What is 3pl logistics?

We’ve looked at everything you need to know about 3pl logistics services:

3pl stands for Third-party logistics services, which means outsourcing the logistics processes of e-commerce, including inventory management, storage, and delivery to the client to a logistics supplier.

Read more: How to choose the best Third-Party logistics company?

What do third-party logistics companies do?

If you are the owner of an e-commerce business, ordering or full-filtering is an integral part of your operations, and as your business grows, you will find that you cannot complete customer orders by yourself. At this stage, you need to develop the strategy of delivering to your customer, which means outsourcing this activity to a 3pl-partner.

As a business owner, understanding how 3pl works to maximize the use of customer delivery service strategy for internet sales or e-commerce, the growth and development of your company are very important.

According to the 23rd annual third-party-logistics study by famous organizations such as Pennsylvania State University, Infusis Management Consulting Company, Penske Logics Management, and Korn Ferry, 89% of the companies that use a third-party logistics partner, They’ve confirmed that third-party logistics helped them improve their services and satisfy the customers.

3PL or third-party logistics services

Third-party companies are responsible for the transportation and transport of goods, warehousing, and management of both activities. The common functions of 3pl operators are transportation and storage of packages, storage management, distribution, and a range of value-added services such as package tracking, share management, customer transaction management, etc.

Third-Party logistics are divided into five categories according to the type of activities they perform :

• Transport companies
• storage agents
• Transport subsidiaries
• Transportation Service Management & Optimization Companies
• Software processing companies

Read more: Discover how using a 3PL can help your business save money

What is the process of ordering a 3PL?

If you’re considering working with a 3pl company or you’re not familiar with outsourcing your shipping and delivering your orders, you should know that what’s going on in the Third-Party logistics ordering process looks like a black box; but the process of delivering orders to the customers in a Third-Party logistics has not to be a secret.

So, what happens in 3pl e-commerce when a customer clicks on the “order registration” in your online store?

Order or receive 

A third-party logistics company can’t send orders without having an inventory available. Ordering in 3pl warehouses refers to acceptance, inventory listing, or storing. Each Third-Party logistics has its processes and capacity to receive and store inventory.

Read more about How to Fulfilling Online Orders and Meeting Consumers Demand

warehousing

3pl providers will store items in its Completion Centers after receiving your inventory in such a way that each SKU (Stock Keeping Unit) or inventory maintenance Unit (PSA) will be stored in the Completion Center; It has a separate storage location on a shelf, in a chest or in a pallet.

Third-Party logistics have different storage capacities, and it’s important that the Third-Party logistics you’ve selected have an excessive storage space needed for your current inventory. As your product production line and order volume increase, Third-Party logistics storage must also be to scale with you.

Select and package 

Once an order is registered in your online store, the process of selecting and packing is done in the warehouse. When the ordering process starts is a 3pl. You’ve probably heard the phrase “pick and package” before in the process of completing orders; this is the first half of the way to a 3PL, but how long does it usually take to get a selection and package from the time the order is registered?

Some 3PLs require you to manually upload orders to your system, which includes the details of each order, shipping method, delivery to the customer, and so on; it also can be a deficient and complicated method of managing orders. Some 3PLs have complex technology that integrates directly with your e-commerce platform and collects all the ordering processes in one place, which makes the ordering process more automated and easier. Third-Party logistics integrate API and your e-commerce OS, helping you accept new orders quickly and respond in a timely manner.

Packing 

When all items of an order are selected, they must be safely packed for transport. Packaging accessories used to depend on your 3PL capabilities, brand preferences, and sent items. The most common standard packages are :

• Simple non-branding boxes
• Bubble bags
• Poly Bag
• Adhesive packing
• dunnage airbags
• Kraft paper airbags

Some third-party logistics companies are paid for the packing separately, while others do it as part of their services. They should choose the best packaging materials to protect your products and achieve the 

lowest weight and dimensions, and then optimize their packing so that you don’t have to split the containers. The next weight or volume weight is a pricing technique in transportation where the packet is considered to determine the transport rate. The use of appropriate packing materials can help reduce the costs of logistics.

If you want your brand to be distinguished by shipping packages and delivering orders to customers, make sure your third-party logistics partner or Third-Party logistics can see your demand for custom packaging or value-added services like custom boxes and marketing inserts.

Often, getting a package is the first customer experience of your brand. Hence, brand packing can be so important and impressive for them.

Read more: Advantages of 3PLs or Third-Party logistics?

Transportation 

The next step is to send your order. Considering the cost, product pricing, and marketing strategy, it is possible to get the cheapest method of transportation or a safe and fast one; based on what we told above, try to choose high-priced Items or something like this.

Most Third-Party logistics companies can meet your needs at the lowest possible cost; Because they have many carrier partners who have different transport speeds and full-advantage services.

Return of good 

Most third-party logistics partners also offer back-end product services. Actually means that if the client returns orders by resending them back to your Third-Party logistics, it processes restore, store, and even discarding the product depending on your policies and preferences.

