What is 3PL Fulfillment? Everything You Need to Know

3PL Fulfillment - A Complete Guide for Ecommerce Businesses

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Many ecommerce business owners find it difficult to handle logistics. If you have only just started your company, you will want to prioritize customer satisfaction above all else. If deliveries are delayed or the products are delivered in poor condition, you’ll have to face the wrath of your customers.

There’s no better way to keep your customers happy than to ensure timely delivery of products. Unfortunately, this is much easier said than done. It’s not an easy feat for ecommerce store owners to get products delivered to clients in a timely and efficient manner.

As your business continues to grow, your supply chain will also expand. Costs will increase, and management will become more difficult. Any logistical errors could have a significant impact on customer experience, and ultimately affect the growth of your business and reduce profits.

A growing number of companies instead focus on outsourcing their fulfilment to another business altogether. They simply outsource their entire logistics operations to a third-party logistics company, also known as a 3PL provider.

More and more businesses are now waking up to the realization that the traditional business model of handling all logistical operations in-house is probably not that effective. Smaller eCommerce store owners often find it difficult to expand their business when they are already operating on a very limited budget.

By partnering with a third-party logistics company that handles order fulfillment and delivery, eCommerce businesses can instead focus on growth and improve the quality of their product.

Partnering with a third party logistics business can help you in many ways. These companies have their own fulfillment center, and offer a full suite of 3PL services, including inventory management, logistics services, and various other fulfillment services.

Their warehousing solutions help create a strong link between manufacturing and order delivery. You will notice an uptick in customer satisfaction when orders are delivered on time. Fulfillment is key for business growth, after all.

As an ecommerce store, if you don’t know what is 3PL fulfillment, you are seriously missing out. Before you decide to partner up with a 3PL company, you should have a firm understanding of what is 3PL fulfillment, and how it can be of benefit to your business.

What is 3PL Fulfillment?

The 3PL meaning is actually quite straightforward. 3PL is simply an abbreviation for “third-party logistics.” In most cases, the term refers to a company that manages a fulfillment center. Instead of having to set up warehousing on your own, businesses can contract with such companies.

They will manage your entire supply chain and usually offer a range of services to business owners. These include:

  • Storing inventory in warehouses
  • Managing inventory and stock levels
  • Shipping goods or receiving new stock
  • Freight shipping solutions
  • Order picking and packing in the warehouse (matching deliveries)
  • Customizing orders as per requirements
  • Handling and processing returns

These companies offer full-scale supply chain management solutions, serving as an eCommerce fulfillment center for all your business’ logistical needs. Instead of having to store or manage inventory in-house, they offer a full spectrum of services to outsource logistics.

Depending upon the nature of your industry, you might want to find a relevant third-party logistics provider. For instance, some 3PL companies have temperature-controlled warehouses ideal for cold storage. These are an ideal choice for food manufacturers or companies that have to ship consumables or chemicals that must be kept under a specific temperature.

3PL Meaning – Understanding The Term

3PL companies allow you to outsource your entire set of logistical operations to another business altogether. This leaves you to focus on the core offering: your product or service. In certain cases, some 3PL companies go above and beyond, often providing returns processing and customer support solutions to companies as well.

As you can imagine, 3PL meaning is different from 4PL and 5PL. For instance, 4PL businesses serve as integrators, bringing together all elements of your supply chain together. Fourth-party logistics providers are not just concerned with your company’s handling and shipping, but take a more holistic approach to identify issues and optimize your supply chain.

On the other hand, 5PL companies offer similar solutions like a 4PL business, though they cater to multiple clients and work with various tools and technologies. Keep in mind that 3PL businesses don’t just work with smaller companies, however.

An increasing number of larger businesses are now using 3PL solutions to manage their logistics.

3PL Fulfillment – How It Works

If you want to streamline your fulfillment process, you will want to seriously consider working with a third-party logistics company. When you work with a 3PL service provider, they offer a full solution, including freight transportation and shipping, warehousing solutions, and inventory management.

In most cases, 3PL businesses don’t always buy their own warehouse space or their truck fleet. Instead, these companies work with other shipping providers. When you focus on what is 3PL fulfillment, you are essentially contracting with a third party to handle your logistics and fulfillment processes.

Ecommerce companies don’t have to worry about buying or leasing warehouse space. You also don’t need to worry about investing in a fleet of trucks. A 3PL partner can help you cut down on shipping costs drastically.

The reason why you would want to contract with a 3PL warehouse is because they can significantly improve logistical efficiency and speeds. As the number of orders continues to grow, you don’t have to worry about expanding your warehouse or hiring more staff.

