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3PL – a strategic asset for eCommerce companies

How to benefit from 3PL and use it to grow and scale your business.

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What can you expect from a 3PL partner

What are you looking to solve by hiring a 3PL logistics provider / 3PL partner? Is it cost-effectiveness or better pricing for logistics? Is it a specialty in transportation or other capabilities? Or is it perhaps global reach or efficient cross-border sales? Maybe all of the above?

Third party logistics is a major part of an effective eCommerce supply chain for many businesses. 3PL companies make it simple for businesses to outsource some or all of their logistics and warehousing.

What can you expect from a 3PL partner
By working with a 3PL provider, e-commerce businesses can outsource some of their key tasks

By working with a 3PL provider, eCommerce businesses can outsource all the tasks related to order fulfillment, including:

  • inventory management
  • product order lists
  • picking and packing orders 
  • shipping orders

 

Although saving time and allowing you to concentrate on other, more important things is already a good goal, the right kind of 3PL partner can benefit you in many other ways, too.

3PL and order fulfillment

Beyond Pick and Pack

What does a 3PL do generally? Let’s try to break down the main tasks. When an order comes in, a 3PL provider makes sure that the right product is picked and packaged according to the guidelines, which also means including all the right documents and labels in the package. Then, the 3PL ships the package to the customer, within the agreed-upon SLAs and preferred shipping method. In some cases, a 3PL partner also takes care of handling returns.

With time, though, companies move on from working with 3PLs on basic support with order fulfillment service, and establish more strategic relationships with them. Read on to explore all the other areas in which the right type of 3PL provider can help.

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Flexibility

What if your product needs a special type of packaging, or you want to customize the way you package your products? Or, how about if you want to launch custom promotions or campaigns, include giveaways or product samples, or do bundles in your orders?

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Scalability

When your business grows, the demands get more complex. If you experience rapid growth in demand, it’s important to feel secure that your 3PL logistics partner can handle the increased volumes accordingly and appropriately.

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Efficiency

With a 3PL partner, you can truly start to optimize your supply chain. Standardized shipping times and improved inventory management are some of the benefits. SLAs guide the work of the 3PL partner, so you can rely on things to get done on time.

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Internationalization

The easiest way to execute cross-border eCommerce is if you warehouse your goods as close as you can to where most of your customers are based. This is especially true if you need to ship your goods from, for example, the EU and the UK, or the EU and the USA. 

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Data-Savvy

Use that data and insight you gather from your collaboration to make better, data-based decisions. For example, the information you collect can show you which products are shipped from which warehouse to where, which in turn helps you shape better decisions regarding stock levels and product availability across your entire warehouse network.

Outsourcing eCommerce logistics to a 3PL partner

As an eCommerce business, deciding to outsource your logistics processes and operations to a 3PL partner can generate many benefits. Before delving deeper into these, however, let’s try to clarify what type of companies benefit the most from this approach – and why.

What Kind of eCommerce Company Benefits the Most from Outsourcing Logistics and Order Fulfillment?

1. Scaling eCommerce companies

Is your business growing fast? Does it have (potentially) international expansion on its list of goals and ambitions? If so, you might need a solution that can help you handle increasing shipping volumes instantly and reliably.

The alternative option, in fact – hiring new warehouse staff, training them, acquiring a new warehouse space, and updating all your contracts – can turn out to be extremely expensive and inconvenient, while often also hindering your expansion plans.

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3PL planning
2. Large and established eCommerce companies

Even larger and longer-established eCommerce businesses can reap great benefits from working with a 3PL company. In fact, if you run or manage one of these companies, you might already be working with a 3PL partner – but, maybe, you aren’t fully happy with them and are seeking a better and more suitable partner.

Sometimes, in fact, the operational goals of big corporations change significantly, introducing new challenges and requirements. Whether it’s about saving costs, entering a new market, or becoming more sustainable, the right 3PL partner can offer you tailor-made support.

3. eCommerce companies who sell globally

Sitting almost in between the two eCommerce businesses that we have described above are those companies that are already well established domestically, but are now looking to enter new markets. To do so in an optimized, streamlined, and cost-efficient fashion, it’s vital to multi-warehouse.

Multi-warehousing consists of distributing the inventory to several locations and always shipping from the closest possible warehouse to your end customer. If this sounds like something that might suit your business, you’ll need to make sure that the 3PL partner that you team up with can support multi-warehousing through an advanced and reliable order management system.

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Is your current 3PL set-up good enough? 

Is your current 3PL set-up enabling you to reach your business goals or better yet, to exceed them? Is your current 3PL partner driving growth, or stunting it? Are you curious to see how much your business could grow with the right 3PL partner? Perhaps it is time to rethink your 3PL strategy.

Use this assessment tool to find out how to make your 3PL strategy work for you.

3PL-strategy

Do you need one or many 3PL service providers?

It can be tempting, as an eCommerce business, to rely on several 3PL providers for all the different markets that you operate in. However, this is hardly ever the right solution in the long term.

Take stock updates, for example. This is a relatively simple, everyday task, but it could turn into a real nightmare if you had many different ways to handle it across your different locations. You might be ending up mixing disparate approaches such as 3PL’s order management systems with old-fashioned Excel spreadsheets, causing unnecessary delays, clashes, and confusion – not to mention that the risk of human error will be much higher.

