In the last few years, eCommerce has gained immense popularity across the world. Most of us now search for a product online before stepping into a brick-and-mortar store. Buying online has become almost instinctive.
Thanks to technology, today you can set up a fully functional online store within minutes. However, one of the biggest challenges with selling products online is order fulfillment.
With brick and mortar stores, all you have to do is hand over your products to the customer who has stepped into your store. But when you’re running an online store, the customer gets to buy your product from the comfort of their homes and also get the last-mile delivery.
This complicates things a bit, especially for the sellers who have very little idea about how logistics work. Things get even trickier in case of interstate or international deliveries. There are also those sellers who simply do not wish to spend their time learning how to get their products safely delivered across the world, and would much rather outsource it to professionals.
This is where 3PL or Third Party Logistics companies come into play. They simplify order fulfillment and other logistics-related processes in return for fees.
3PL is a widely popular service that allows companies to outsource their logistics to a 3rd party logistics provider. 3PL companies are neither the buyer nor the seller. They simply partner with the seller and facilitate smooth deliveries of the product to the buyers’ doorsteps.
3PL companies have gained prominence as one of the most important parts of the eCommerce business. This is because their operations are highly sophisticated and crucial to the success of an eCommerce company.
3PL or third-party logistics is a service provided by logistics companies wherein they take care of all your logistics-related requirements like order fulfillment, returns, and refunds, warehousing and inventory management, etc. This allows you to efficiently deliver your products to your customers which results in increased customer satisfaction.
There are many small and medium sized eCommerce businesses that do not have access to any physical warehousing facilities. However, for a smooth flow of products, they need to be stored somewhere prior to shipping them to the customers.
3PL companies provide these critical services where businesses can rent a small section of a warehouse and use it to store their products. These warehouses are generally owned or operated by the 3PL companies themselves.
Apart from the obvious B2C domain, eCommerce has also grown substantially in the B2B transactions. Many companies today send multiple shipments to the same location. They may be parts of the same machine or multiple smaller equipment.
However, sending all of these individually might incur heavy costs in terms of taxes, duties and shipment charges. 3PL companies can help consolidate such smaller shipments into larger ones, thus saving a lot of money for the suppliers.
Perhaps the most crucial operation for any eCommerce business is its order fulfillment. Companies that offer excellent order fulfillment services to their customers tend to do much better than their competitors.
However, this is also one of the most complicated processes. The customer should not just get their order, they should also get it on time and without any damages. Easy as it may sound, most companies require professional expertise in this area, something that an expert 3PL partner brings to the table.
The working of a 3PL company is not just limited to handling transportation or distribution functions, but it is extended to outsourcing procurement and focusing on different segments of your business. Third-party logistics companies focus on elements like product sourcing, freight shipping, and more.
A 3PL inventory management fulfills various requirements like distribution and warehousing. A third-party logistics provider manages all the logistics of customer fulfillments so that you can run your business efficiently. That is why it is always essential to hire a 3PL company and smoothly manage your supply chain.
If everything in your business is going great, but you are struggling with supply chain management, it is the right time to choose the best 3PL company. The best third-party logistics providers will take care of your overwhelming order fulfillment processes. Before you pick any 3PL logistics company, you need to decide the type of service that suits your business.
The most common services include – Transportation, Distribution, Shipping logistics and receiving products, Warehousing, and product storage. If you are running a huge business, then you will need a full-service end-to-end third-party logistics provider. On the other hand, a small business will probably require one or two of the services mentioned above.
Talking about the primary offering of a 3PL provider, they offer logistics services for managing different aspects of your supply chain management. Generally, third-party logistics providers are integrated into the warehousing, inventory distribution, and transportation processes of a company.
When you scale and customize services, then 3PL providers can meet your business requirements and help you expedite your order fulfillment process.
A third-party logistics company helps you to stay competitive in the market. The whole product packaging and shipping work is costly as well as complex.
A 3PL company usually takes care of this process once you pass them on to your orders. We have some fantastic e-commerce companies like Zappos and Amazon who are making shipping possible in only 1 or 2 days. The fast-acting third-party logistics partners are involved in making it happen.
Also, a 3PL partner specializes in managing the whole supply chain process. This will ultimately help your business optimize the fulfillment, distribution, and shipping process for boosting efficiency and effectiveness of cost.
