What is 3PL Fulfillment?
With endless benefits, 3PL fulfillment services have revolutionized how people handle backend business processes in the modern age.
3PL fulfillment companies are the new lifeblood of e-commerce, offering specialized fulfillment services for e-commerce companies and the like.
But, with so many options and services available, it can be confusing for someone just starting to make their e-commerce debut. These folks are typically left to fend for themselves and use trial and error to determine the best way to optimize these third-party logistics services.
Ultimately, trial and error costs both the time and money you intend to save using these services in the first place.
This method completely defeats the purpose of 3PL Fulfillment!
Table of Contents
Since we’ve been in the business for over a decade, we thought we would share our step-by-step planning guide full of industry secrets to maximize 3PL fulfillment services for your e-commerce logistics.
Here’s how our step-by-step guide plays out:
- Define: What are 3PL Fulfillment Services?
- Our Process: The Third-Party Fulfillment Process Explained
- Financial: 3PL Fulfillment Costs
- Benefits: Primary Benefits of Using Third-Party Fulfillment
- Deep Dive: Specialized Fulfillment Services
- Tips and Tricks: Essentials for E-commerce Companies
- Conclusion: Final Thoughts
Now, follow us along this step-by-step process to see how you can maximize your 3PL investment today!
Step 1: Define – What are 3PL Fulfillment Services, anyway?
To understand 3PL fulfillment services completely, you must understand the nature of today’s modern economic model.
Although online marketplaces were first conceived in the early 1980s, it wouldn’t be until the mid-90s that major advancements in commercial use of the internet would give rise to e-commerce websites like Amazon and eBay.
The Rise of E-commerce and E-commerce Logistics
The e-commerce industry quickly blossomed into the well-oiled machine we see today, with e-commerce sales topping $1.03 trillion in 2022 for the U.S. alone.
With so many online transactions, the complexities of e-commerce logistics are vast and require an endless amount of care and attention to be a contender in our increasingly competitive and globalized economy.
Fulfillment Services for E-commerce Steps Into Play
In response to these complexities, e-commerce companies began to outsource their e-commerce logistics processes to a third-party logistics and fulfillment provider – known colloquially as 3PLs.
3PLs have become a mainstream staple for companies primarily involved in e-commerce transactions and continue to grow in size and take on more logistics as the e-commerce landscape continues to evolve.
What Exactly Do 3PLs Do?
3PL Fulfillment Providers handle the backend logistics for these e-commerce companies with a wide range of services, including but not limited to:
Even though some of these services differ from each third-party logistics provider, they are generally the same in nature.
Using their services, e-commerce companies can:
Free up resources and time
Capitalize on the logistics expertise of the 3PL
And, seamlessly scale operations for their e-commerce business
In theory, 3PL fulfillment services can be a huge benefit to your business from all different angles. While e-commerce companies can easily get the most out of third-party fulfillment providers, any burgeoning business can see a huge ROI from 3PLs.
(Credit: ShipBob, Not Our Original Work)
Step 2: Our Process – The Third-Party Fulfillment Process Explained
Now that you understand what a 3PL fulfillment company actually does, let’s take a look at the 3PL fulfillment process to see how small business e-commerce companies can maximize their benefits.
A simplified breakdown of the 3PL fulfillment process:
Receiving Inventory: You ship your products to the 3PL’s warehouse
Warehousing: Your products are securely stored in climate-controlled areas based on what your specific products require.
Order Processing: As customers place orders, the 3PL pick pack and ship your products.
Shipping: The 3PL uses its highly integrated shipping network to ship your products around the globe swiftly.
Returns Management: If necessary, the 3PL will handle product returns in a timely manner. This maximizes customer satisfaction and gives you flexibility in a competitive environment.
Even though this distilled version of the 3PL fulfillment process does not explain all of the inner workings of your third-party shipping, you can see how much work is involved in these backend processes.
With so many logistics for every e-commerce company, it’s no wonder most are turning to 3PL fulfillment services for help on the backend.
(Credit: ShipBob, not our original work)
Step 3: Financial – 3PL Fulfillment Costs
Determining your overall costs and pricing for 3PL fulfillment services can be a tricky endeavor. As with their process, 3PL fulfillment costs vary greatly and completely depend on the specialized fulfillment services you require.
Although you will need to reach out to your 3PL provider for specifics, these are the fees and services that you can expect to see on your invoices:
Setup Fees: Initial fees for integrating with a 3PL system.
Receiving Fees: Costs associated with offloading and checking your inventory.
Storage Fees: Monthly or per-unit charges for storing your products.
Pick and Pack Fees: Costs per order for retrieving and packaging products.
Shipping Fees: Often discounted due to the 3PL’s volume but varies by service.
Account Management Fees: Some 3PLs charge for dedicated support or advanced reporting.
