inventory, packaging, and shipping, providing reliable logistics to maximize profits.
Each 3PL company has different capacities for receiving, storing, and fulfilling inventory, and all offer a very flexible service. They can assume just a piece of either your warehousing, distribution, supply chain, or fulfillment needs, handle an entire branch, or take over your entire shipping operation. Companies can then farm out only the services they most need help with, making 3PL services remarkably affordable.
If you’re a smaller company, in-house order fulfillment can be expensive. Using a 3PL provider will eliminate the need for warehouse space, labor, and technology required for in-house order fulfillment. It also reduces ancillary costs, such as buying warehouse management software or paying for liability insurance.
Working with a 3PL provider can also help businesses implement systems that streamline operations. A 3PL provider will be up-to-date with the latest logistical trends and efficiencies in the industry, which can only benefit your company. Instead of spending studying details of shipping and logistics, or packing items, printing labels, and mailing them, you can focus on more strategic initiatives, such as product development and marketing.
Small to midsize companies handling logistics themselves often don’t have the scale necessary to deliver quickly to customers anywhere in the country. 3PL providers, on the other hand, usually have multiple distribution centers making use of optimized delivery systems. So orders can be delivered within one or two days nearly everywhere, for a far lower cost than companies could do it on their own. Your business can then expand its reach and reduce the cost of shipping and transit time.
Outsourcing inventory warehousing and order fulfillment to a 3PL can help you stay organized and manage inventory more efficiently. A 3PL provider will have knowledge and experience in transport documentation, import and export, international compliance, and economic regulations, nationally and worldwide.
A 3PL provider offers businesses the flexibility and scalability to utilize supply and distribution resources based on current business needs. Companies can then scale up or down depending on sales and can use their resources more efficiently.