The success of an eCommerce business relies on its customers’ satisfaction and it all starts with how they manage their supply chain. Inventory management is a crucial part of the supply chain, making up most of your business processes. If problems are not addressed immediately and correctly, the goal of satisfying customers will not be met and will negatively affect your brand.
Nowadays, businesses rely on third-party logistics (3PL) partners to manage their supply chain for them. This has already been a standard practice for many years, as businesses of all sizes are taking advantage of the benefits of using the services of a 3PL. So what is 3PL warehousing? And how to find the right 3PL provider for your business? Keep reading to find out.
What does 3PL (third-party logistics) mean?
A 3PL, or a third-party logistics provider, is a company that specializes in managing your supply chain and taking care of all your logistics needs. It can handle all your operations including warehouse management, fulfillment, and shipping. The term 3PL can also refer to a fulfillment center, order fulfillment companies, eCommerce fulfillment warehouse, and more.
3PLs are the backbone of today’s burgeoning eCommerce industry. Many brands have become accustomed to using a 3PL provider to take care of their warehouse operations and help them grow faster.
Benefits of using a 3PL service
The advantages of 3PL warehousing are enormous. Depending on your goals and the size of your company, a 3PL can be a much better alternative to in-house fulfillment. Here’s why:
Save on costs
Since 3PL providers have their own warehouse, you will save money on costs unlike when you have to rent your own. Not only that, but you will also save on labor costs because they have a staff member who will manage the warehouse.
Uses advanced technology
3PLs use state-of-the-art warehouse technology which adds to the efficiency of the entire supply chain process. Demands can fluctuate anytime so it is important that your 3PL can provide a seamless approach when managing inventory to avoid delays. It is also easier nowadays because they can already integrate their system into your eCommerce store so any orders you get will automatically be updated with the warehouse.
Allows flexibility and scalability
Another great thing about partnering with a 3PL is that they can accommodate any increase in demands you might experience. It might be due to a store sale or you are planning to expand your business. Whatever the reason for the influx, the warehouse is capable of adjusting to your business needs.
Work with experts
Running an eCommerce business can be overwhelming especially since you have to think about the storage and transportation of goods to other parts of the world. It involves a lot of legal documentation and strategic planning to ensure that the orders will be delivered to the consumers in great condition and on time. A 3PL company has competent staff who are knowledgeable when it comes to the rules and regulations. They can also anticipate problems and provide necessary solutions immediately.
Reduces risk
Operating a 3PL and managing inventory on your own is risky especially if you do not have enough knowledge and resources for them. By getting the services of a 3PL company, the risk is greatly reduced, resulting in more efficient operations and a great customer experience. You will also have peace of mind while focusing on the other aspects of your business.
Expansion to new markets
A 3PL that has warehouses across multiple locations can help you enter new markets without significant investments. For instance, if you’re planning to expand to the US East Coast and Canada, a Pennsylvania fulfillment center could be a great fit to store inventory close to your audience and target customers, cutting shipping costs and reducing delivery times.
How does a 3PL warehouse work?
When availing of the warehousing services of a 3PL partner, you get to enjoy the whole package of order fulfillment services. Here are the steps involved in 3PL warehousing:
Receiving stock and inventory management
Once your products are done, the 3PL staff will schedule to receive them. Then they will store them in the warehouse based on their SKU (Stock Keeping Unit). When the items arrive in the warehouse, they will be registered into the system to keep track of the inventory easily. You will also have access to the inventory so you can be updated in real time with the status of your stocks.
Picking and packing
Since your eCommerce store is integrated with your 3PL partner’s system, they will be notified immediately whenever you receive an order. They will pick the items being ordered and pack them to prepare for shipping. Most use standard packaging but some companies offer customized packaging for your products which can add to the satisfaction of your customers. Then, they will attach important labels such as delivery addresses and receipts.
