Are you an e-commerce business looking for more efficient, flexible, and productive ways to sell its products to an ever-growing customer base? Then, this article right here is for you.
Keep reading to discover what the most incredible advantages of partnering up with a third-party logistics (3PL) provider are, and what types of e-commerce businesses can benefit from this approach to supply chain management.
What Is a 3PL, third-party logistics service provider?
Before we jump into the core of our guide, let’s clarify what a 3PL is, and what exactly they do for businesses of all shapes and sizes. Third-party logistics is a type of supply chain management that provides companies with services, including packaging, warehousing, shipping, transportation, and order fulfillment.
When a business decides to team up with a 3PL, it won’t need to set up a separate, internal warehouse: everything is handled externally by its 3PL of choice. But what happens, exactly, during the order fulfillment process managed by a 3PL?
Generally speaking, this process is divided into four parts:
- Receiving the goods: Before you outsource your supply chain services to a 3PL, you will need to ensure that they have all your products safely stocked in their warehouses.
- Collecting the goods: Once an order has been placed on your e-commerce store, a specialized warehouse picking team will ensure that the item (or items) that has been ordered is carefully selected from the available items in the warehouse, according to the order specifications.
- Packing the goods: When the correct item has been identified, the 3PL will take care of packing it according to the customer’s requirements (more on this below).
- Shipping the goods: Finally, your 3PL will safely and efficiently ship the item to its recipient.
As you can imagine, outsourcing all these steps of the supply chain to a trusted, reputable, specialized partner can yield lots of benefits. Let’s take a look at these in the next section.
What Are the Biggest Advantages of Working with A 3PL?
Below we have compiled a list of six of the most significant advantages of choosing to team up with a 3PL.
1. Specialized Skills for International Fulfillment
One of the most important benefits of working with a 3PL is the possibility to tap into its vast know-how and expertise. For example, think about fulfilling international orders – something that many e-commerce businesses aspire to, yet find quite challenging to achieve.
When teaming up with a 3PL, you have the reassurance that its team knows your target market well, and therefore it can tweak its services to better fit it – and to give you a much better chance at winning in that market.
3PL providers, in fact, have all the latest tools and know all the best technologies required to analyze international demand, adjust inventory, and monitor other parts of the supply chain across different geographies. Doing so on your own, especially if you are a small e-commerce business, can prove incredibly difficult as well as very costly.
2. Distributed Inventory
Another aspect to take into consideration is the fact that 3PL providers usually boast a wide, solid network of resources. This is very handy, as it enables them to increase efficiency throughout the entire supply chain process.
For example, if the usual shipping route is not currently usable due to ongoing works or other issues, a 3PL is able to rapidly calculate an alternative way to safely and quickly transport the goods to their final destination.
Not only does this allow for faster and more affordable shipping, but it also drastically reduces any potential risks that your business might come across if it chooses to handle this on its own.
Customization is not only an increasingly vital requirement when it comes to the products you offer, but it is gradually becoming essential in packaging, too. For example, being able to offer gift wrap as part of the packaging process can be something that makes your e-commerce business – no matter how big or small – stand out from its rivals.
And when it comes to executing this type of custom packaging, you can count once again on the support and expertise of your trusted 3PL. The team will handle this for you, ensuring that the goods are packaged to the exact specifications of your customers.
The bottom line? Higher personalization leads to increased customer satisfaction, which in turn translates to more – and more consistent – sales in the long term.
4. Increased Cost Savings
You may wonder why we didn’t add this crucial benefit at the very top of our list. Well, we thought it was useful and important to first outline all the great things that a 3PL can do for your business, in order to better illustrate why all this can lead to huge cost savings.
From having vast resource networks to using the latest and greatest tools and technologies, and from being able to run their own warehouse and offer your customer all the personalization they need, it’s easy to understand how all this can drastically reduce your expenses.
Not to mention that, of course, you will also be saving on aspects such as hiring (and paying) a specialized team and shipping your items in the best and most efficient way.
5. More Flexibility and Scalability
One of the bonuses of working with a 3PL is that, once you have found the right one for you, you can expect to receive the same type of support that you would receive from a business partner. 3PL providers, in fact, are a lot more than mere suppliers of services: they are genuinely invested in your company’s success.
So, if your company is looking to scale up its operations, your 3PL will do everything it can to support this goal. On the other hand, if you are going through a period of slow or reduced sales, your 3PL will simply scale down its operations, meaning that no time, money, or other resources are overused.
6. Efficient Returns Management
Did you know that a 3PL provider can also handle returns? Yes, in addition to the standard picking-packing-shipping process, many 3PL companies also manage customer returns. Notoriously, returns can be pricey and complicated if you choose to handle them on your own, often resulting in delays, mistakes, and overall frustration.
Having one single point of contact for all these different steps in the supply chain process, on the other hand, translates into happier and more satisfied customers who are much more likely to come back to you for more purchases.
What Kind of Company Benefits the Most from Working with A 3PL Partner?
Now that we have covered what a 3PL is and does, and what great advantages can result from teaming up with one, you might be left wondering: “Would that work for my e-commerce business?”
There are three main types of e-commerce businesses that can reap the most benefits from partnering up with a 3PL – let’s examine them below.
1. Scaling E-Commerce Companies
If you have recently launched your e-commerce store but are already seeing some initial good results from its sales, then perhaps it’s time to think about expanding – possibly, on an international scale, too.
However, doing this by yourself can prove very difficult and expensive, which is why you are much better off joining forces with a 3PL.
The right 3PL provider will support your international growth with scalable, flexible, and totally adjustable services that are 100% tailored to your specific needs.
2. Large and Well-Established E-Commerce Companies
One might think that, just because an e-commerce business has been going for a while and is now well-established, it won’t need the support of a 3PL? Think again! Even larger, more financially stable companies have a lot to gain from this type of partnership.
After all, in an economic climate that’s more and more uncertain, and with inflation levels constantly on the rise, finding solutions that enable you to save money is a no-brainer. And with the help of a 3PL, as we have seen, the cost savings as well as benefits from streamlined operations can potentially make a huge difference.
3. E-Commerce Companies Who Sell Globally
Is your e-commerce business already selling globally, and is looking to expand to even more international markets? Then, partnering with a 3PL can be just the right choice for you.
With their accurate and up-to-date knowledge and understanding of global markets, 3PL providers can go from being mere supply chain service providers to invaluable business partners for your company’s expansion.
Reap the Benefits of Teaming Up with a 3PL
Establishing a partnership with a 3PL can generate a vast array of advantages for your e-commerce business. From fewer costs to enhanced scalability, from more (and better) tools and technologies to a wider resource network, most types of e-commerce businesses can benefit from working with a 3PL.