Running an online store? Packing and shipping orders (fulfillment) are super important. But as your business gets bigger, it might become too much to handle on your own. That’s where 3PL companies come in! This complete guide will explain what they are and help you decide if they’re a good fit for your business.
What is Third-Party Logistics (3PL)?
As an online store owner, you know how important it is to get things shipped out quickly (fulfillment). But what if your store explodes in popularity and you can’t keep up with boxing and shipping orders yourself? That’s where 3PL companies come in! They handle all the logistics for you, from storing your products (warehousing) to keeping tracking of how much you have (inventory management) and getting them to your customers. This isn’t a new idea, but it became super common with the rise of online shopping. Now, 3PL companies often combine storage and shipping into one service, making it easier than ever for online stores to focus on selling, not shipping.
How does a 3PL Work?
When shopping online, have you ever wondered what happens to your online order after you click “submit”? If you use a 3PL company that helps e-commerce businesses with shipping and storage, their warehouse might seem mysterious. But don’t worry! This guide will shed light on the whole process, from the moment you hit “submit” to when your order lands at your doorstep.
1. Receiving
Before your order can zip off to your customer, the 3PL needs to have your products in stock. This is where “receiving” comes in. Every 3PL has its own way of accepting and storing inventory. This helps them get things organized quickly so they can start fulfilling your orders as fast as possible.
2. Warehousing
Once your products arrive at the 3PL warehouses, they’ll find a home! Each item, identified by a unique code, SKU) gets its own spot on a shelf, bin, or pallet. Different 3PLs have different storage sizes, so finding one that can grow with your business is important. Remember, a 3PL is different from an on-demand storage company that just rents out space. A 3PL actually runs the warehouse and handles all the logistics for you.
3. Picking
Once a customer clicks “order.” the 3PL gets to work! This is where “pick and pack” comes in. Some 3PLs make you upload order details manually, which can be a hassle. But better 3PLs use fancy software that connects directly to your online store. This way, orders flow automatically to the 3PL, saving you time and headaches. When an order arrives, the warehouse crew gets a “picking list” telling them exactly what to grab and where to find it.
4. Packing
After the warehouse team picks your customer’s order, it’s time for packing! The 3PL will use boxes, bubble mailers, or bags to secure your products, depending on what they offer and what your items need. Some 3PLs charge extra for packing materials, while others include it in their service. They’ll choose the best way to pack your order to keep it safe and minimize shipping costs by using the right box size. If you want to add a personal touch, some 3PLs also let you use custom boxes and inserts to promote your brand. After all, a nice package can make a great first impression.
5. Shipping
Once your order is packed and ready to go, the 3PL will ship it off. Most 3PLs, including Simple Global, handle buying and printing shipping labels for you. Some partner with specific carriers, while others compare prices from different ones to get you the best deal on shipping speed. Big names like DHL, USPS, and UPS are the ones who will actually pick up the packages from the warehouse and deliver them to your customers. The speed of delivery depends on what the customer chooses at checkout and the options the 3PL offers. Finally, the best 3PLs will automatically send tracking info to your online store so you and your customer can follow the package’s journey.
6. Returns
Some 3PLs can even handle returns! If a customer sends something back, the 3PL will take care of it, figuring out whether to put it back in stock or toss it (based on your instructions). They can even provide return labels for your customers, making things easier for everyone. This way, you don’t have to deal with returns yourself, and your customers can easily track their return shipment.
What Should You Look for When Choosing a 3PL Partner?
Not all 3PLs are created equal. Besides shipping your orders, some 3PLs offer extra features that can be really helpful. Here’s a quick rundown of some of the things you should look for from a 3PL service provider.
Inventory Management
In addition to shipping, some 3PL cans also be your inventory BFF (best friend forever). This means they can track your stock levels, show you what’s selling and what’s not, and even warn you when it’s time to order more so you never run out (stockouts). This way, you can always see how much you have in stock and keep your customers happy by never showing them “out of stock” messages.
2-Day Shipping
Shoppers want fast and affordable shipping! Almost 75% of them expect it, and many abandon carts or cancel orders if it’s not an option. This is why big stores offer super-fast, sometimes free, shipping. To keep up, consider using a 3PL that has warehouses in different areas. By storing your products closer to your customers, the 3PL can offer faster shipping at a lower cost. They can also often negotiate discounts with shipping companies to save you even more.
Distributed Inventory
Imagine you have warehouses on both the east and west coasts of the United States. If a customer on the west coast places an order, it would be much faster and cheaper to ship it from the west coast warehouse instead of the east coast one. This is called distributed inventory. Some 3PLs have warehouses in many places and can automatically route your orders to the closest one. This can be especially helpful if you have customers all over the country. By having products closer to your customers, you can offer faster shipping at a lower price. However, spreading out your inventory might not be the best idea for small businesses just starting out. but as your business grows, having warehouses in different areas can be a great way to reach more customers and be prepared for anything!
B2B and B2C Fulfillment
Not all businesses just sell directly to consumers (B2C). Some also sell to other businesses (B2B). If you do both, finding a 3PL that can handle both can save you a lot of hassle. These 3PLs can handle things like drop shipping to big stores and wholesale shipping. Basically, they can be your one-stop shop for storing, packing, and shipping all your products, no matter who you’re selling to.