Since they first began, 3PL services have undergone a massive transformation. What was earlier limited to just moving the products from one place to another, now includes a range of sophisticated services and cutting-edge technologies.
With the rise of eCommerce, 3PL has ushered in a new era of providing holistic services focussing especially on small and medium online businesses. Most 3PL providers today offer multiple variants of services so that their clients end up paying only for the services they need.
Businesses today are looking to leverage services like 3PL warehouse management, 3PL inventory management and a range of other 3PL solutions by partnering with a third party logistics expert. This enables them to focus on their core competencies while also significantly enhancing their customer satisfaction.
Here are some of the most common type of 3PL companies and contracts:
Standard 3PL services include the most basic 3PL operations. This is a great fit for businesses that want a partner to handle only their transportation needs.
Standard 3PL contracts are the most economical kind of 3PL services. These are generally preferred by retailers who have very basic requirements and have already taken care of their inventories and warehouse management in-house.
3PL Service developers go one step further, and provide the necessary IT architecture to handle the logistics of their clients aka your company. The services include secure deliveries via end to end real time tracking and compliance support.
Apart from these, 3PL service developers also offer innovative solutions that can help a company move their products with minimum storage requirements.
These companies specialize in all the activities carried out by freight forwarders, while also providing critical logistics support.
Forwarder based 3PL companies generally do not own any assets like warehouses or shipping lines, and act as an intermediary between your company as well as the carrier.
There is a lot of financial activity involved in the logistics operations. From timely payments to the shipping lines and freight carriers, to accounting and auditing, these activities can drain a lot of your time, energy and resources.
There are some 3PL companies that are experts in this domain. They provide all the finance related services along with the standard 3PL services, and take this mammoth task off your plate.
3PL Customer Adapters take over almost every logistical responsibility of their clients. Services generally include but are not limited to determining the best shipping carrier for an order, negotiating for the best prices and helping with all the compliances.
Customer developers are the top of the line among all the 3PL services. The range of services that they provide is so extensively exhaustive that they practically become the logistics arm of their client companies.
3PL customer developers help their client with all things logistics. They come in with all the technology, resources as well as manpower to cater to their clients’ requirements. Once you’ve partnered with them, you never have to worry about your deliveries, shipment schedules and a million other tiny things, and can focus on growing your business.
However, all of this comes at a significant price, which is why only a few businesses around the world eventually go for these services.
Partnering with a 3PL firm rids you of a range of activities that would otherwise eat up a lot of your time and other resources. This allows you to focus on your core business process, and makes your business much more efficient.
When you partner with a 3PL, you invest in their domain expertise. Companies that are reluctant to outsource their logistics to 3PL worrying about the costs are perhaps looking at it very myopically.
If you handle your own logistics without quite understanding it then you’ll end up messing with a lot of your deliveries. It will cost you a lot more money than what the 3PL would’ve charged you.
By partnering with a 3PL company, you can multiply your fulfilling capabilities and ship your products to regions that would have otherwise been out of your scope.
This is because 3PL companies have collaborations in place with multiple shipment companies which allows them to deliver your products at much lower costs.
3PL companies come with resources and operational experience that can help you scale your business very quickly. You do not have to worry about finding the right candidates, training them and providing them with the necessary equipment, your 3PL partner will do it for you.
Partnering with a 3PL company will help you streamline your logistics, supply chain as well as warehouse operations. All of this will directly impact the quality of your delivery systems. Your products will reach your customers in time and without any damages.
All of this will lead to a heightened customer satisfaction, and establish brand reliability and credibility.
If you’re passionate about being in control of all your operations all the time, partnering with a 3PL may come with a few complications for you. Many companies insist on creating end to end branding for their customers. They feel they would be letting their customers down if any part of their services isn’t up to their standards.
Some companies are extremely protective of their user database and are hesitant to share it with anyone outside of their organization. Even though most 3PL companies do sign NDAs with their clients, some companies may not wish to sign up, fearing a data breach.
In such situations, the company is better off setting up a logistics framework on its own rather than outsourcing it.