Shipping
3PLs already have their shipping partners but they can also compare different shipment services to find the right option for your needs. They will negotiate the best rates so that you can get the best services without breaking the bank or sacrificing delivery times. Once the orders are packed, they will be picked up by the shipping partner and the tracking information will be uploaded to the 3PL’s management system and also to the business’s store platform. Customers will also receive the tracking details.
Returns processing
Not all orders will be successful every time. Some customers might not be satisfied with what they receive so they end up returning the items. Returned items will be sent back to the warehouse and the staff will determine whether to keep or dispose of them depending on your preferences or policies. Check whether your potential 3PL partner offers a returns handling service as this can save you a lot of trouble when managing returns on your own.
How to choose the right 3PL warehouse services?
Getting the services of 3PL warehousing will benefit your business a lot in the long run. You do not have to worry about reliability because they are the most experienced when it comes to eCommerce order fulfillment. There are a lot of existing logistics companies today in the market so it is important to find the most suitable for your business.
Here’s what to consider when looking for a fulfillment company:
Location availability
When it comes to choosing the best 3PL warehousing company, the location of the company and its fulfillment centers play a vital role. Your products will be fulfilled in the 3PL’s fulfillment center, so the location should be close to areas where most of your customers reside.
In the US, for example, check if the 3PL has at least two fulfillment centers and warehouses on the West and East Coasts. This ensures ideal inventory distribution and allows for reasonable delivery times across most states.
Fulfillment fees and costs
Fulfillment costs can vary widely between 3PLs. The fees could include picking, packing, shipping, and sometimes storage fees if your products stay longer on the shelf. Your order volume is also an important factor in determining the fulfillment cost for you. Overall, it’s better to request fulfillment pricing from multiple providers and compare them.
Speed and accuracy
Speed is paramount. Every customer wants their orders to be delivered as fast as possible. Speed here may not just relate to shipping speed (expedited shipping). Fulfilling orders quickly and without errors also helps in ensuring orders are processed on time to be shipped. Ask your 3PL about their average speed to ensure it fits within what your customers expect.
Customer service
Customer service is as important as the other factors for finding the best 3PL warehousing company for your business. Make sure the company you’re looking for has a good customer support team that can assist you with shipping and fulfillment when needed.
Conclusion
All businesses should consider getting 3PL warehousing services because it will definitely maximize your business operations. It is already a one-stop-shop solution to manage and streamline your supply chain.
Order fulfillment is made easier because of this service so if you are in a saturated market, projecting a high volume of orders, or expanding your business anytime soon, better get the services of a 3PL company.
If you’re on the lookout for a 3PL based in China and the US, consider working with Lansil Global. With 10 years of experience in the industry, we’ve helped many eCommerce brands expand their business around the world.
Ready to grow your brand with a 3PL that prioritizes your business? Reach out to us to get a custom quote.
3PL warehousing FAQs
Here are some frequently asked questions about 3PL warehousing:
What are the main types of 3PL?
Warehouse-based 3PLs: These 3PLs are commonly preferred among eCommerce brands to handle their supply chain. Their services include storage and inventory management, order fulfillment, distribution services, and more. They often have many warehouse locations to service customers around the globe.
Transportation-based 3PLs: As the name suggests, transportation 3PLs focus on offering services related to moving goods, coordinating with freight forwarders, and managing payment for transportation on your behalf.
Financial and information-based 3PLs: When working with these 3PLs, you can provide value-added services such as auditing, accounting, supply chain management, and more by utilizing advanced technologies.
How important is 3PL to your supply chain?
3PLs are an integral part of any supply chain. The warehouses can store, manage inventory, and arrange shipping, which is a big part of any supply chain.
Should I work with a 3PL warehouse provider?
It all depends on your business requirements. If you’re running a business that comprises moving your goods from one place to another, a 3PL could be helpful to support your operations and give you a reliable logistics service.
What is smart warehousing?
Smart warehousing is a term used to refer to advanced 3PL warehouses that offer order fulfillment services and utilize technologies, such as a warehouse management system, to streamline logistics operations.
