If you are an online company owner, order fulfillment is crucial to your operations. As your firm expands, you may discover that completing client orders in-house is no longer possible. You’ll need to broaden your fulfillment strategy; for many organizations, this means outsourcing fulfillment to a third-party logistics (3PL) provider.
As a business owner, it’s crucial to understand how 3PLs function to make the most of your eCommerce fulfillment strategy and expand and scale your company. Here’s what you should know.
What are third-party logistics (3PL)?
Third-party logistics (or 3PL) refers to outsourcing eCommerce logistics procedures to a third-party enterprise, including inventory management, warehousing, and fulfillment. 3PL providers empower online retailers to do more, using the tools and infrastructure to automate retail order fulfillment.
We don’t know for sure who invented the phrase “third-party logistics,” but corporations started gravitating toward outsourcing incoming and outbound logistics services to third parties in the 1970s and ‘80s.
With the advent and rise of eCommerce in the ‘90s and 2000s, the term 3PL has become common, and 3PLs have extended their offerings. The supply chain integration of warehouse operations and transportation services has become the term for third-party logistics.
When it comes to 3PL fulfillment, logistics businesses provide a broad selection of services. Third-party logistics services run the gamut of the supply chain. 3PL fulfillment services might include items like:
- Distribution
- Shipping and receiving
- Transportation
- Warehousing and warehouse management
When dealing with a 3PL partner, you’ll want complete services. Go Freight Hub Logistics provides partners with extensive third-party logistics services. This implies that Go Freight Hub 3PL services merge effortlessly. This develops encompassing services to address your business’s fulfillment demands.
What is 3PL in a warehouse?
3PL stands for third-party logistics, mentioned above. The phrase third-party logistics is frequently used interchangeably with order fulfillment. A third-party warehouse offers a comprehensive range of eCommerce fulfillment services. This might involve warehousing, order processing, and shipping and receiving. Many 3PL warehouses provide additional benefits. These might include customer assistance, return processing, and customization.
The 3PL business model is the most frequent form of outsourced logistics organization. There are more forms, such as 4PL and 5PL, but most firms, big and small, are interested in 3PL by far.
Third-Party Logistics (3PL) Basics
Third-party logistics providers oversee incoming and outgoing transportation for their customers, as well as warehousing. Most 3PL companies own or lease warehouse space, which they provide to their clients. They usually don’t own their own fleet of vehicles but contract with other carriers for freight and transportation.
Third-party refers to the notion that you’re outsourcing your order fulfillment. You don’t own the warehouse. Instead, you rent shelf space for your items in a vast warehouse that keeps things for various firms. Warehouse personnel receive your items and put them into inventory. They choose items from shelves to satisfy orders and pack them securely for transportation. The 3PL works with numerous carriers to deliver orders to your customers.
Third-party logistics warehouses are intended to enhance speed and efficiency. As your firm expands, they can manage the increased demand, and you may extend your capacity without adding more people. A 3PL can work with you on strategies to lower your shipping costs and delivery times. When you engage a 3PL business for your eCommerce fulfillment, you receive the advantage of expertise and concentration.
Benefits of third-party logistics
There are various advantages to this operating style.
Lower cost of products sold
When you buy things ahead, you will pay the wholesale price. The more you purchase, the cheaper your expenses are and the bigger your profit margins.
Greater flexibility
in product sourcing. When you employ an eCommerce fulfillment business model, you may more readily acquire items from more than one manufacturer. All your things will be held in the same warehouse, so purchases that contain products from several vendors may ship in the same package. This saves on delivery expenses.
Also read: Top 4 Ways Managed IT Services Can Lead To Sustainable Business Growth
