What is a 3PL? Third-Party Logistics and Ecommerce

Third-Party Logistics providers are being utilized through numerous e-commerce businesses to oversee and manage the supply chain management. 3PLs specialize in optimizing the supply chain and allow online stores to focus on other business and marketing operations.

These days, the business market is competitive and keeps costs down while increasing the efficiency and speed of a company’s logistics operations. The term 3PL is developed for efficient transferring of resources to areas where they are most needed. 3PL continued to grow as the deregulation of interstate trucking reduced the barriers to entry in the industry of freight management.

The third-party logistics in logistics and supply chain management is what the company uses as third-party businesses to outsource elements of the company’s order fulfillment services.

What services does 3PL provide?

  • Supply Chain Management – When a supply chain is well-oiled, it will be possible to achieve a successful e-commerce business. If your inbound freight delivery requirements are taken care of, it means that 3PL did an excellent job.
  • Warehousing – Physical goods must be stored at the same location; even an e-commerce merchant has no physical store. A 3PL will take care of the warehousing requirements. Investing in technology and space is required to run the warehouse efficiently.
  • Consolidation Service – It is rare for an e-commerce merchant to send a lot of small goods to the same location. In this situation, the whole can be lesser than the sum of the parts. Meaning to say, if small goods were consolidated into one shipment, shipping charges could be lowered. A service provider that sends several small packages as one large package is called consolidation service.
  • Order Fulfillment – In order fulfillment, it has to consider if the customers are receiving the right goods. The goods must reach the receiver on time and in good condition. An excellent third-party logistics service provider would take care of the order fulfillment requirements well.

The Pros of Using 3PLs

  • Customization – All internal packaging and boxes/bags are customized to a specific brand. Processes are adapted to a business’ specification and operation.
  • Warehouse Costing – The costing must be an attractive storage cost variable where customers pay for storage on a given month. Some 3PLs offer free warehouse storage only for a limited time.
  • Communication – There should be an onboarding process and frequent communication before and after product launch. A collaborative approach is highly-encouraged.
  • B2B (Business to Business) – Certain 3PLs can handle both B2B and B2C (Business to Consumer) fulfillment, resulting in one e-commerce fulfillment partner for all sales channels.