Can't Keep Up with the Pace of Ecommerce? Here's Why You Need a 3PL Provider

Most ecommerce companies have the same goal: to reach new customers, increase brand awareness, and boost revenue by increasing the number of items sold each day, each month, and each year. However, logistics has traditionally been seen as an area that doesn’t need much investment or attention — after all, it’s just an invisible part of the business that handles storing and shipping products to customers. But ecommerce has changed this game and made logistics not only relevant but integral to the success of online businesses today.

What exactly is 3PL?

A 3PL is a company that provides logistics services to ecommerce merchants. These services can include warehousing, transportation, and order fulfillment. A 3PL can help ecommerce merchants keep up with the pace of ecommerce by managing their supply chain. A 3PL can also help ecommerce merchants save money by reducing their shipping costs.

For many successful ecommerce businesses, 3PLs have been—and will continue to be—the secret ingredient that have allowed them to weather the recent supply chain crisis. Unfortunately, the acts of political instability, natural disasters, human resources shortages, and regulatory challenges that we’ve seen in the past two years aren’t an exception to the rule.

How does a 3PL work?

Despite variation in 3PL fulfillment services, this is the typical process.

• Your inventory will be received at a 3PL's warehouse, and every SKU will be neatly organized.
• When an order is placed on your ecommerce site, it either goes straight to the third-party logistics company or it automatically pushes if your software integrates with your online store.

• A Warehouse team member is assigned to a Picking List of items that are ordered by the company.
• Once everything is ready, we pack it in boxes with receipts and instructions.
• The 3PL either prints the shipping label or finds a partner for delivery.
• When the customer receives their package, the shipper may not have done so for them, and the distribution center only stored it for a little while.
• Tracking information is uploaded to the third-party system and synced with your order management software.

Benefits of using a 3PL service

You’ll be outsourcing your logistics to shipping and fulfillment experts

Do what you do best—and allow others to do what they do best. 3PLs are specialists in logistics. By allowing them to manage your shipping and fulfillment, you’ll have more time to invest in a big-picture strategy.

3PLs can help you reduce shipping costs and improve delivery times. 

It’s also important to note that today’s ecommerce market is constantly changing. The rate at which shoppers are demanding new products has increased exponentially as well as the amount of items purchased online. While it may seem impossible for any company to keep up with this pace, especially those without specialized staff or expertise in order management and logistics, companies like UPS® Logistics Services (UPS LSC) offer scalable solutions tailored to your specific needs so that no matter how fast things change, you never have to worry about whether or not your business will be able to keep up.

These are just a few of the benefits that come with using an effective, professional logistics service. When your business is handling hundreds or thousands—or even millions—of packages each year, you need an expert on your side.

Most common areas where 3PL services are used

Here are the most important services to look for when engaging the services of a 3PL.

• Warehouse and inventory management
• Order management and fulfillment
• Shipping coordination
• Order tracking
• Reverse logistics and returns
• International logistics

How to choose a 3PL provider

Selecting a third-party logistics service is likely one of the biggest decisions you’ll make as you scale your ecommerce business. You’re putting trust in the provider you select to take care of your brand and deliver the customer experience you envision.

The right partner can make or break your company’s logistics, customer service, and repeat purchase rate. Trusting someone with sales, inventory, and other sensitive information is a significant risk.

Choosing the right partner is a balance between quantitative data and relationship building.

Here’s how to do it:

• Evaluate their logistics operations
• Ask about the costs
• Set reporting and communication expectations
• Determine delivery service levels before you commit to working with a new 3PL
• Check for integrations with your existing inventory management system

Partnering with a 3PL can change your business for the better

Whether you’re partnering with a 3PL for the first time or decreasing the reliance you already have on one, the process is tough. Ecommerce brands can’t control the destiny of each of their business partners. But what you can control is the due diligence you conduct before selecting a 3PL. 

Be ultra-thorough in your appraisal of potential partners. The right third-party logistics companies can change your business for the better—not just by taking the headache out of storing and delivering orders, but in the speedy delivery times you can promise to customers.

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