Order fulfillment is an important aspect of any ecommerce business’s operation. As your company expands, it may become clear that fulfilling customer orders in-house is no longer practical.
Third-party logistics comes in to play here! This article will cover everything you need to know about third-party logistics companies to determine whether they’re appropriate for you.
What are third-party logistics (3PLs)?
The third-party logistics (or 3PL) industry is a service that involves outsourcing ecommerce logistics activities to a third party firm, such as inventory management, warehousing, and fulfillment. Ecommerce businesses may use 3PL services to do more with the tools and infrastructure available.
We don’t know who originated the phrase “third-party logistics,” but in the 1970s and 1980s, companies began outsourcing inbound and outbound shipping services to third parties.
With the advent and expansion of ecommerce in the 1990s and early 2000s, the phrase “3PL” has become commonplace, and 3PLs have grown their services. The integration of warehousing operations and transportation services
3PL vs. 4PL: What’s the difference?
4PL is one of the more recent terms used to describe 3PLs. A 4PL denotes a company that provides three-party logistics (3PL), which adds an extra layer of separation between ecommerce companies and their supply chain providers: When a firm hires a 4PL, the 4PL takes care of and organizes 3PL services for a customer. This is sometimes called “double brokering.”
3PL services, manufacturing, inventory procurement, and more are some of the services that 3PLs provide for a client throughout the supply chain.
The 3PL order fulfillment process
What happens inside a 3PL fulfillment center may appear to be a black box if you’re thinking about working with a 3PL firm or are just getting started with outsourcing shipping.
However, the 3PL fulfillment process does not have to be mysterious, and it should not be!
After a customer clicks “Submit order” on your online store, what happens at a 3PL’s ecommerce warehouse? Let’s take a look at the whole process from beginning to end.
A 3PL can’t ship things without first obtaining them. Reception and storage of incoming products in a 3PL warehouse is referred to as receiving or taking in inventory.
Every 3PL has its own procedures and storage capacity for inventory.\
We store your items in our fulfillment centers after we receive them. Each SKU has its own dedicated storage location, which can be a shelf, bin, or pallet.
The average 3PL warehouse space differs across 3PLs. Not all 3PL warehouse capacity is created equal. It’s critical to choose a 3PL with enough storage capacity for your current stock — as your product line and order quantity expand, so must your 3PL storage.
A 3PL, on the other hand, is a third-party logistics provider that operates its own warehouses and logistical centers.
When a consumer places an order, the 3PL fulfillment chain begins. (You may have previously heard the phrase “pick-and-pack fulfillment,” which is the first part of it.)
Some 3PLs demand that you upload orders to their system manually. This might necessitate the use of spreadsheets that contain order information, client shipping information, and so on. This approach to managing orders is both time-consuming and complicated.
The other 3PLs also have sophisticated technology that connects directly to your ecommerce platform or marketplace. These 3PL fulfillment software integrations connect orders, shipments, inventory tracking and stock levels together in one place to automate the fulfillment process and improve automated shipping.
Customers’ online orders are immediately pushed to your 3PL the moment they’re placed, thanks to our transaction management software.
When an order is delivered to your 3PL, it is assigned to a warehouse picking crew. The picker is given a picking list of the goods, quantities, and storage locations at the facility so that they may be retrieved from their designated areas.
When all goods in an order have been selected, it’s time to carefully wrap them for shipment. The packing supplies utilized will be determined by your 3PL’s capabilities, your brand preferences, and the items being sent.
The following are the most frequent packing materials:
Some 3PLs charge for packaging supplies as a distinct item, while others incorporate them into their fulfillment management package.
The 3PL will take into account both the safety of your products and their weight prejudice when selecting the best packing materials to both preserve them and minimize possible dimensional weight. They’ll also optimize shipments so you don’t have to split them.
When it comes to calculating shipping fees, Dimensional weight is a shipping pricing method that considers package dimensions. Packing supplies can help you keep costs down.
Make sure you work with a 3PL that allows you to use personalizing, such as custom boxes and inserts, if you want your brand to stand out during delivery. Receiving a box is often the first physical encounter that a consumer has with your business, so branded packaging may make a big impact.
The process of shipping your purchase is the next stage. Most 3PLs will print and deliver the shipping labels for you. Some 3PLs have preferred carrier partners, while others calculate rates from a variety of providers. The latter enables 3PLs to provide clients with the most cost-effective delivery options based on their preferences.
Orders are picked up and sent to 3PL warehouses by carriers like DHL, USPS, and UPS. Each order is transported according on the terms and conditions of the 3PL’s relationships with other suppliers as well as client preferences determined by the end consumer.
When the purchase is ready to ship, third party logistics with integrated technology will immediately post tracking information to merchants’ websites.
If a consumer returns an order to your 3PL, your firm will execute the return and restock or trash it, depending on their regulations and your preferences, as many 3PLs also provide return processing services.
You have the option of having your 3PL print return shipping labels for your clients. This saves you time and money by allowing you to skip the hassle of returns in-house, and customers can easily check the status of their return order.