3PLs for Sellers Explained

What is a 3PL and does my ecommerce business need one? We’ve gathered an overview of what to expect when working with logistics partners and why you might want one.

You can outsource your logistics and create a customized supply chain plan that works for you and your ecommerce business. Third-Party Logistics (3PL) partners provide sellers a competitive advantage and a way to meet customer delivery expectations, among many other benefits.?

What is a 3PL?

3PLs offer a way to partially or fully outsource your storage and fulfillment process within your supply chain. It’s basically a logistical service for ecommerce sellers – whether you are B2B or D2C – with dedicated, safe warehouse storage where 3PLs facilitate the movement of goods to ship merchandise to consumers.

One major advantage of a 3PL is the ability to store and send bulk goods by pallet or truckload. A 3PL can receive/accept incoming inventory. This includes receiving containers on behalf of the seller. This is a huge help to sellers who do not have the warehouse storage space or the staff to handle these sorts of transactions.

3PLs save businesses time and money as they modernize your supply chain process in what is called a managed transportation relationship. A 3PL can provide a business with a competitive advantage by relieving you of warehousing, packing, labeling, and ship your merchandise.?

Are there disadvantages to a 3PL?

Sure, you can find disadvantages for everything. The important thing is to discover what works for you and your business. If you are a low-volume seller with less than 15 orders per day, a 3PL might not be cost-effective for you.

Some people consider having less control over delivery as a disadvantage. Other people prefer to offload logistics and delivery so they can focus their existing resources on other business priorities and tasks.

If you choose a 3PL for your Amazon sales, instead of Amazon FBA, you still need to perform some of the customer service tasks that FBA would handle on your behalf. NOTE: Some 3PLs do offer that service, and perform it very well (ex. return reprocessing). Be sure to inquire when you review their offerings and their provided testimonials.

Remember, there are many advantages to hiring a 3PL as a growth strategy to scale your business.

Why is a 3PL Important When Sellers Scale Their Business?

Preventing stock gaps and OOS is the #1 challenge for ecommerce sellers. Without stock on hand, you could lose your customers to a competitor and have to win them back again. When you scale your business, it is crucial to not only hold the right amount of inventory, but also retain that inventory in the right places.

Many sellers prefer to keep 30-60 days of inventory on hand. While essential, this can cause logistic issues since Amazon FBA is intended for delivery to the customer, rather than as a storage solution.

3PLs allow you to store excess inventory in bulk storage, then send it on when – and where – it is needed. You can maintain consistent inventory levels by using a 3PL to hold higher amounts of inventory.

This is especially important for international ecommerce sellers. Maintaining the right amount of inventory is needed when international imports can have shipping delays that last over 20 days.

Manufacturers can require a purchase of 6 months of goods. You’ll store 30-40 days at Amazon then move the extra units to the 3PL warehouse. When you maintain 6 months of inventory at a 3PL you can drip feed Amazon FBA to keep inventory buffers healthy. You’ll find that large inventory buffers can also help accommodate opportunities like spikes in sales volume.

Does your ecommerce business need a 3PL?

Yes, logistic providers can help when your business would like to

…expand into new markets

3PLs have the knowledge and connections to help you develop new regions or achieve a global presence.

…improve customer experience

A more satisfied customer experience can be achieved with a 3PL to offer fast and reliable fulfillment.

…handle additional business and larger order volume than you can now

This is a good problem to have as it means your company is growing. Congrats! 3PLs are the perfect partner for an expanding business.

…avoid hiring more warehouse staff

Got capacity challenges? We can’t always grow our companies immediately to respond to our needs to a changing landscape. 3PLs provide a range of services from inventory management, to picking/packing/labeling, to shipping, to warehousing – all under their roof, not yours.

…store merchandise in a safe environment

3PLs will store cartons and pallets in a warehouse, along with receiving parcels. Some offer climate-controlled warehousing, and a host of other warehouse services.

…stabilize inventory levels and prevent inventory gaps

3PLs allow you to store the extra inventory you have on hand so it is ready to ship to Amazon FBA when you need it. This helps you maintain inventory throughout the supply chain to accommodate faster inventory resupply to Amazon or your other marketplaces.

This is key when FBA intake times get long, such as during the holiday season. A 3PL can step in during those busy holidays and offer manual fulfillment. This can prevent stock gaps and also avoid the experience of shipments getting lost at FBA.

…prep and ship merchandise

This can include shipping to Amazon fulfillment centers, shipping direct to clients for your Shopify store, or providing Fulfilled By Merchant (FBM) services so you don’t have to do it yourself.

…add expert staff with carrier/customs/tariff knowledge

Outsourcing helps by providing knowledgeable personnel trained in international logistics and accurate documentation, along with the connections you need to match the right shippers to each shipment.

…handle returns

If we had even a quarter for every time we heard someone complain about “handling merchandise returns” we’d buy everyone something nice. Face it, returns are beyond difficult. Offloading them to someone who has the trained staff to handle customer returns is a big relief for ecommerce businesses, small or large.

…save you time, through all the benefits listed above

3PLs save your team time. Time you can reinvest into your business and its expanding reach as you dominate the market and win that buy box.

…decrease overhead costs

Cost-effective pricing and a predictable pricing structure with a 3PL can help you better manage shipping, warehousing, and inventory. Reducing costs could be the top reason to bring on a 3PL as an effective business partner.

Sellers may find that a 3PL performs like a redundancy or backup plan for them. Amazon FBA does not become a single point of failure when you slot in a 3PL to manage long term storage and handle listings during the busy holiday season.

In addition, you may need a 3PL out of necessity as an Amazon seller. Amazon’s FBA inventory limits changed the marketplace drastically. Many sellers have had to enlist the help of a 3PL in order to stay competitive in the market. Now that Shopify may be competing directly with Amazon with their own fulfillment centers, the logistics field is wide open.

Schedule a quick meeting with us to learn what SKUPREME can offer to help with your specific logistical needs.