Beginner’s Guide to Third Party Logistics (3PL)

Warehousing, shipping and fulfillment are the bread and butter of any eCommerce business. Whether you’re new to the world of eCommerce, or you’ve been in business for years, you will eventually need to cross this bridge (if you haven’t already).

The prospect of using third party logistics (3PL) companies can sometimes cause entrepreneurs some anxiety, so we want to put your mind at ease. This is the beginner’s guide to third-party warehousing, shipping and fulfillment.

Your Fulfillment Options

So you’re receiving orders—congratulations! But now you need to fill those orders, and that can be complicated. You have a few options to pick from, Including:

  1. Do it yourself (<–link to article 2, which is yet to be written)
  2. Use a dropshipping company (<–link to article 3, which is also yet to be written)
  3. Use a third party logistics company

What is a 3PL?

Wondering what 3PL means? 3PLs are one-stop-shops for coordinating all of the logistics involved with getting your products into the hands of your customers. Some 3PLs specialize in certain sectors, but most work in a variety of different industries. The shipping of frozen foods, for example, is an area where a 3PL might specialize because of the special needs and regulations that must be met.

In general, there are two categories of 3PLs:

  • Co-managed 3PLs will share the responsibilities of management with each of their clients, so every decision is jointly decided. However, co-management in 3PLs is not standard.

  • Standard 3PLs will operate with full autonomy over everything that happens on the logistical side of your operation.

Pros of 3PLs

  1. You will be working with industry experts.

The discipline of logistics demands a high level of expertise and the stakes are high. If your customers receive their order late, or not at all, it won’t take long for your brand to earn a bad reputation. So why not let an experienced 3PL handle fulfillment?

  1. International shipping will not be a problem.

Selling internationally brings with it a host of additional complications and concerns that are not present when fulfilling domestic orders. Allowing a 3PL to take care of this for you not only saves you time, but is a better guarantee that your international orders will be fulfilled.

  1. You will save money in the long run.

While there are some upfront costs to using a 3PL, not having to maintain a warehouse of your own will be a big money-saver in the long run. Also, 3PLs should be able to accurately forecast your inventory needs, and this can save you money on inventory holding costs.

Cons of 3PL

  1. You have less control over the delivery process

If there is a problem with an order, the customer will look to you for its resolution, not your 3PL. It may take longer to rectify these problems if you use a 3PL, because you will not physically be in the same place. Remember that even though your 3PL is responsible for your logistics, their errors will reflect badly on you.

  1. You have to make a bigger investment upfront

While it’s true that 3PLs will certainly pay for themselves in the long run, if your company doesn’t have enough orders to justify the upfront investment, you might consider fulfilling your orders yourself until you genuinely need the large logistical capacity offered by 3PLs.

  1. You are farther away from your products

Your 3PL will certainly be in a separate physical location from your headquarters, but how far is too far? If you need to run quality assurance yourself, you might be deterred from choosing a 3PL with warehouses that are too far away from your base of operations.

The Bottom Line

There are scores  of 3PLs that operate in the US, and they are all different – you need to choose the one that is right for you. We can’t tell you what to do, but we can help you get the ball rolling with a few items to consider:

  1.   Can the 3PL  handle your forecasted volume of sales?
  2.   Does the 3PL  have good references?
  3.  Is the 3PL using technology that is compatible with your own?

Looking for a 3PL Company Nashville, TN?

If you are in need of 3PL services in the Nashville area, M&W Logistics has you covered! We are experienced, reliable and easy to communicate with. Get in touch with us today to find out how M&W can help your business.