What is a 3PL?

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What is a 3PL?


3PL, or third-party logistics, entails the outsourcing of e-commerce based logistic processes to a third-party company. These processes can include anything from fulfillment to inventory management. With 3PL, e-commerce sellers have the tools and resources to automate retail order fulfillment and allow their fulfillment process to be simplified and smoother.what_is_a_3pl
Companies began outsourcing their inbound and outbound logistics to third-party management services in the 1980s. From there, the concept steadily grew with more companies shifting over to third-party logistics. In the 1990s and 2000s, e-commerce became a booming market and 3PL companies began expanding their services to their customers. Today, these 3PL companies take care of essentially everything for their e-commerce customers, spanning a huge market of fulfillment and inventory services.

Four Valuable 3PL Services to Look For

Although each 3PL company differs on what they offer their customers, there are huge advantages in searching for a company that offers at least one of these four valuable services.

Fast Shipping

In a digital world where products from across the country, groceries, and even fast-food orders can arrive on your doorstep in no time, it’s no wonder more and more consumers are searching for faster delivery options, and your business is no exception. Most consumers are aware that custom or specialized orders naturally take more time, but what about everyday products?
Fast shipping or 2-day shipping is one of the greatest advantages a business can have. Products with relatively quick shipping are more likely to be purchased and less likely to be abandoned in a cart. 3PL companies often have good professional relationships with shipping carriers. This allows them to negotiate discounted shipping costs for their clients.

Inventory Management

Inventory management often involves more than just getting your products to a warehouse and keeping them there. A 3PL should allow you to sync your inventory with your online store. Having this ability would allow you to see real-time inventory levels at each fulfillment center and reorder inventory. This is especially helpful in preventing low stock levels.

Once your 3PL company receives and stores your inventory, you are able to check your quantity of stock available and units sold per day for each item. This service offers high visibility into what you can ship to your customers at any time.

B2B and B2C Fulfillment

Multi-channel inventory management and fulfillment is one of the highest return strategies a company can take on. This is often the approach taken for retailers who wish to sell direct to consumers, as well as business to business. Not only are you opening your inventory and company up to big-box retailers and stores, but you’re allowing customers to purchase directly from you.

This offers every possible opportunity for a potential customer to access your products. In turn, this can lead to more exposure of your brand and more transactions.

Returns Management

Returns can be a tough, multi-step process. 3PLs can assist with your returns management system by handling returned orders, along with integrating returns software solutions. This software can assist your customers in the process and provide a smoother return experience overall. Additionally, returns can be selected to be disposed of, restocked, or quarantined.

The 3PL Order Fulfillment Process

Although you trust your 3PL company to properly execute the order fulfillment process, it can be nice to know how these processes work and what exactly goes into them. Often multi-step processes can seem confusing, but they don’t have to be. The steps below demonstrate the process most 3PL companies implement for their e-commerce customers. 

  1. Receiving – Receiving is the beginning stage. To fulfill orders, you first must have inventory. Receiving entails accepting incoming inventory the client plans on selling. Each company has its own way of receiving inventory for clients, but the basic principle is the same.

  2. Warehousing – Once your inventory is received, it moves along to warehousing, where it is stored in a fulfillment center. Each SKU will have a dedicated location storage where it will reside.

  3. Picking – Once a customer places an order, the picking process begins. Depending on the 3PL you’re working with, some require you to manually upload orders, while others have systems in place that integrate orders and shipments into one, smooth location.

  4. Packing – When all products ordered by the customer are picked, they move on to the packing portion of the process. Depending on the items and the 3PL company, shipping packaging varies. But rest assured that your items will be securely packaged to preserve their quality.

  5. Shipping – Naturally, the final order fulfillment process for a satisfied customer is the shipping portion. The shipping process will look different across various companies depending on their chosen shipping carrier, their costs, and their exact shipping process. Most 3PL companies will print and execute shipping labels on your behalf, but it’s always best to check with your chosen provider. The type of carrier and shipping speed will vary depending on what agreements your 3PL company has put in place.

  6. Returns – Most 3PL companies provide a returns service to their customers. If a customer returns an order by shipping it back to your 3PL company, they will process the return and restock or dispose of the item accordingly.

​What Are the Benefits of Working With a 3PL?

  • Expanding Your Possibilities – Expanding your possibilities can provide a stronger customer base, more sales, and more visibility in your targeted field. If you’re only reaching customers in one region, you’re limiting your business’s potential. 3PL companies also have a large network of fulfillment centers that typical in-house fulfillment lacks. It can be extremely beneficial to partner with a 3PL company that can provide support in areas that are typically costly for smaller-scale businesses.

  • Save Your Business Time and Money – In the long run, 3PL companies can save you a chunk of cash. When you partner with them, you no longer need to buy or rent costly warehouse space, pay for additional labor, or invest in extensive technology systems needed to fulfill and execute orders in-house. Additionally, 3PL companies save you time on the entire fulfillment process.

  • Providing Industry Expertise – You can be a rockstar in your industry but become overwhelmed when it comes to the thought of logistics, order fulfillment systems, and shipping processes. Fully understanding the processes your products must go through to reach your customer can be confusing, but an industry-leading expert can relieve the stress on your business and provide their expertise and direction to best help you succeed.

Logistics Made Easy with Atlas®

Atlas Logistics® offers expert knowledge for your logistics needs. With over fifty years of industry experience, we provide comprehensive management solutions, quality brokerage solutions, and attentive customer care. Looking for the next step for your business? Request a quote or contact us today to discover what Atlas Logistics can do for you.