A 3PL takes a lot of things off your plate like logistics, warehousing, returns and refund management, etc. However, all of these come at a price. Many companies feel that the upfront costs don’t quite justify the services, which is why they prefer to handle their logistics themselves.
Since 3PL companies are in charge of warehousing as well as transportation, they independently decide the policies regarding the same, while their clients have to pay for the costs.
There are also instances where 3PL companies have slowly escalated the tariffs and costs over a period of time, once they’re certain that the company is totally dependent on their services. However, you can avoid all of this by choosing a trusted and renowned 3PL partner.
Businesses such as pharmaceutical companies and food and beverage companies have unique logistical requirements like cold storage, specific packaging, etc. Not every 3PL company may have the necessary resources to provide these services.
Hence, if you require sophisticated delivery services, it’s best to either partner with a 3PL company that specializes in that domain or take care of your logistics yourself.
For example, If you’re a pharmaceutical manufacturer and wish to supply temperature-sensitive medicines around the world then you should enquire specifically for a 3PL firm that specializes in healthcare logistics and only partner with them.
Running an e-commerce business successfully in such a competitive market is a challenging task. It becomes more difficult when you get stuck with diverse tasks and get overburdened by the logistics demands. In such a case, you should not delay in partnering with a 3PL, i.e., a third-party logistics provider.
There are so many 3PL companies out there, but choosing the best 3PL partner for managing your supply chain processes is a crucial task. Picking the right one will offer you a great business experience and boost your productivity. But if you end up with the wrong choice, it will lead to inadequate servicing and various drawbacks.
While choosing a 3PL provider, it is vital to keep a future aspect. If you aim to get massive success in your business, you must work with a capable team to achieve that level of growth. The selected 3PL partner will handle all the work even when you might get a considerable boost in your order volume.
Ensure they are having proper warehouse space and required staff to meet your requirements. Also, there will be a need for online systems to keep track of the orders and organize and ship the orders out of the door whenever required efficiently.
How will you get to know that whether the 3PL team is matching your expectations or not? It is always vital to set some standards to measure the efficiency of any operation. Key performance indicators that cover quantities, numerical measurements, precise times are helpful to achieve your goals.
With the help of logs and analysis, you will track performance levels and the needed enhancements of your logistics team. Thinking about your current and future business needs is a critical step when choosing a 3PL partner. Defining KPIs will assist you in getting your work done promptly and keep an eye on productivity.
Considering the location of your third-party logistics is an important step. You need to find out the place of your 3PL partner. The fulfillment centers and distribution plan should be close to your consumption area. By doing so, you will get a chance to manage all the work more efficiently.
If your products are close to your customers, you can ship them effortlessly to your customers. This is why you should look for such a partner who has a vast network to match your requirements. Such a 3PL partner will leverage your business tremendously, and you can expand your shipments to various locations.
Before choosing any 3PL partner, you might be thinking of what kind of customer service they will offer. Customer service is yet another aspect to consider while you are selecting a 3PL partner. Providing good customer service requires delivering proper attention to valuable customers. It happens by clearing their every single query and assist them whenever they have doubts.
In today’s technology-based world, it is imperative to walk with current technology trends. High-level software based on artificial intelligence and market analysis is used to augment all the operations and sales of your business.
Before you come to any conclusion to pick a 3PL provider, you must have a look at their technological systems. You can look for such logistics partners who opt for providing business intelligence and customized solutions matching your business needs.
Checking the finance and scalability of your 3PL partner helps to build a strong compatibility foundation. For this reason, you must track the record of the 3PL partner with whom you are interested in doing a partnership. It will help you to understand their financial stability.
When you are a big brand and parenting with a 3PL provider, then you must look at whether your 3PL provider is capable of supporting your business or not. Also, the long-term partnership track of a 3PL provider tells about their flexibility in their services. Financial compatibility is essential to support scalability. Your 3PL partner should be capable of supporting the vision of your business to grow and expand.
Meeting your third-party logistics partner will give you the real feel of the company and its work culture. Touring all the facilities and getting a complete understanding of how your products will look into their shelves will help you know how they will be moving via your 3PLs systems.
A lot of ecommerce businesses find the idea of selling someone else’s products in their store before investing in making them in-house. It is indeed a good idea to perform a dry run without committing a hefty amount initially, but one can easily get confused about which model to choose.
