What does 3PL mean?
3PL is an abbreviation for third-party logistics. Other terms for 3PL include outsourced fulfillment, third-party fulfillment service, and ecommerce fulfillment services. With 3PL, the warehousing and order fulfillment process of an ecommerce supply chain is partially or fully outsourced to a supplier outside the company. This can include warehouse management, gathering and packing customer orders, choosing the right shipping carrier, applying the shipping label, entering the tracking number, dealing with customer returns, international shipping, and anything in between.
Although 3PL services have existed for decades, the rise of online sales has created an increased demand that goes beyond just cost-cutting for a supply chain. A 3PL provider is an important consideration for any ecommerce operation, as in many cases, the third-party fulfillment service may be the part that customers deal most with.
The advantages of outsourcing ecommerce logistics using 3PL
As an online retailer, your specialty is knowing your product. The key to scaling and growing is being able to properly delegate tasks that don’t make up the core competencies of the business. By outsourcing your ecommerce logistics to a trusted 3PL provider, order fulfillment duties can be handled by a business partner that specializes in supply chain logistics.
You can then free up your resources to focus on upcoming seasonal peaks, instead of packing orders or applying shipping labels.
A good 3PL provider will reduce your shipping costs using its relationships with key shipping carriers, allowing you to access special discounts normally reserved for bulk shippers while ensuring that packages are dispatched quickly. For example, Pitney Bowes is a 3PL partner that is capable of managing your fulfillment warehouse, streamlining the entire fulfillment process and providing cost-effective delivery solutions in addition to fulfillment services.
Scaling ecommerce operations brings new challenges that 3PLs have experienced and solved. With their help, an online retailer will encounter fewer headaches and less risks, allowing orders to keep moving.
3PL logistics services can also help you with international and cross-border shipping. This allows an online retailer to better compete on a global scale.
The challenges that come with outsourcing ecommerce logistics
Outsourcing ecommerce logistics can reduce the risks that come with scaling that is simply not feasible using internal staff. But when delegating a process outside of your company, there’s always the trade-off of losing visibility or maintaining quality control over that process.
From how orders are packed to deciding which carrier will convey the shipment, using a 3PL service allows an online retailer to delegate control over day-to-day tasks in exchange for saved time and cost savings. This could have unintended negative impacts on customer experience.
That’s why it’s so important to work with a 3PL partner that understands your business needs and your expectations for customer experience. When partnering with a knowledgeable 3PL, they’ll take the time to review and understand your ecommerce fulfillment process. They may also offer options for custom packages, personalized note cards, and promotional packaging to help you deliver a remarkable unboxing experience.
What is the difference between 3PL and dropshipping?
When using a 3PL partner, an online retailer controls the manufacturing process and/or owns inventory of a product. Outsourcing focuses on the logistics of the shipping and warehousing processes.
For aspiring ecommerce entrepreneurs, building an online retail business fulfilled by drop shipment is an alternative option. With dropshipping, the ecommerce company processes the order, but order fulfillment is handled exclusively by the manufacturer. The seller simply acts as a middleman between a manufacturer, a wholesaler, or another retailer.
Although this can cut costs in terms of storing inventory and overhead, there is a loss of quality control over the ecommerce logistics process. This is not an ideal solution for a company that focuses on the customer experience.
Is a 3PL partner right for your ecommerce business?
If you’re having trouble keeping up with customer orders or running out of warehouse space, then outsourced third-party logistics may be the right solution for you.
Get in touch with one of our fulfillment experts to discuss 3PL services as part of a full range of ecommerce logistics solutions.