Returns Management
Some 3PLs can even help with returns. They can accept returned items, figure out what to do with them (like restocking them or throwing them away based on your instructions), and even use special software to make the return process smooth for your customers. This can be a big time-saver for you.
Kitting
Want to add a personal touch to your products? Some 3PLs offer a service called “kitting.” This lets you tell them exactly how you want your orders prepared. For example, you could ask them to add a sticker to every box, use your special packaging materials, or even include a number of specific items (SKU) into a single box. Basically, you can customize how your products are presented to your customers.
Data Analytics
Not all 3PLs are created equal. Some, like Simple Global, offer advanced data tools that can give you insights into your business like never before. These tools can help you with everything from figuring out how long it takes to deliver orders to customers, to seeing how much storage space you’re using and how much it costs. This data can be a goldmine for making better decisions about your business.
Worldwide Fulfillment
Thinking of taking your business international? Some 3PLs can help you expand to new countries! These global 3PLs have warehouses in many places around the world, so you can store your products closer to your international customers. This can make shipping faster and cheaper. Even better, some 3PLs can handle the complexities of shipping across borders. Ideally, the 3PL will have one easy-to-use system for managing all your warehouses, orders, and inventory, no matter where they are in the world.
3 Big Benefits of Using a 3PL Company
In short, using a 3PL company can be a big win for your online store. They can handle all the storage, packing, and shipping of your products, letting you focus on running your business. This can save you time and money, and even help you reach new customers around the world!
1. Save Time & Money
As your online store grows, fulfilling orders yourself becomes a burden. By outsourcing to a 3PL, you eliminate the need to:
- Buy or rent warehouse space
- Invest in fulfillment equipment (forklifts, etc.)
- Purchase warehouse management software
- Hire and manage warehouse staff
- Pay for workers’ compensation and liability insurance
By letting a 3PL handle fulfillment, you save both time and money. This frees you up to focus on more important things, like:
- Developing new products
- Marketing your business
In short, using a 3PL company can be a big win for your e-commerce business. They can handle all the storage, packing, and shipping of your products, letting you focus on running you business. This can save you time and money, and even help you reach new customers around the world.
2. Access Logistics Expertise
Running an e-commerce store is tough, and you probably don’t have time to be a logistics expert too. That’s where a 3PL comes in! They’re staffed with people who know all the ins and outs of shipping and logistics, so you don’t have to learn it all yourself. These 3PL pros also have the resources to stay on top of the latest shipping trends and find ways to make things run smoother and more efficiently for your business.
3. Gain Global Reach
Thinking of expanding your e-commerce business beyond your region? A 3PL can help! Unlike in-house fulfillment, 3PL companies have warehouses in many places. This can be a huge advantage because shipping from a single location can be expensive, especially for customers far away. By using a 3PL with warehouses across the glove, you can get your products to customers faster and for less, which can help you grow your online business.
When Should eCommerce Businesses Work With a 3PL?
Here’s a general breakdown of when e-commerce businesses should consider looking for a 3PL:
Your Order Fulfillment is Becoming a Burden:
- If your sales are growing and you’re struggling to keep up with packing and shipping orders yourself, a 3PL can take that burden off your plate.
- As your business grows, you might run out of space to store your inventory. A 3PL offers dedicated warehouse space that scales with your needs.
- Spending too much time on fulfillment tasks takes away from other areas of your business. A 3PL frees up your time to focus on marketing, product development, and other strategic initiatives.
Looking to Expand or Improve Efficiency:
- If you want to expand your reach to new geographic regions, a 3PL with warehouses in different locations can significantly reduce shipping costs and transit times for your customers.
- A 3PL can streamline your inventory management by tracking stock levels, providing real-time data, and even automating reordering to prevent stockouts.
- 3PLs often have negotiated discounts with major shipping carriers, which can translate to significant cost savings for your business. Additionally, strategically placed warehouses offered by 3PLs can further reduce shipping costs by keeping products closer to your customers.
- If you’re thinking of selling internationally, a 3PL with a global presence can simplify the complexities of cross-border shipping and international fulfillment.
Beyond Fulfillment:
- Running an online store doesn’t require you to be a logistics expert. A 3PL can provide valuable knowledge and stay up-to-date on the latest shipping trends and regulations.
- Some 3PLs offer a wider range of services beyond fulfillment, including kitting (customizing how you prepare orders), returns processing, and even data analytics to help you make better business decisions.
In Short, Consider a 3PL if:
- You’re spending too much time or money on fulfillment.
- You’re looking to expand your reach or improve efficiency.
- You don’t have the resources or expertise to handle fulfillment in-house.
Remember, a 3PL can be a valuable partner for your e-commerce business, allowing you to focus on growth while they handle the complexities of logistics.
Conclusion
In conclusion, using a 3PL company can be a game-changer for your online store. They can handle all the storage, packing, and shipping of your products, letting you focus on running your business. This can save you time and money, and even help you reach new customers around the world. Whether you’re a small business just starting out or a larger company looking to expand, there’s a 3PL out there that can help you achieve your goals. So if you’re feeling overwhelmed by fulfillment tasks, or if you’re looking for ways to improve efficiency and grow your business, then consider partnering with a 3PL. It might just be the best decision you ever make for your online store.