You can presently choose from 3PL, 4PL, and dropshipping for this purpose, and all of them are focused on providing a different set of values. Let us see which of these three would serve your interests the best.
Third-party logistics refers to outsourcing the shipping and handling operations while keeping track of the activities. Here, the product is manufactured/procured by the seller, and they ensure its availability on the product at their facility.
All logistics activities include inspection, picking, packing, cross-docking, liasioning and customs, last-mile delivery, authentication, and maintaining visibility during the transit. It saves a lot of time as you can focus on production, something you excel at, instead of putting your nose into the intricacies of logistics. Some of the examples of 3PL logistics companies include C.H. Robinson, PE Logistics, QualPack, and J.B. Hunt.
4PL refers to further outsourcing the management of the logistics to the external organization. The 4PL provider will overlook the entire process, which also includes processes like return merchandise authorization (RMA), and thus, it further eases work on your part. UPS 4PL Services, AmazonFBA and Accenture 4PL Services are some of the market leaders in this category.
Generally, 4PL providers command considerable expertise over the end-to-end execution, which ultimately helps you project yourself as a customer-focused brand.
Dropshipping is a business model where you sell products that you currently don’t possess, but you can procure and ship them once you receive an order. Your role is limited to order management, invoicing, and ensuring that the right items get delivered to the customer in due time.
Now let us understand how you can choose the ideal one for your business. Firstly, when selecting between 3PL Vs. 4PL, your organization size, and sales volume play an important role. If your business is in its budding phase, you might want to go ahead with 4PL. If you deal in a considerable volume and are thinking of an expansion, you might still want to prefer 4PL.
On the other hand, if you can allocate enough manpower to overlook the managerial aspects and a low to medium sales volume, 3PL will be a great fit. It will cater to the needs of organizations selling niche and custom products as they have similar operating conditions.
Dropshipping is a great way to leverage seasonal demands and test new products. In many cases, you might be unsure if an item would perform well. Dropshipping allows you to test its demand among your customers and target audience without any major financial setback in case the product doesn’t sell.
It is also useful when you want to sell a frequently demanded item that you don’t manufacture so that your customers can purchase all the items in one place. With this being said, dropshipping business.
3PL companies today provide a plethora of services to their clients. Therefore, 3PL prices depend on the combination of services that they’ve vouched to provide.
Here are some of the most common components that constitute 3PL costs.
Once you zero in on a trustworthy and reliable 3PL partner, they will initiate the process to get your company onboard. This is an extremely important process that helps both the companies understand how each of them functions.
The onboarding process generally lasts for days, often weeks, depending on the size of the companies and the collaboration. Since a lot of resources are involved in making sure that the process is smooth and efficient, 3PL companies generally charge their clients for it.
3PL companies offer a range of inventory and supply chain management solutions as well as provide the necessary resources and manpower. Inventory costs can be further divided into two categories:
When you send your finished products to the 3PL warehouses, your 3PL partner has to employ adequate resources that can receive the products and store them.
These resources check your products for any defects, and make sure that they’ve been received in the perfect form and shape. They also inspect the invoices and make sure that everything is accounted for.
Your 3PL partner may charge an hourly rate or offer a flat rate per product depending on your contract with them.
This one is pretty self explanatory. 3PL partners take a huge load off your chest by providing the necessary warehouse space for you to store your products before they’re shipped out.
A company generally ships all the products to the warehouse in batches. In most cases, there is no individual packaging for the products. Your 3PL partner takes care of your retail packaging requirements so that individual products can be shipped out to the final customers.
Packaging costs depend on the number of products to be packed as well as the duration of the contract.
eCommerce companies often provide festive offers to their customers, wherein they provide multiple products as one big package. Your 3PL partner can easily help you consolidate multiple products as one SKU and create these special packages at their warehousing facilities.
This process is known as “kitting.” The kitting cost charged by a 3PL company depends on the number of SKUs included in the bundle and the time duration of the offer.
Outbound shipping is possibly the biggest component of the overall 3PL pricing. It refers to the process of taking the product out of the warehouse and shipping it to the end customer.
Your 3PL partner will charge you for every delivery they make. Shipping charges often include a myriad of smaller components like fuel cost, handling charges, customs and duties, etc. These depend on the dimensions of your shipment, the distance between the two points as well as the medium of transportation.
