3PL Guide
E-commerce, which is one of the rising trends of the past few years and an important business line today, has been established to fulfillment of the consumer needs. E-commerce develops mostly through processes that start from the production stage and include the meeting of the products with the consumer.
Especially if you are a small-scale E-commerce entrepreneur/ bussines, doing all your work in hause will reduce your efficiency considerably. While warehousing, packaging and logistics may seem easy on their own, all these responsibilities can become quite a burden together. If a business cannot respond to this intensity within itself, problems will begin to occur in the supply chain- fulfillment. At this point, as a very popular method preferred by many e-commerce platforms, we come across with support from third party logistics companies, namely 3PL.
If you want to have detailed information about what 3PL supports are, please continue reading this article.
Table of Contents
What is 3PL?
In the shortest term, 3PL can be explained as a company outsourcing activities such as storage, transportation and logistics to another company. Of course, warehousing, transportation and logistics activities must be outside the company’s core business.
Third-party logistics services, which emerged at the end of the 1970s, have become a growing business with the rise of e-commerce.
With the globalization of trade and the increase in competition, it has become more and more important to respond quickly to the demands of consumers. Third-party logistics supports provide services to e-commerce companies right here. They provide services to companies in need of storage, packaging and transportation of their products.
In many cases, 3PL has become integrated into the storage and shipping procedures of companies. Although not all 3PL services offer a storage area, if the company that uses the service needs a storage area, this need will be met by the company providing the 3PL service. In companies that receive 3PL support, all processes regarding storage, packaging and shipping services are managed and provided by 3PL. In this way, companies that benefit from the service can focus on research and development and growth instead of these areas. By allowing time and energy to be channeled to the right place, 3PL will increase the efficiency of the company and accelerate growth.
What Are The Services Provided by 3PL?
Although 3PL services can be reshaped according to the needs of the customer, there are certain services offered by 3PL. Throughout all these services, the process is carried out in a transparent and observable manner by the customer himself/herself. Before reaching an agreement, you can specifically list your expectations and get a 3PL service specific to your needs.
In the continuation of the article, a general framework of 3PL services is presented and these services are briefly explained.
Warehousing
If we explain in order of need, the first service 3PL offers is the storage service. As we said before in the article, although not all 3PL service providers have their own storage space, storage will be provided if there is customer demand. It is possible to benefit from 3PL services for the storage of your products.
Inventory Management
Inventory management is also one of the 3PL supports. For this, it would be right to make an agreement with a 3PL provider with a strong IT system. Inventory management is not only storage, but also the service of managing the stored products until their distribution.
Distribution
3PL also provides the distribution of orders received by your company. By managing warehouses in several different locations, they can ensure that orders are delivered to different regions in the fastest way. This is related to the advanced IT network and the orders will be directed directly to the nearest warehouse, and the fulfillment of order will be provided quickly.
Picking and Packing
Another of the 3PL services involves completing orders. In this context, the picking and packing of the ordered products is provided by the officers of the company from which you receive the 3PL service.
Freight Shipment
The initiation of the cargo process in order to deliver the products to the buyer in domestic and foreign trade is provided by 3PL.
Expedited Shipping
When you work with 3PL providers, they will provide you with the most affordable delivery option for the fastest delivery of the order.
Shipping Tracing/Tracking
3PL will also track the orders sent to your customer. Providing shipment tracking/ tracing numbers to customers and tracking/ tracing the shipment in order to complete their orders are part of 3PL services.
Returns
This process, which we encounter in many articles as Reverse Logistics, refers to the return of orders delivered to the customer. 3PL offers support not only for the delivery of orders, but also for returns. Returning the products that returned by the buyer to the warehouse as required is among the 3PL services.
When you decide to make a bussines deal with a 3PL provider, it is possible to customize all these services according to your needs. You can specify the content you request before the agreement.
3PL and Order Fulfillment
Throughout the article, we mentioned that 3PL providers manage the order fulfillment on your behalf and increase the efficiency of your business. Well, if you ask what stages the 3PL order completion processes go through, you can find the answer to this question in the continuation of the article.
Receiving The Products
In order to provide 3PL services properly, products must first be taken to 3PL warehouses. In order to complete the orders from these warehouses, the products are distributed according to the incoming orders. Inventory control and management of the products kept in the warehouses are provided by 3PL.
Picking
After the buyer orders the product, this order is automatically forwarded to the 3PL party. At this stage, the product in the warehouse is taken by the 3PL officer and made ready for packaging.