Advantages of 3PL Fulfillment

Now that you understand the basic 3PL meaning, it’s time to look at the benefits. As a business owner, if you are considering outsourcing your supply chain solutions to a 3PL company, there are several advantages to doing so. Here are a few.

Increased Cost Savings

Perhaps the biggest advantage of working with a third-party logistics firm is that they can help you increase your cost savings. These companies already have warehouses, order picking systems, and the equipment needed to handle both inbound and outbound shipping.

As a result, they are also able to offer volume-based discounts to their customers. For growing ecommerce businesses, this is a great benefit, as it allows them to reduce overhead expenditure dramatically.

From transportation to storage and shipping, your 3PL partner will handle everything. They charge variable pricing depending upon the volume they handle. This prevents hits to your bottom line and ensures your business growth.

Focus on Your Core Offering

Instead of having to worry about logistics and supply chain management, working with a 3PL company allows you to focus on your core product offering. As a business owner, this frees you up to focus on critical operations instead of worrying about storage or warehouse management.

Increased Customer Satisfaction

Customer satisfaction is a critical factor in the growth of your business. When customers receive goods on time and in prime condition, they’ll be inclined to order again. This enhances brand reliability and increases overall satisfaction.

Highly Scalable

Another major benefit of working with a 3PL fulfillment company is that it allows you to easily scale your operations as your business grows. Many businesses go through demand fluctuations during the year. If you are using a 3PL provider, you can scale up or down as needed without tying up your capital.

International Logistics

If you are planning to expand your business across borders, 3PL businesses can take care of customs, duties, documentation, and any other shipping or transportation issues that might arise in real-time. This prevents delays in shipments and ensures that your goods are transported efficiently.

Understanding the Logistics Process

Third-party logistics providers and shippers take care of both incoming and outgoing shipments on behalf of their clients. Apart from that, they also take care of warehousing solutions. Perhaps the greatest example of this is Amazon FBA, which is the company’s most popular third-party logistics solution.

Amazon FBA (fulfillment by Amazon) takes care of all warehousing and shipping solutions for sellers, allowing them to only focus on developing their store. It’s a pretty cost-effective method that allows retailers to reduce shipping rates and ensure products are delivered on time.

When you work with a 3PL provider, the products are shipped directly from your factory straight to the warehouse managed by your 3PL partner. Once inventory is received, the company logs it into their management software. Then, they can offer a variety of services. Here’s how the process works.

Integrating with Sales Platforms

A vast majority of ecommerce store owners use different types of ecommerce platforms like Shopify to build and manage their stores. Needless to say, the success of your store depends on you taking a more strategic approach and integrating 3PL with all of your sales channels.

Ideally, when searching for a 3PL company, make sure that they integrate seamlessly with all of the sales platforms that you use. This will give you better visibility over customer orders and inventory levels.

Managing Inventory

When you choose a fulfillment partner, you will obviously want to choose one that offers comprehensive inventory management solutions for your online store. Your account manager should be able to give you guidance on restocking levels, evaluating lead times, and increasing stock levels based on seasonal demand.

Freight Forwarding and Receiving

If you have to ship large orders, you might want to choose a fulfillment provider that can help you with freight forwarding. Freight forwarders can save you a great deal of money based on whether you are shipping a full truckload or less than truckload. This is important, especially if you require kitting services as well.

Order Picking and Shipping Management

Most 3PLs offer conventional order picking and packing services. They also provide reverse logistics solutions, so in case goods are returned, the company will handle returns and make sure that

Order picking is a pretty complicated process. When an order is placed at your online store, it is run through the management software at the warehouse. From there, an order picker has to identify the SKU, pick up the product from the shelf or the pallet, and then package it properly.

Then, once it’s packed, a carrier picks up the product and delivers it to its destination. Some even offer day shipping solutions to get your goods delivered on the same day.

How to Choose the Best 3PL Provider

If you are looking for a third-party logistics service, here are a few important tips to help you find the best company.

Experience and Expertise

Ideally, you’d want to choose an outsourcing fulfillment company that has considerable experience and expertise. When you bring on an experienced company to handle fulfillment, they can ensure smooth operations and give advice on how to handle technical shipments.

They are also capable of handling different types of goods, and can ship orders on time. They make sure that goods are packaged according to their nature with appropriate shipping labels so they don’t get damaged in transit.

Locations

Ideally, you’ll want to choose a fulfillment provider that can handle a suitable order volume and has warehouses in multiple locations. For instance, if you ship across the country, the provider you choose should be able to ship orders from multiple warehouse locations.

If the company only has a few warehouses spread thin across the country, this could cause delays in shipment. Ideally, you would want to choose a fulfillment provider that has multiple warehousing locations.