Do You Need One or Many 3PL Service Providers?
How many 3PL companies do you need
How much can you save if you switch to an all-in-one 3PL solution

Want to find out how much you can save if you switch to an all-in-one 3PL solution? Request your quote now.

Request a quote

How to choose the right 3PL partner

3PL logistics is a vast and complex field, with many players providing specialized services. Some, for example, might focus exclusively on transportation, while others might specialize in warehousing or distribution. Actually, only 42% of global 3PL service providers include eCommerce in their service offering list.

For this reason, it’s essential that the 3PL partner that you choose must match your company’s needs and goals.

Customers expect fast deliveries — without paying for higher shipping costs. To remain competitive, eCommerce firms often outsource their logistics and warehousing. In fact, almost half of eCommerce businesses rely on 3PLs logistics to sell across borders.

Depending on whether you are doing mainly international or domestic sales, or a combination or both, you will need a partner that allows you to achieve your specific goal.

How to Choose the Right 3PL Partner

90%

Inbound logistics

74%

Logistics process
reengineering

69%

Just-In-Time and
inventory management

Inbound logistics, Statista 2019

OGOship's advantage: simple way to mix domestic and international sales

Discover below how you can benefit from outsourcing your domestic and international sales to an expert partner like OGOship.

Warehousing

We help you store your goods in our global warehouse network in one or multiple locations.

Management

You can still manage everything from one order management system: same process, same operational logic.

Synchronization

Everything syncs directly to your eCommerce platform, even if you do store the goods in multiple places.

Support

We help you get everything set up correctly and provide guidance on all the paperwork you need if you want to store your products internationally.

How to evaluate 3PL companies and find the right partner for you

When evaluating different kinds of 3PL service providers, you need to consider a few key areas: customer service, warehousing, specialization, management tools, and costs.

1. Customer service

Does the service provider prioritize customer service? What communication channels are there? What are the service levels in case you need to contact support?

In partnering with a 3PL company, reliable customer service is essential. If the service provider doesn't have clear and consistent processes in place, you may not get help quickly when you need it most. OGOship has an excellent track record in providing first-class customer service for its clients.

 
2. Warehousing

Evaluate their ability to offer you different warehousing options. Does your partner have automatic or manual warehouses? Are different warehouse locations available?

OGOship has both manual and automatic warehouses in its network. If you’re sending large volumes and want to emphasize quick delivery, the automated warehouse might be your best option. If your shipments need more customization, a manual warehouse could be a better solution for you.

OGOship operates several warehouses globally. With multi-warehousing, you can store your goods in any location, ensuring fast shipping times and a cost-efficient supply chain.

 
3. Specialization

Some 3PL service providers specialize mainly in transportation between locations, while some can handle everything from storage, fulfillment, inventory management, and transportation. Some 3PL companies are even specialized in a specific industry.

OGOship is specialized in eCommerce logistics and warehousing. We provide outsourced logistics, warehousing, and fulfillment services.

 
4. Management tools

Do they offer a management system that easily integrates with your eCommerce platform?

Smooth integration ensures that orders are picked, packed, and shipped, and inventory levels are updated in real-time.

Some service providers have systems that allow eCommerce businesses the possibility to boost sales through logistics — cool, right? OGOship's myOGO, for example, has features like Campaign Engine, which allows mass customization of orders straight from the system. 

You can add rules to change shipment types according to the order value, or add additional products. Talk about getting creative!

 
5. Costs

When choosing the right 3PL partner for your business, it's crucial to have a clear understanding of the costs. Remember to check the small print and ask: is there a minimum monthly spend? What are the account set-up fees? How much does software integration cost?

OGOship's pricing model has no hidden or getting-started fees — just pay as you go by order volume. Integrations with the most common eCommerce platforms are free and ready to use.

Request a quote.

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”There are so many things you need to consider when evaluating which 3PL partner is the right one for your online store’s needs. One of our strengths is a strong emphasis on customer service. We are always ready to take one more step to ensure everything works out smoothly for our customers. ”
OGOship

Tim Kannerbro, OGOship

3PL, 4PL or 5PL?

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3PL

This acronym refers to the expression “third-party logistics”. This is a practice through which a business outsources all its supply chain services to an external company – the 3PL provider.

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4PL

This acronym stands for “fourth-party logistics”. This occurs when a service provider manages a company’s entire supply chain logistics services, together with directing and developing their logistics.

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5PL

This is an acronym that spells out “fifth-party logistics”. A 5PL company offers logistics solutions to its customers’ entire supply chain, taking over every single aspect of the process and, sometimes, even building partnerships with 3PL and 4PL providers.

3PL and Order fulfillment

Guides and Resources

A guide to international expansion for e-commerce businesses
A guide to international expansion

To be successful in your international expansion, you need to have a solid plan. This guide covers some handy insights and provides you with a free Excel template to kick off your international expansion plan.

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Amazon – how to choose the right fulfillment model

How to choose the right fulfillment model for your needs, and what are the differences between Amazon FBA and FBM? Read what are the pros and cons of the two alternative fulfillment models.

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how-to-choose-the-right-3pl-partner
How to choose the right 3PL partner for your company

Ask the right questions and choose the right 3PL partner for your needs. Download a checklist with 22 questions to help you evaluate different service providers.

Download checklist

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