When should you think of a third-party logistics partner or 3PL?

Almost every e-commerce store, regardless of the e-commerce platform and industry, can benefit from outsourcing logistical services. In this section, we consider three signals that indicate you are ready to outsource your ordering process  

below :

• More than 100 orders per month. While there isn’t a magic number, if your order volume is a lot and you can’t continue by yourself, it’s time to start outsourcing your orders.
• Many hours you spend reacting to new orders like packing items, printing labels, and waiting at the post office; on the other hand, You will lose the opportunity to attract more customers, develop new products, and market.
• Your storage is running out of space; When you increase the volume of your order, you’ll need additional funds all time. If you make ready orders at home, it may not be easy to find enough storage space. A third-party logistics warehouse can save you from a garage or living room full of products.

Inventory outsourcing and completion of orders by Third-Party logistics; Can help you stay organized and manage your inventory more efficiently, besides extending your production line without worrying about inventory storage limitations.

The most valuable 3PL services you should look for

Beyond the transport request, A Third-Party service depends on the provider you choose. In this section, we’ve reviewed some of the most useful features and logistics services that are offered by a global 3pl:          

inventory management

Inventor management is more important rather than storing your products. Third-Party logistics, which you should allow the convenience of syncing inventory with your online store, view your inventory in any third-party order completion center, and actively charge it to avoid the non-inventory situation.

Once your Third-Party logistics get inventory and store it, you can check the number of available products and units sold products per day. It gives you a perfect view of what is available at any time to send orders that customers have ordered.

Consider the following statistics:

• Seventy-three percent of buyers prefer to experience fast and affordable delivery. The shipping and order expenses will make forty-four percent of online buyers remove their shopping cart. 
• Twenty-four percent of customers cancel their order due to delays or lack of enough speed that is required in sending.

This trend comes with the fact that the most popular online retailers offer to send orders in two days and free shipping options. Hence, Customers expect to choose fast and affordable shipping for their orders by clicking on the orders registration button.

The third-party logistics partner storage, Provide access for you to can observe what expectation your customers have in prompt delivery by storing inventory near shipping targets. Also, collaborating with suitable Third-Party logistics can help you provide shipping processes in two-day ( send the orders just in two days)for your customers at an economical price.

Logistics providers offer third-party logistics, their own transportation services, or they are in touch with transportation companies that allow them to negotiate about freight process and shipping for their customers.

Inventory distribution

When working with a Third-Party logistics supplier that has multiple stores, you can split the inventory in the order completion centers to send each order from the nearest warehouse to the customer; This is known as a special and useful way for distributing products to clients.

It’s considerable that 3pl global companies, despite their technology, can complete the order process by using powerful algorithms to deliver orders to the order completion center that are optimal and suitable.

If your customers are geographically far from your country, you may want to distribute your inventory across several centers; this will make your inventory closer to your transit destination and can ensure your shipping process will do in two-day, too.

The distribution of inventory is not necessarily economical for everyone. Especially if you don’t have a lot of orders yet, however, as your business is growing, having a network of order completion centers or distribution can help you reach more customers with high feedback.

Third-party logistics depots also help keep you ready in unforeseen circumstances when a center can’t service, And it’s a very wonderful way. Inventory distribution also can help manage inventory, making you have a backup warehouse.

Complete B2B and D2C orders

(B2B order: this model involves all the businesses that sell products or services directly to the customers.

D2C order: this kind of business is also known as B2B, while D2C brands sell their own products.)

If you use a multiple-channel logistic strategy, finding Third-Party logistics that can handle your B2B and D2C will make your life and work easier.

Order Handling

Another positive point is that Third-Party logistics companies can help your return management process by taking care of the return orders to create a better experience for your customers. You also can choose to restock, quarantine or even destroy cargo, and in conclusion, third-party logistics create a clear return policy for you.

How do you choose your third-party logistics partner?

third-party logistics providers undoubtedly can help you speed up your logistics operations while you devote time and make an effort to improve other sectors.

The cost that you should pay for third-party logistics depends on the type of your goods, the type of transportation from the aspect of: immediate or non-urgent, and the distance for arriving at the destination. 

Scalability: You’d better evaluate the ability of the companies providing logistics services to meet what you need. Efficient responsiveness to increased activities is the main key to making the sustainable growth of your business and getting more known.

Technology: To select their logistics partner into the technology used by the companies and the process they follow for their activities

Background and reputation: The activities history of your third-party logistics is so important. This means that financial stability is strong and able to provide optimal services. It’s recommended to catch useful information about it and, after making sure, start the collaboration.

The last point you’d better know is:

that choosing an appropriate third-party logistics service can be a significant decision that will affect your business in the future. That is why it is so important to consider all possible ways and choose the most useful suggestions, and after that, without any concern, you will have good experiences for your customers and yourself, too.