What Is 3PL and How Can It Benefit My eCommerce Business?
There comes a time for most eCommerce businesses when they realize they simply don’t have the ability, experience, or time to handle everything on their own, and they look to others for support. Often, they’ll turn to 3PL, or third-party logistics, to take care of the tasks they can’t or don’t want to. If you’re new to the eCommerce game, you may be wondering, what exactly is a 3PL provider, what services do they provide, and what are some 3PL benefits?
What is 3PL Logistics?
A 3PL is defined by the Council of Supply Chain Management as: “A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.”
While many people think 3PL companies got their start in the early 1970s, that’s only when they got their name. History shows us that 3PLs have existed since at least the 1700s, when companies were hired simply to ship packages from the countryside of England to their various colonies across numerous continents.
Since the advent of eCommerce in the 1990s, however, 3PLs have really taken off. Today, 80% of all Fortune 500 companies and more than 95% of all Fortune 100 companies use some form of 3PL. Of course, 3PL also helps smaller businesses compete. They do this by handling their clients’ logistics processes, which include inventory management, warehousing, and fulfillment.
Five Benefits of 3PL Providers
Now that you know the background of 3PLs, let’s take a look at some of the primary benefits they offer eCommerce businesses.
1. Cost Savings
Storage and shipping are some of the largest costs associated with eCommerce retailers. When they work with a 3PL, the need for space—and the cost to rent or maintain it, along with overhead expenses—can be eliminated or reduced. When it comes to shipping, 3PLs also have relationships with carriers which results in discounted pricing that’s passed on to customers.
In addition, many 3PLs operate out of multiple locations, so they can ship products from the facility closest to the customer (the fewer zones a product travels across, the less it will cost).
2. Experience
Logistics are the speciality of a 3PL. By using one, you can tap into the knowledge of their experts and take advantage of the latest software and equipment that they’re utilizing. For example, employees at a 3PL are pick-and-pack experts, and know the most efficient ways to get your product to your customer. They’ll also use the latest technology, which provides top-notch security, tracking, payment processing, and more.
3. Reach
Some eCommerce businesses feel bound by their location and remain local or national, unsure of international rules and regulations. Many 3PLs have a global reach, allowing businesses to bring their brand to a global audience. With estimates placing the global digital buying market at more than 2 billion, thinking outside the border can really pay off!
4. Customer Service
Being able to handle returns, exchanges, and refunds is just as important as selling a product. Of course, many small eCommerce businesses aren’t able to offer 24/7 support through email or phone to do this. A 3PL, on the other hand, has the staff to do just that.
5. Scalability
Many startups and small eCommerce companies can handle logistics at the beginning, but as they grow, space can become an issue and fulfilling orders fast enough can become difficult, resulting in shipping delays and disappointed customers. A 3PL handles fulfillment in a timely manner regardless of the number of orders and can reduce your space (and your costs) during slow periods too.
Not All 3PLs Are Created Equal
While you’re likely to find some or all of the above benefits available through many 3PLs, The Fulfillment Lab takes services a step further! Not only do we provide cost savings, experience, reach, customer service, and scalability, we also offer customized packaging solutions.
Customized packaging options let you create your own custom shipping boxes, coupons, and inserts, upgrading your packaging to make it fresh and exciting every time someone makes a purchase. Often, this can be based on demographics, spending behaviors, birthdays or anniversaries, and more.
This helps build loyalty and turns customers into brand advocates. At The Fulfillment Lab, customizing packaging is as easy as logging into your own unique portal and interacting with our user-friendly fulfillment software.
To learn more about how we can help your eCommerce business boost efficiency and improve its customer experience as your end-to-end fulfillment partner, contact us today!
