Are you into the e-commerce business today? Is the process of fulfilling orders taking so much of your time? Are you doing it by yourself? And have you ever heard of using 3PL services?
If yes is your answer to the first three questions, but no to the last one, then this article is for you. It will be a simple yet informative guide to what a third-party logistics (3PL) service is. It also contains tips on picking the best 3PL provider for your needs.
Let’s Define What 3PL Is
Third-party logistics (3PL) means the process involving the use of warehouses, inventory, and delivery to the customer for the fulfillment of e-commerce requests. It lets online sellers do other essential business tasks. 3PLservice providers, on the other hand, use tools and specialized systems to automate customer fulfillment.
While there is no account of who named it 3PL, this process has been helping thousands of small to big businesses since about the 70s to 80s. However, when the 2000s entered, the need for 3PL services boomed together with the advent of e-commerce.
How Does 3PL Work?
Are you now interested in using 3PL services for your e-commerce business? Then, you should also know how the process works. It starts when a client clicks “ORDER” on your e-commerce website. But, how does it begin with an e-commerce business like yours?
Step 1: Receiving The Items
3PL service providers cannot begin without any items with them. To receive items for inventory is the first step of the process. It is when the 3PL warehouse accepts your products and accounts for them properly. Do note that each provider has their own system of receiving products, so it is best to know their guidelines for a swift and hassle-free receiving stage.
Step 2: Storing The Goods
This stage starts after the warehouse accepts your products. The 3PL provider stores the items in fulfillment centers, such as a warehouse. Every SKU (stock keeping unit) has a designated storage area suitable for them. Typical storage types are pallets, shelves, and bins.
3PL providers have various storage capacities. Therefore, you might want to consider a provider that has ample space to accommodate your products to their inventory. Also, note that a 3PL provider is different from a typical warehouse, which only serves as storage and nothing else.
Step 3: Pick-and-Pack
It is the stage where a customer gets involved, which is the time they click “ORDER” on your online site. Depending on your system and your 3PL provider (plus the system they use), you may either use a spreadsheet to forward the orders to your provider or an automated technology that is already integrated into your system.
Either way, as soon as the 3PL provider gets the request, a picking team acquires the items from their respective locations and packs them for shipment. The packing team now securely fixes your item using packing materials, such as:
- Polybags
- Boxes
- Bubble mailers
- Plastic-based Dunnage
- Paper-based dunnage
The packing materials might be included in your fulfillment service subscription, while other plans or providers charge them separately to you. Additionally, some offer personalized boxes and inserts, based on your brand. This factor may be an added marketing feature to your brand. Make sure to discuss this process with your 3PL provider to know all your options.
Step 4: Shipment To Customer
The last and one of the most critical stages is the shipment of the order to the customer. This stage includes the printing and placing of correct shipping labels to the items on your behalf. Some 3PL have carrier partners, others choose from various shipping companies, while a few have their own delivery system. Note that these carrier companies also have their guidelines and policies to follow, which is beyond the control of your 3PL provider.
Common carriers that 3PL providers use are:
- UPS
- USPS
- DHL
Nevertheless, 3PLs typically monitor the entire shipment to ensure that the fulfillment process completes its course.
BONUS INFO: Returning Items
Most 3PLs can also assist you with return requests. When a customer ships back an item to your 3PL provider, they will process the returned item. Once assessed, they will either restock or place your item for disposal or return it to you, depending on their policies or your agreement. Either way, your 3PL provider will keep you updated for you to complete the return process on your end.
How To Pick The Best 3PL Provider?
If you choose to partner your e-commerce business with a 3PL provider, you may enjoy many benefits, such as more time to focus on other business tasks, saving up on costs, and many more. Now, the next question you should answer is: How can you pick the best one?
Here are three points that you should consider to know if your targeted 3PL provider is a match for your company.
- The Difference from Conventional Fulfillment Services
When looking for a 3PL company, ask and assess their fulfillment process. Assess how they store goods, how they handle the picking and packing stage, and the carriers they partner with to fulfill the customers’ orders. Also, check if they are only using one facility to do everything, as more modern 3PL providers now use interconnected facilities to make the fulfillment process faster, cheaper, and hassle-free for both you (online sellers) and customers.
- The Kind of System Used
Choose a provider that has a more user-friendly system. Check if they have the technology to connect to your online store and if it can also be your way to track the status of the order.
- Location
While almost all transactions are done online, the location of a 3PL provider is essential to you. The nearer the location of the fulfillment center is to you, the faster you can bring the products to it. Moreover, if it is strategically located, their fulfillment process can also be faster.
Takeaway Thought
Going for e-commerce may be challenging, but with the help of providers, particularly those who offer 3PL services, online sellers can have a successful business ahead. 3PL services help fulfill orders and even manage goods. Other than doubling as a warehouse facility, these providers carry out the picking and packing up to the delivery of the items to customers. It means you can have more time to carry out other business tasks like product development and marketing to help you improve and expand your business.