The eCommerce world today is plagued with returns and refunds. Whether it’s good for the industry or not, is a matter of great debate. However, it’s a reality that all businesses must make provisions for.
Your 3PL partner is in charge of your logistics, which also covers handling the returns. Hence, expect a small component for the same in your 3PL costs.
Searching for the top 3PL companies in your country? You are at the right spot. 3PL companies help businesses simplify shipping processes by providing infrastructure and much-needed expertise. Third-party logistics can be an extremely beneficial option for SMBs as they can also outsource warehousing apart from shipping.
You might be amused to know that the e-commerce giant Amazon too hired 3PL companies before disrupting the market itself with Amazon FBA. If you are finding the best 3PL operators in your region, you are at the right place. Have a look at our country-wise top 10 3PL companies list:
With their headquarters located in North Brunswick (New Jersey), Capacity 3PL offers a range of services, from Order Fulfillment to Shipping and Transport, and other value added services.
Bergen Logistics are experts at providing omnichannel fulfillment support to sellers who sell their products across different platforms.
Operating out of Baltimore, CDS Logistics have more than 60 distribution centers spread across the USA. This enables them to provide last mile deliveries to nearly every part of the country.
The Northeast Group Order & Inventory Management is a warehousing company that has a facility in Plattsburgh, NY. This helps them provide seamless warehousing facilities to the companies from the east coast as well as many regions of Canada.
Reo Logistics has their warehouses and processing facilities spread across the Eastern and South Eastern USA. They specialize in handling packages from chemical, petroleum, biological and consumer products industries.
With warehouses located in Nevada and Virginia, Bender Group is a 3PL services provider based out of California. They are a 70 year old organization that specializes in warehousing, omnichannel fulfillment, international customs clearance and freight forwarding.
DCL Logistics is a 3PL service company that has its headquarters in Fremont, California, right in the heart of the Bay area since they started their operations way back in 1982. They provide services like eCommerce fulfillment, reverse logistics and kitting & assembly.
Easy Post is a shipping solutions provider that offers some of the most unique tools to sellers by their range of innovative APIs.
Expeditors is a fortune 500 company with its headquarters in the state of Washington. It has a global presence with 175+ offices in more than 60 countries spread across six continents.
Located in California, Motivational Fulfillment is a 3PL provider company that helps small and medium sized businesses with their warehousing, kitting & assembly as well as transportation requirements.
Located in Utah, Momentum Shipping is a third-party logistics company that provides services like eCommerce order fulfillment, warehousing, kitting & assembly, etc.
Based out in California, Flex Logistics is one premier 3PL warehousing company in the USA with a strong presence across the Atlantic and in the Asia Pacific as well. With more than three decades of experience, they provide highly cost effective services in regions like Los Angeles which are otherwise too complex to tackle for any logistics service provider.
Shipwire is a cloud-based shipping management platform that powers global logistics operations for many leading companies. Their head office is located in California, USA. The Shipwire platform supports real-time marketplace connectivity, order processing, transportation management, and fulfillment along with reverse logistics and e-waste recycling.
If you are looking for shipping goods in large volumes across the globe with tonnes of value added logistics services available, excellent technical stack and customer support, AMS Fulfillment could be the best choice for you. Their head office is located in California, and they also offer to operate as an extended part of your business when it comes to order fulfilment, warehousing, and shipping.
With its headquarters in Plymouth (Minnesota), MVP logistics is a 3PL service provider with specialties in supply chain, distribution, third party logistics, fulfillment, international shipping, warehousing, project management, logistics, LTL, and truckload.
PPC Fulfills is a 3PL service provider based in Camanche, Iowa. They transport roughly 4,000,000+ shipments per year, and are one of the largest logistics providers in the region. Their services include product fulfillment, returns processing, warehousing, logistics and transport management, etc.
One World Direct is an order fulfillment expert with their headquarters located in the state of South Dakota. Their fulfillment centers are located in the three strategic areas of California, South Dakota and Ohio, which gives them the ability to deliver to almost any corner of the country.
It was established in 2010 after its owners struggled to find a proper logistics services provider for their own ecommerce business. James and James Fulfillment provides extremely optimized client-focused solutions to its clientele across the United Kingdom.
