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As an eCommerce business, you may find that handling merchandise in-house isn’t always productive. This is especially true for smaller eCommerce companies that are looking to expand. So, rather than operating on a shoestring, it may be in your company’s best interest to partner with a third-party logistics or 3PL service. Incorporating such services into your business plan allows you to team up with professionals so that you can focus on more critical tasks such as customer satisfaction, marketing, and growth. Today, we’ll take a look at the services provided by 3PL fulfillment companies and explain why they’re beneficial for your eCommerce supply chain.

What is Third-Party Logistics (3PL)?

3PL is the outsourcing of supply chain operations and the logistics involved with getting products to the consumer. These companies offer solutions including storing, shipping, packing, and receiving. Some 3PL providers even offer other logistics services that add more value, such as kitting and assembly, inventory management, postponement packaging, and more. 3PL’s help their clients to compete, or work, with the largest eCommerce companies such as Amazon and Shopify.

Because most 3PL providers have been offering logistics services for years or even decades, they have the leverage and expertise to make the process more cost-effective, simpler, and faster. The market for these services has grown steadily, especially given the sharp rise in eCommerce retailers. 3PL fulfillment companies are used by roughly 86% of Fortune 500 companies and about 96% of Fortune 100 companies.

Services Provided by eCommerce oriented 3PL Companies:

Now that you understand what 3PL companies are, let’s take a look at the services offered:

1. Fulfillment/Pick & Pack

Many eCommerce companies rely on multichannel selling to stay in business. Your fulfillment partner needs strong IT to support this and ensure everything works smoothly. Generally, the best 3PL companies offer integrations that work seamlessly with the largest sales platforms. A good provider should already support all sales channels or have the ability to create custom APIs. Additionally, you should have access to a dashboard where you can track and view the process of all orders in real-time. Once 3PL companies receive your orders, they ship them out. The process of order receiving and shipping is called fulfillment.

2. Storage

Once merchandise has been received at the 3PL warehouse, the inventory is stored in a fulfillment center. Each item is given a dedicated SKU (stock keeping unit) and then separated into dedicated storage locations, either on a pallet, shelf, in a bin, or some other speciality location for items such as cold chain products.

Yet, inventory doesn’t just have to be adequately stored; it must also be organized efficiently. When dealing with certain products, factors such as stock turnover and expiry dates are crucial. Part of managing these processes involves using good warehouse and inventory management systems. Often you’ll find it pays to expedite high-demand items for accessibility.

Just be sure to ask lots of questions before choosing a provider because different companies have different storage capabilities. You’ll want to make sure you partner with a 3PL that offers room for growth or can scale with you.

3. Shipping

One of the most critical parts of eCommerce is the shipping of products. Most 3PLs will offer to purchase and print shipping labels for you. Some third-party logistics providers work with preferred carriers, while others compare the costs from numerous carriers. Comparing prices allows 3PLs to offer clients the most affordable shipping methods available at the delivery speed chosen by the customer.

Major carriers such as FedEx, UPS, and DHL pick up orders from third-party warehouses. After the package has shipped, the 3PL should offer integrated technology to update tracking details to a merchant’s online store automatically. Just remember that the shipping speed and carrier will depend on the partnerships and policies created by the 3PL and those offered by the merchant and chosen by the customer.

4. Returns Handling

Return policies play a significant role in the purchasing decisions of consumers. In fact, it’s been estimated that over 60% of potential clients look at the store’s return policy before buying from them. So, when stores adopt complicated return policies or require additional costs, it can scare customers away.

For this reason, eCommerce stores should be sure to set up effective systems for returns and exchanges. And these procedures should be discussed upfront with any potential fulfillment service. You should also try to ensure that your 3PL provider and warehouse team can efficiently handle returns.

The return process can be tedious to deal with, and this is the reason it’s best to outsource these services. After all, when a product is exchanged or returned, it must quickly and carefully get checked to ensure it’s eligible for restocking and then immediately updated for reselling.

5. FBA (Fulfillment by Amazon) Prep

If you’ve ever tried or are currently doing fulfillment by Amazon (FBA), then you know that non-compliance can cause you to incur additional charges. Hence, it’s crucial to always make sure your products meet Amazon’s strict FBA requirements 100% of the time. If these are services that your business could stand to use, then look for a 3PL that offers them. In the long run, hiring a 3PL for FBA prep is an excellent investment that saves you time and money, thus allowing you to focus on growing your business.

To compare prices between different 3PL Providers, check out our article here!

3PL warehouse infographic
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