3PL Cost Calculator for E-commerce Fulfillment Pricing
To get a better sense of what you will actually pay to ship certain products with Launch Fulfillment, check out our 3PL cost calculator.
This 3PL cost calculator will give you a general idea of how much your e-commerce fulfillment pricing and product handling costs will ultimately be monthly.
Remember that these are just an estimate, and your real 3PL shipping costs will vary depending on the exact services you need.
Launch Fulfillment is the best in the business, with competitive pricing for every 3PL fulfillment service.
Get in Touch to Find Out More
Step 4: Benefits – Primary Benefits of Using Third-Party Fulfillment
At this point in our third-party fulfillment guide to success, you may wonder why your business should consider third-party fulfillment services when they add extra costs to your business model.
As they say, in business, it pays to spend money where it counts, and it’s easy to see how much value third-party fulfillment adds to your business when you look at the compelling reasons behind these logistics services.
Here are just a few of the benefits of using third-party logistics:
Cost-Efficient: Often, leveraging a 3PL can lead to savings in the long run.
Scalability: Handle peak seasons without worry; a 3PL can adjust to demand.
Focus on Core Activities: Leave logistics to the experts and focus on your business growth.
Speedier Deliveries: Many 3PLs have multiple warehouses, ensuring faster deliveries.
Advanced Technology Access: Benefit from the latest in tracking, reporting, and management without the overhead.
Clearly, endless opportunities exist to maximize your third-party logistics investment.
If you’re still unconvinced, here are some added benefits from Cerasis and GlobalTranz.
(Credit: Cerasis, not our original work)
Step 5: Deep Dive – Specialized Fulfillment Services
In a complex global environment, tons of logistics and supply chain management companies can somehow help the back end of your e-commerce business.
That being said, there is a significant difference between supply chain management and logistics.
Basically, logistics is just one component of many in supply chain management.
The Role of Logistics and It’s Specialized Fulfillment Services
While it is a singular component of the supply chain, third-party logistics companies are a specialized form of logistics.
Therefore, companies like Launch Fulfillment offer specialized fulfillment services, such as:
Subscription Box Services: Perfect for monthly subscription businesses.
Cold Storage: For products requiring refrigeration.
High-Value Goods Handling: Extra security for luxury or high-value items.
Cross-Docking: Reducing storage time by directly transferring products to outgoing trucks.
This list is just a snapshot of all the services offered by Launch Fulfillment.
For a tailored version of your e-commerce business’s needs on the back end, contact us, and we will review your options.
Step 6: Tips and Tricks – Essentials for E-commerce Companies
Hopefully, by now, we’ve shown you why 3PL fulfillment services are more than just a strategic move – they’re a competitive necessity for all e-commerce companies.
As you journey through this multifaceted world of 3PL, you’ll pick up even more essential components to help your e-commerce business grow.
Valuable Insights for Your 3PL Fulfilment Services Investment
With e-commerce companies operating in a space marked by dynamic consumer demands and technological advancements, it’s vital to be agile and informed.
Here are a few actionable insights to get the most out of your third-party logistics team:
- Audit Regularly: Vigilantly monitor your 3PL’s performance. This means checking if they consistently meet delivery deadlines and uphold product safety standards. Regular audits can help identify areas of improvement, ensuring smoother operations.
- Understand the Costs: Navigating the financial aspect of 3PL services can be daunting. Familiarize yourself with all associated fees, and be wary of potential hidden charges. Transparency in this regard will prevent unexpected expenses and facilitate budgeting.
- Build Strong Relationships: Your relationship with your 3PL provider shouldn’t be purely transactional. Cultivating a healthy partnership can open doors to better terms, potential discounts, and enhanced services. Remember, mutual respect and understanding form the foundation of any prosperous business relationship.
- Stay Informed: The 3PL industry, much like e-commerce, is continuously evolving. Keeping yourself updated on the latest technological breakthroughs and service offerings from your 3PL ensures you’re always one step ahead and can leverage new opportunities as they arise.
- Plan for the Future: Growth is the goal of any business. Ensure your 3PL provider can accommodate your anticipated expansion, be it in product volume, geographic reach, or both. Forward-thinking will save you from potential logistical headaches down the line.
(For more valuable insights, check out our post on “How to Offer the Cheapest Overnight Shipping & Fastest Delivery to Customers.”)
Conclusion: Final Thoughts
Integrating 3PL Fulfillment Services into your e-commerce business strategy is a step towards efficiency and scalability.
However, to truly harness its potential, it requires more than just signing a contract.
By actively managing the relationship, staying informed, and regularly reviewing performance metrics, e-commerce businesses can ensure they’re not just using 3PL services but optimizing them.
In the competitive e-commerce arena, this optimization can make all the difference.
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