Third-Party Logistics (3PL)

What is 3PL?

Answered July 28 2019

The term 3pl refers to third-party logistics, which means that an outside company takes over the receiving, storing, picking, and shipping of your products from its warehouse to your customers. For many ecommerce businesses today, 3pl options provide an efficient and affordable way to grow and scale an online company.

 

How It Works

Once you’ve selected a 3pl provider, you’ll begin by shipping your products to their warehouse. The 3pl company will receive the products and store them appropriately. When a customer purchases a product from your online storefront, this order will either need to be communicated to your 3pl partner manually or automatically.

Ensuring that your online marketplace is integrated into the 3pl system is critical to maintain speed and accuracy.

When the 3pl provider receives the order, it will need to pick that order in its warehouse, update the inventory records, and securely package and ship the item to your customer. You may want to see what packing and shipping options are available. Some 3pl providers may ship in unmarked boxes and use one shipping company while others may allow you to use custom-printed, branded packaging and find the best shipping option available among many.

Benefits

Working with a 3pl provider can result in many benefits for a small or mid-sized e-commerce business. Managing a warehouse requires significant investment, and it may simply not be cost effective for a smaller company to establish its own warehouse and inventory management system.

By partnering with a 3pl provider, you tap into its established system, network and expertise, which allows you to compete with larger companies quickly and easily.

According to  Comscore, more than 70 percent of consumers expect two-day shipping as an affordable and common option when shopping online.

By using a 3pl company, smaller businesses can meet that expectation affordably.

Finally, outsourcing your logistics and supply chain management allows you to focus on more strategic initiatives within your own company to grow into the future.

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