The world of 3PL and eCommerce is an exciting and changing beast, connecting businesses with consumers across the globe. Never has eCommerce been such an exciting area to be a part of in the business world to ensure the 3rd party logistics is fine-tuned and streamlined to speed up the stages of logistics from the warehouse and safely into the hands of consumers.
Businesses turn to 3PL when their own fulfillment strategy gets to a point where is it too difficult to manage and send their own in-house orders. Logistics and the outsourcing of the picking, packing, and sending of products is called 3PL.
What is 3rd party logistics (3PL)?
Often thrown around in eCommerce circles, 3PL or third-party logistics is the outsourcing of eCommerce to dedicated companies that can manage all of the steps in the logistics process including retail order fulfillment.
3PL works through the supply chain process, connecting products, logistics, shipping, and delivery to provide a complete solution for businesses without the need to invest in expensive warehousing, delivery, and distribution.
Why is 3PL important for eCommerce
Using 3PL services is vitally important for eCommerce as it streamlines the process and works to lowering business and shipping costs. 3PL involves a range of steps including the following:
- Storing inventory: Whether it is in pallets, or on shelves, the warehouse that is managing your 3PL service will store inventory, so it is ready for picking, packing, and shipping. There will be volumes the merchant will need to provide and the whole process is usually automated to ensure a smooth and efficient process.
- Picking and packing: This process starts when a customer orders a product from the 3PL provider. Once orders are uploaded to the 3PL digital system, then they are fulfilled and packed ready for shipping out to the customer via the shipping providers. Packing can involve bubble wrap, take, and poly bags.
- Shipping and delivery: This final step in 3PL is where the customer receives the product safe and sound from a carrier such DHL or similar – all depending on whether the item is being shipped nationally or internationally.
Thanks to the power of technology, all of the logistics steps will be monitored and often updated in real-time via a range of devices. Each logistics and 3PL provider will have their own methods, however, a quality 3PL provider will have live and up to date information for clients and also consumers regarding the status of their order.
How is 3PL different from 4PL?
There is a subtle difference between 3PL and 4PL, namely, there is an additional step in 4PL which involves the management or brokering of additional services such as manufacturing or additional 3PL services. This management will be at an additional cost, however, many merchants prefer this form of logistics as it adds an extra layer of distance between customers and merchants.
The 4PL process will often include communicating directly with the manufacturer or merchant regarding stock levels to ensure the entire process for logistics from start to finish is streamlined, and there are no delays in any of the logistics steps.
The benefits of 3PL
There is a wide range of benefits for using 3PL for business, including customer service satisfaction, improvements in time management due to technology. A survey from PLS Logistics outlined in the findings that 75% of shippers said that “the use of 3PL services has contributed to overall logistics and cost reductions.” Additionally, the survey also found that shippers experienced an 86% increase in customer satisfaction.
Technology is helping to also ensure that each step in the supply chain process is being effectively managed and cloud technology is working to reduce transportation costs, boost compliance, increase transparency and ensure inventory levels are optimized.