The supply chain is one of the essential components of an e-commerce business. Prompt delivery and smooth customer experience could differentiate between an outstanding and a mediocre brand.
As start-ups launch, they might need to handle order fulfillment, storage, and delivery. But as they expand, this process might take its toll on their ability to focus on the core business. With a certain growth level, start-ups tend to focus more on marketing and product development. At the same time, leaving tasks like shipping and fulfillment to 3PL professionals.
A 3PL or third-party logistics provider is a professional company that provides a range of services—warehouse, inventory management, order fulfillment, and shipping to e-commerce businesses. 3PL providers take vendors’ logistics and storage complications, allowing them to save costs and improve overall customer experience.
A Procurement Partner
Some 3PL providers help clients with procurement and other supplementary services, like systems integration and reverse logistics. A 3PL company can also help keep track of stock levels and report when stocks are almost out.
They receive goods from the manufacturer, hold, and deliver customers’ orders. For storage services, they provide high security for valuables and offer in-house tracking to speed up access to commodities.
A third-party logistics provider helps businesses save overhead costs and utilize time on other productive endeavors. Plus, the wide international coverage of these organizations gives you access to foreign markets. However, choosing the right 3PL provider for your business can be dicey. Here’s how to navigate the process and make the best choice.
Before Choosing a 3PL Provider
No one knows and understands your business needs as you do. In choosing a 3PL provider, your marketing priorities, shipping, and packaging strategies can influence your choice. You’d want a specialized company that can prioritize your needs without compromising quality. Before choosing your 3PL provider, you want to learn about their history, processes, and resources.
You want to ask, how broad are their offerings? The wider the offerings of a 3PL, the better they’d be able to cater to your needs. What reputation has this organization built for itself? Do they have a brand to protect?
Different Types of a 3PL Provider
There are different specialties of 3PL providers. This classification is based on the services offered. Understanding what you need would help you make an informed decision while choosing a third-party logistics company.
Transportation 3PLs
They focus on moving goods from one place to another. It could be from the manufacturer to the warehouse or from the warehouse to a customer. The destination and the timeframe for delivery largely determine the most suitable option. Be it a traditional parcel or same-day delivery transport company.
Warehouse and Distribution 3PLs
These are the most common 3PLs, and they focus on storage and distribution. The biggest selling point of these organizations is their large distribution centers and fast shipping rates. They also help handle inventory management and return services.
Freight Forwarders
These organizations have no assets of their own. They act as intermediaries for corporations for international shipping arrangements. They help organize and expedite the shipments from the manufacturer to the customer.
Managed Transportation 3PLs
These organizations serve as an extension of the drop shipper’s team. They leverage technology to provide a holistic management service. Customers enjoy an integrated freight system that simplifies workflows and eliminates human error. Customers are at liberty to choose how much logistics support they need.
Financial 3PLs
These 3PLs help corporations document and analyze the fulfillment cost. They provide auditing, accounting, and payment analysis of warehouse processes. They allow businesses to have access to industry-specific insights that improve decision-making.
Companies are offered access to tracking, booking, and tracking tools, giving them more control over the e-commerce business order fulfillment process.
How to Choose a 3PL Provider to Ensure Success for Your Business
Often drop shippers are middlemen who link manufacturers and customers together. But they often bear the brunt when manufacturers or logistics companies fail to deliver.
Finding the right 3PL helps improve efficiency and scalability. It is important to ensure that a third-party logistics company has a robust technology system. It should offer a warehouse management system that helps track shipment and a business intelligence solution that offers insight into day-to-day operations. You also want to choose a 3PL capable of expanding to meet your changing business needs.
Ensure that the 3PL partner you choose has a proven track record of reliability and financial stability. You want to verify they’re capable of meeting your fulfillment and distribution requirements. Also, determine which organization is willing to accommodate your customized preferences. Overall, ensure the 3PL has a growth mindset.
Making the Most of the Opportunity
A third-party logistics provider can be a game-changer for many businesses. However, it is dependent on you. Understand the operations time, determine the cost of using them, and determine communication expectations. And lastly, ensure that the 3PL integrates with your order and inventory management system for a seamless experience.