Customer Service

In case shipments are delayed or inventory is missing, you should be able to get in touch with a customer support representative. You need to choose a 3PL provider that offers reliable customer support. Ideally, you’d want to choose a company that offers dedicated support and has a lower response time.

Costs

Perhaps the most important factor to consider is the fee charged by your 3PL provider. Many companies offer discounts with other major shipping companies like USPS or FedEx, so you might want to get quotes about shipping costs as well.

You should also get quotes about the total costs of order fulfillment; how much does the company charge for their services?

Compatibility and Integration

Ideally, you’d want to choose a 3PL platform that has integrations and APIs available for all major ecommerce platforms. You will want to integrate all of your sales channels with the 3PL provider to ensure automation and orders are shipped on time.

The Best 3PL Companies

Working with a 3PL company is a great option for ecommerce business owners. There are a number of major 3PL companies that offer global operations. Here are some of the best 3PL companies in the industry.

ShipBob

ShipBob is perhaps one of the most recognized 3PL companies in the world. The company has a very strong reach, not just in the States, but fulfillment locations throughout the world. They have contracts with major shipping companies, and offers a full suite of shipping services, including:

  • Receiving goods
  • Warehousing
  • Order picking and packing
  • Shipping goods (DTC and B2B)
  • Handling returns
  • Kitting and customization

Some of ShipBob’s integrations and partners include:

Developer APIs are also available, and ShipBob has been rated #1 Best Fulfillment Technology by AdWeek Retail Awards.

FedEx Supply Chain

FedEx is a household name in the world of shipping. It has a massive infrastructure and shipping network, and the business also offers comprehensive third-party logistics solutions to ecommerce businesses.

FedEx Supply Chain offers complete 3PL solutions, including:

  • Receiving
  • Packaging
  • Goods storage
  • Shipping
  • Return logistics

Many smaller companies throughout the United States prefer FedEx because of its shipping network and its scalability. The pricing varies depending upon package sizes and order volume, so it's highly scalable.

Omni Logistics

Omni Logistics is another popular option for ecommerce businesses looking to ship goods globally. The company has shipping partners and operations in all major regions, including Asia, North and Central America, and Europe.

They also offer complete 3PL solutions including:

  • Warehousing
  • Shipping
  • Picking and packing
  • FTL and LTV freight forwarding
  • Reverse logistics

Omni Logistics has multiple warehousing locations around the globe which speeds up shipping times and reduces delays. You can get products moved across borders very efficiently with the services they offer.

Shipwire

Shipwire is a fulfillment company that has its own cloud-based platform for managing inventory. The company has around 150 warehouses spread throughout the globe, in key regions including Australia, USA, Europe, and Asia.

They also offer same day shipping in specific areas. The company also offers ground and expedited delivery, and it also gives users the option of using the DDP method to charge customers for duty or absorb the costs.

If your ecommerce business primarily focuses on cross-border fulfillment, Shipwire might be a viable solution. They also offer affordable return shipping solutions, and have contracts with regional, national, and international shipping carriers.

C.H. Robinson

C.H. Robinson is one of the biggest names in the 3PL market. The company handles more than $21 billion in freight annually, making it one of the largest 3PL companies in the world. They have one of the most robust supply chains, capable of handling almost 20 million shipments in a year or more.

They offer custom quotes based on carriers and distances, allowing businesses to quickly streamline supply chain problems. C.H. Robinson can also integrate with your ERP or TMS, and help you access real-time data regarding your shipments.

They also provide multiple freight services, including:

  • Air freight
  • Rail shipping
  • Truckload
  • Temperature controlled freight services
  • Flatbed
  • Intermodal
  • Ocean shipping


Customers also get access to a host of tools and resources that they can use to streamline operations. With more than 105,000 customers, C.H. Robinson is a behemoth in this niche.

UPS Supply Chain Solutions

UPS Supply Chain Solutions is UPS’ main 3PL service. They offer global supply chain solutions through more than a thousand distribution facilities, providing shipping in more than 120 countries.

The company offers eFulfillment, warehousing, distribution, and logistics solutions for all kinds of businesses. UPS already has a massive shipping network, so they are able to leverage their humongous reach to offer shipping and supply chain management solutions to businesses all over the globe.

XPO Logistics

XPO Logistics was named a Top 100 3PL company by Inbound Logistics magazine in 2020. It is one of the largest global shipping companies that offers shipping solutions in more than 30 countries.

They employ more than 97,000 employees, and have 1,506 warehousing locations spread across the globe. The company is headquartered in Greenwich, Connecticut, and their European headquarters are based in Lyon, France.