Parcelhub is one of the renowned names in the industry. It is widely preferred due to its ability to integrate with all leading marketplace providers and inventory management systems, and it helps British businesses ship over four billion products every year. Their exceptional services make Parcelhub extremely popular among the emerging businesses from Birmingham to the Park Royal of London.
Hub has found its spot on the list due to its end-to-end services focused on SMBs. It too connects with all leading inventory management solutions and marketplaces, and it also provides its customers with value-added services like assembly.
Pro FS helps businesses located in the UK, and it also provides services like return management and reverse logistics. They also offer same-day dispatch in a few locations.
Torque is focused on ecommerce fulfillment, and they have six warehouses across the United Kingdom. It also supports integration with leading ecommerce store builders, including Shopify, WooCommerce, and Magento.
3P Logistics specializes in large-scale fulfillment operations and provides its clients with premium services like customer relationship management. They manage over 200,000 square feet of storage space in the United Kingdom.
Storeship is ideal for online retailers with changing order volumes since they do not have any fixed charges for providing the services. They are majorly focused on sellers on Amazon and other marketplaces, but independent stores are also among its focus customers. They provide Kitting, customs services, and returns management apart from the conventional 3Pl services.
FedEx is one of the most popular brands in the full-service freight company, and it currently commands the largest airline cargo fleet. FedEx extends its services in over 220 countries and specializes in quick shipping. They also have warehousing space of more than 35 million square feet. It is one of the favorite logistics companies in Canada due to its strong presence in the US and in Europe.
ShipFusion is a Canadian 3PL provider that specializes in serving e-commerce businesses in North America. They offer excellent services to the budding online stores with their robust cloud software package, ShipFusion also extends unmatched client support. They operate primarily from Toronto and Ontario with a strong presence in the US. They also have a storage facility in Chicago.
DB Schenker is a logistic company specializing in complex operations and serves some of the biggest corporations in the world. It owns a warehousing space of more than 94 million square feet and has distinct divisions that specialize in each segment of the business.
Another old-time giant, Kuehne + Nagel Inc., is a German-founded, now Switzerland-based logistics firm. It is a major player for agriculture products like cotton, has over 75 million square feet distributed over 65 nations, with its headquarters in Canada situated in Toronto.
Founded in 1937 as Nittsu, Nippon Express is a Japanese firm that can be a perfect match for the US companies partnering with businesses in Japan. They operate in over 48 countries and have a sizable warehousing space of around 31.7 million square feet. Its Australian head office is located in Victoria, and the company plays an important role in facilitating trade with Japan and the USA.
Toll Group is one of Australia’s finest homegrown 3PL logistics companies based out of Melbourne. The company offers its services extensively in the Asia Pacific region also with over 50 countries listed under its extensive coverage. It operates through three divisions, with Japan Post Holdings as its parent company.
Known for their superior supply chain management capabilities, IFC Global Logistics is the first choice for all businesses in Australia. They also provide customized solutions, which adds to their ability to serve emerging businesses.
UPS is another homegrown corporation that has served businesses for a hundred years now. It covers all supply chain management activities, with its warehousing facilities deemed as one of the biggest ones available. They serve more than 125 countries and have a powerful last-mile delivery infrastructure. UPS has its regional office in Auckland to support its 3PL operations.
FloShip provides a techno-savvy platform that helps businesses operate in Europe, China, the USA. Cross-border fulfillment is one of its core specialties while they also enable you to pool their client servicing team as a part of their value-added services portfolio.
FloShip’s 3PL services are known to be one of the quickest and manageable among its segment. Its headquarters are located in Hong Kong and it is quite popular in New Zealand due to their export-oriented capabilities and fine customer support.
DHL is a German firm founded in the US, and it is one of the most recognizable names in the industry. DHL operates more than 490 warehouses and extends its comprehensive 3PL services in over 220 countries around the globe. They have a powerful technical infrastructure that provides seamless supply chain visibility.
Cardinal Logistics is a company based out in New Zealand that specializes in FMCG and grocery products. They also provide their services for heavy machinery, which makes them an ideal fit for tech SMBs in Christchurch to big corporations in Auckland.