What is a 3PL and Why Companies Partner with a 3PL Business Provider?

With the world embracing digitalization in almost all spheres, eCommerce businesses are gaining momentum. Nowadays, people buy everything from services to products online. As a result, big and small eCommerce businesses are competing for large market shares. Customer satisfaction has emerged as a key growth driver in these businesses. Delivering quality products in professional packaging at fast turnaround times has become necessary for these businesses. However, as the business expands, supply chain management becomes challenging. Inventory management, packaging, and shipping require attention, resources, and money. Any small mistake may lead to product recalls, refunds, delays, and may even impact your profits as well as credibility. To avoid these challenges, most eCommerce businesses outsource their fulfillment and logistics operations to a 3PL or third-party logistics providers. What is a 3PL business? How do these businesses operate? What are the benefits of partnering with 3PL eCommerce fulfillment services? Read the post to know the answers and more.

If you are looking to partner with a trusted and experienced 3PL eCommerce fulfillment solutions provider, then you can contact us at 3PL Business.

An Overview of Third-Party Logistics (3PL) Company

A third-party logistics company or 3PL company is an outsourced company that manages fulfillment operations for an eCommerce company. These companies can provide a broad array of services, including receiving, storage, packaging, and shipping. Sometimes these companies may provide value-added services such as kitting and assembly, inventory management, procurement, postponement and packaging, and so on.

Most startups and mid-sized eCommerce businesses outsource their eCommerce fulfillment to 3PL companies. This saves them the efforts and time required to maintain a warehouse, shipping, and packaging facility among many things and focus on their core business processes. The “Global Third-Party Logistics Market, By Mode of Transport, By Service, By End User, Estimation & Forecast, 2017 – 2027” published in December 2021 indicates that the global 3PL market will reach USD 1,656.7 Billion by 2027 from USD 1,032 Billion in 2021, at an annual CAGR of 8.2% during the period. An increase in global trading activities, manufacturers and retailers focusing on core competencies to sustain intense market competition, and a competitive landscape are some factors fueling the growth of 3PL companies. A press release by the leading supply chain and market research consulting firm Armstrong and Associates, Inc. states that 96% of the Fortune 100 and 86% of the Fortune 500 companies use 3PL services to mitigate their fulfillment challenges. Many 3PL companies are today technology-enabled. They have embraced technologies like global positioning systems (GPS), radio frequency identification (RFID), and the Internet of Things (IoT), which helps clients track their packages and optimize the value of their eCommerce business.

Different Types of 3PL Companies Analyzed

Although the term third-party eCommerce fulfillment may encompass a broad array of services, the companies may specialize in all services or just special services. Based on the services offered, these companies are distinguished into the following types.

1. Standard 3PL Service Providers: These eCommerce fulfillment companies only provide storage and shipping services. They may sometimes undertake distribution activities upon the client’s request. Standard 3PL services may be the best option for businesses looking for pick, pack, and ship, warehouse options.
2. Service Developers: These businesses offer all core services as standard 3PL services, along with additional services such as IT support, product tracking, and security. Some service providers may also offer cross-docking and package selection. The cross-docking refers to the activity of unloading materials from an incoming truck and loading them onto the outbound truck. This activity may not require long-term storage.
3. Customer Adapters: These eCommerce fulfillment services perform all types of fulfillment activities from shipping to storage and sometimes price negotiations with carriers and rate maintenance. Customer adapters are usually companies that invest in technologies. They give technology access to their clients, thereby allowing them to track all the processes and customize them as required.
4. Customer Developers: These companies usually work as an extended logistics division of big eCommerce companies. Generally, Fortune 500 companies and large eCommerce companies partner with this type of customer developers because their services are quite expensive.

Benefits of Partnering with a Trusted 3PL Business Provider

Outsourcing pick, pack, and ship warehouse services brings several benefits to businesses, which is why these services are in demand. Below are some obvious advantages of outsourcing these services to third-party service providers.

• Access to Expertise: Although logistics may seem as a simple function, it requires expertise to make it profitable. A good third-party logistics fulfillment service provider knows how to choose the modes of transportation depending on the volume and location. To optimize profitability, these businesses may partner with different local service providers. They have an understanding of government regulations, too. If you have to perform logistics and inventory management in-house, you must possess expertise in all these functions. This will further add to your operational costs. To avoid this, you can easily partner with a trusted 3PL business provider.
• Time Saving: Supply chain management is a challenging function. It requires dedicated staff, time, and efforts to get it right. Sellers and manufacturers can get it right by partnering with third-party eCommerce fulfillment companies. These partnerships would mean less manual work, automated paperwork, few organizational errors, and fewer time spent on managing shipping and tracking it.
• Supply Chain Optimization: 3PL companies continuously optimize their processes. These optimized processes are immediately made available to clients. If you are seeking customized ecommerce fulfillment solutions, a trusted 3PL partner will analyze your supply chain, identify gaps, determine the unnecessary operation, and make changes and increase cost savings.
• Gain Industry Insights: 3PL eCommerce fulfillment is a competitive business. Thus, many eCommerce fulfillment services providers use industry insights and gain knowledge to understand the changing trends and customer demands. Many of these service providers invest in technologies for tracking. By partnering with an experienced 3PL business, you can gain from their knowledge and insights.

You can realize many more benefits by partnering with an experienced 3PL business provider like us. We are based in New Jersey and offer an array of services, including kitting and assembly, pick, pack, and ship, and FBA preparation. Since inception, we have been helping small- and mid-sized eCommerce businesses in profitable supply chain management. We use technologically advanced process that helps clients optimize the value of their fulfillment services without big investments.

No matter what your eCommerce fulfillment needs be, our experts can help you find the right solution. Feel free to call us at (732) 983-4801 or write to us at sales@3plbusiness.com to know more about our 3PL eCommerce fulfillment solutions.