XPO uses cutting-edge technology and has an internal portal for tracking and managing shipments, inventory levels, and returns. The company has one of the most expansive trucking networks across the country and is an ideal choice for ecommerce businesses that rely on ground shipping.

Expeditors

Expeditors offers comprehensive 3PL solutions to businesses across the globe. They have operations in all major regions, including the United Kingdom, Canada, United States, and Asia.

They offer shipment solutions to businesses operating in the following industries:

  • Aerospace
  • Automotive
  • Healthcare
  • Fashion
  • Manufacturing
  • Oil, gas and energy
  • Technology
  • FMCG (fast-moving consumer goods)

The company offers complete solutions, including supply chain management, inventory tracking, transportation, customs, risk mitigation, and warehousing. Expeditors offers multiple transportation services, including:

  • Air shipping
  • Ocean
  • Ground
  • Project cargo
  • Multimodal

They also offer consulting services and dedicated customs brokerage services to their clients.

Keuhne + Nagel

Keuhne+Nagel is one of the oldest shipping companies in the business. They specialize in the following services:

  • eCommerce shipping solutions
  • Intermodal shipping
  • Shipping perishables
  • Wine & spirits
  • Air logistics
  • Container shipping
  • Road logistics
  • Sea logistics
  • Supply chain management

The company has multiple offices throughout the United States. However, this is a global concern, with a shipping network that connects to more than 100 countries. They have 1,200 offices and distribution centers throughout the globe.

Hub Group

The Hub Group is a supply chain solutions provider that provides full-scale 3PL solutions to businesses across North America. The company offers the following main services:

  • Managed solutions
  • Consolidation and warehousing
  • International freight handling
  • NSD Last Mile

The NSD last mile delivery solutions are designed to improve the quality of delivery service by offering full flexibility and optimized execution for your customers. They also offer reverse logistics handling and closely work with their clients to ensure that the shipping experience is as smooth as possible.

The Hub Group offers supply chain solutions for the following industries:

  • Glass
  • Healthcare
  • Automotive
  • Chemical handling
  • Building materials
  • CPG
  • Paper
  • Private equity
  • Retail
  • Wine and spirits
  • Food and beverage
  • Durable goods
  • Ecommerce solutions

With more than five decades of experience in the shipping industry, the Hub Group is a household name across North America. They also provide custom solutions to private businesses, and have a worldwide network to handle shipments all across the globe.

DHL Supply Chain

DHL Supply Chain is a member of the DPDHL Group, the largest logistics solutions provider in the world. The company offers comprehensive 3PL solutions to businesses looking to grow, and primarily work in the following industries:

  • Healthcare
  • Retail
  • Consumer goods
  • Automotive and mobility
  • Energy and oil
  • Engineering
  • High-tech
  • Chemicals

DHL has more than 1,400 warehouses and offices in more than 55 countries and territories. They offer highly scalable shipping solutions to businesses of all sizes. Despite being a pricier offering than other names on this list, DHL is still widely trusted.

Coyote Logistics

Coyote Logistics is a supply chain solutions provider that offers FTL and LTL shipping, along with intermodal shipping solutions. Coyote has been in the market for more than 15 years, and has won many awards over the years.

Coyote Logistics handles more than 10,000 shipments in a day, offering specialized solutions in the retail, manufacturing, and food and beverage industries. They offer the following shipping freight shipping solutions:

  • Ship freight
  • FTL and LTL
  • Intermodal freight shipping
  • Cross-border shipping
  • Air
  • Ocean

They offer customized solutions to growing businesses and have a dedicated technology platform to handle client inventory. Coyote was bought out by UPS, and has access to more than 75k of the company’s assets. They are incredibly reliable, and even have mobile apps available.

3PL Saves Time And Money

Now that you understand the 3PL meaning carefully and have a clear idea about what is 3PL fulfillment, it might be a wise idea to look into local businesses offering 3PL solutions in your region.

As an ecommerce or online store owner, working with a 3PL provider could help you grow your company very quickly. You don’t have to worry about logistics or inventory management; you just need to focus on maintaining the quality of your product.

Many companies that work with 3PL providers were able to soften the blow of the global pandemic, as they had the option to quickly scale down operations. Now, as the pandemic slowly recedes and business picks back up again, these companies are able to scale up as needed based on the rise in demand.

It can be a bit difficult to choose between self-fulfillment or work with a 3PL provider, so it’s generally a wise idea to compare your options carefully. Outsourcing fulfillment gives you the ability to streamline your supply chain and ship orders to customers across the globe quickly and efficiently.

These are some of the best ecommerce fulfillment companies that offer complete 3PL solutions to businesses. You need to evaluate your options carefully and find the best solution based on your store’s requirements.

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