While growth typically comes with growing pains, it also comes with opportunities.
This is probably something you already know to be true if you are growing your e-commerce business, especially in terms of logistics, shipping, and fulfillment. When you spend all of your time negotiating shipping contracts or putting out fires, it’s hard to concentrate on marketing, product development, and building relationships.
Because of this, 90 percent of Fortune 500 companies seek assistance from third-party logistics (3PL) providers. The 3PL software market is expected to reach $1.75 trillion by 2026, just like the ecommerce market, which has expanded at an exponential rate.
There’s an explanation the administrations of 3PLs are popular inside web based business, regardless of the business. Your inventory is housed in their warehouses, and they pick, pack, and ship your products to your customers.
Here is what you need to know to find and select the right vendor, whether you are ready to partner with a 3PL for the first time or considering multiple 3PL partners to diversify and reduce risk.
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What’s a 3PL?
A partner or service known as a 3PL (Third-Party Logistics) assists online retailers in managing their supply chains. Management of the warehouse and inventory, fulfillment of orders, coordination of shipping, retail distribution, exchanges, and returns are all common 3PL services.
A merchant is ultimately able to concentrate on other aspects of their business when they partner with a 3PL.
You can store your stock in a 3PL vendor’s warehouse and have it shipped directly from your manufacturers rather than managing your own warehouses and doing distribution in-house. Items are shipped from the 3PL’s warehouse automatically when a customer places an online order. Customers never second-guess the handoff between received orders and fulfillment when using a 3PL because the procedure is straightforward and seamless. That enables online retailers to concentrate on what they do best: create, sell, and market products.
3PLs have been and will continue to be the secret ingredient that has enabled many successful e-commerce businesses to weather the recent supply chain crisis. Sadly, the acts of political instability, natural disasters, a lack of human resources, and difficulties with regulations that have occurred over the past two years are not an exception. According to experts, significant disruptions now occur every 3.7 years, and supply chain disruptions are becoming more severe and frequent.
How does a 3PL function?
The typical 3PL fulfillment process looks like this, although it can vary depending on the provider and the services you’ve agreed upon:
- The 3PL organizes each SKU after receiving your inventory at its warehouse.
- If the 3PL’s software is integrated with your online store, an order placed on your ecommerce site is either manually forwarded or automatically pushed to the 3PL.
- A member of the warehouse team receives a picking list to collect the ordered items.
- The items are packed in boxes that include the order information and receipt.
- The shipping label is either printed by the 3PL or used by one of its shipping carrier partners.
- The transportation transporter gathers the bundle from your 3PL’s dissemination community and conveys it to your client.
- The 3PL system receives the tracking data and synchronizes it with your order management software.
So, what is the difference between a 2PL, 3PL, 4PL, and freight forwarder?
2PL: Couriers deliver packages to a final customer after collecting them from your warehouse.
3PL: A third-party company is responsible for storing, picking, packing, and shipping inventory.
4PL: Suppliers deal with the satisfaction accomplices (3PLs) you’re working with. Their group arranges the agreement with an accomplice, settle any issues, and conveys between your interior group and the merchant.
Brokers of freight: Go about as delegates among brands and drivers. Cargo forwarders are unique in relation to 3PLs in that they’re explicitly devoted to coordinating up brands with drivers or transporters.
You lose control when you give things to a 3PL.
It is true that inventory stored in the warehouse of a third-party logistics provider won’t be immediately accessible to you, which may initially feel unsettling.
However, working with a 3PL actually grants you control. Mistakes are less likely to occur when shipping and fulfillment are delegated to professionals, relieving you of the burden. You should also be able to get reports and analytics from a good third-party logistics provider, which will allow you to remotely manage the process and help you make better business decisions in the future.
For what reason do organizations decide to work with a 3PL supplier?
If you have never worked with a third-party logistics provider before, it might sound like a costly solution to an annoying workflow. After all, picking, packing, and shipping orders from your warehouse or physical location may be less expensive than employing outside assistance.
However, before you become overwhelmed by order growth, it is prudent to select a 3PL. 3PLs are not just a solution for brands of the enterprise size; they are made for businesses of any size that want to grow. What if you have a flash sale or a product that goes viral? It’s not generally attainable (or savvy) to deal with that flood of requests in-house. In an era when 60% of global consumers expect same-day, next-day, or two-day delivery, breaking fulfillment promises to customers can severely damage your brand.