Packing
As all ordered products are collected, the products are packed by 3PL officers. This stage is the last stage before the transfer. It is possible to choose your own packaging material for packaging. Standard packaging materials are boxes, wrapping paper, tape etc.
Shipping
After the order is packed, it is sent to the buyer. Some 3PL providers do the shipping themselves, while most collaborate with other professional shipping companies to do this.
Returns
Some orders will be returned by the buyer as they do not meet their request. 3PL also provides control of the return process. This includes receiving the returned product and sending it to the correct warehouse. In addition, the re-introduction of the product to the inventory as required is carried out by the 3PL employees.
Why Do You Need 3PL?
In the previous part of the article, we talked about all the services that 3PL provides. 3PL is a service that can be a life saver especially for E-commerce companies. The benefits of 3PL to your business are given below in a shorter and clearer way:
• Saves time
• Reduces risks
• Being a service that makes use of new technologies allows you to stay up to date.
• Reduces your burden and responsibility
• Allows you to develop in different areas
We can extend the list further. 3PL services help you take responsibility and focus on what matters most and give you the opportunity to grow your business. At the same time, leaving issues such as storage, order and transfer to professionals will reduce the risks and increase the quality of your customer relations.
Which Types of Businesses Should Work with 3PL Services
Of course, being an e-commerce company does not mean that you have to work directly with a 3PL services. Working with a 3PL provider will undoubtedly make your job easier, but not every business needs 3PL services to the same extent. In this section of our article, you can find tips on which types of businesses should work with especially 3PL services.
– If you ship more than 100 orders per month
100 orders per month is a pretty big workforce. If your e-commerce company also receives more than 100 orders per month, it will be beneficial to work with a 3PL provider. As your orders increase, the time and energy you will spend to meet customer requests and needs will also increase. In addition, as the number of products ordered increases, you will need more storage space. Therefore, working with a 3PL provider would be very beneficial.
– If you want to reduce your storage expenses
Of course, working with 3PL service providers is not free. On the other hand, if you work with a 3PL service, you will both reduce your storage costs and save time.
– If you promised a fast delivery to your customers
If you, as a company, promise fast delivery to your customers, 3PL services can be your savior in this regard. Since the storage, packaging and shipping you are trying to do as In hause will take much more time due to other existing responsibilities, the execution of these works by a 3PL provider will speed up your shipments. Working with 3PL providers can be a good solution to increase customer satisfaction in the short term and loyalty in the long term.
What is 4PL?
Although 4PL services are not as common as 3PL services, they are becoming more and more demanded. 4PL providers work on providing a flawless chain between customer and supplier.
What is the Difference Between 3PL and 4PL?
Third and fourth party logistics support providers will definitely help you make your job easier and will save you time, money, space and labor compared to in-house logistics activities.
We mentioned the services of third-party logistics providers above, these providers will provide you with services in many areas, including the selection and packaging of storage products, the shipping process and the processing of returned products. Third-party logistics services will provide you with all the support you need to fulfill consumer needs. So what exactly is the difference from fourth party logistics services?
By adding one more element to the process, fourth-party logistics providers work on the control and execution of processes such as storage, packaging and shipping. In other words, they also carry out logistics processes. While working with your 3PL provider, you can also agree with another 4PL provider to top up these processes.
The key difference between the two services is that 3PL providers work on the storage and shipping of products, while 4PL providers are all about improving your business’ supply chain.
Pricing of 3PL Services
You can find enough information about 3PL services in other parts of our content. The pricing of 3PL services will of course vary according to the company you work with and the services you request. However, you can find some factors that affect pricing in this section.
– Interviews
Some firms may apply pricing to their deal processes.
– Inventory Purchase
Before working with 3PL services, they need to get the products you have from your warehouses or manufacturers. This transaction is included in the pricing.
– Inventory Storage
According to different types of warehouses, the storage of products is priced differently.
– Picking and Packing
Getting your orders from warehouses and getting them ready for packaging requires labor and is one of the most important stages of the process.
– Packaging
The materials used in packaging are reflected in the pricing.
– Kitting
Any extras you request before shipping are included under this.
– Shipping
Many 3PL providers are contracted with transport companies and often do not do the transport themselves. The process here is also included in the pricing.
Summary
We have provided information about 3PL providers throughout the article. Taking advantage of the right 3PL services in line with your needs will be a right step for the growth of your brand. For this, make sure that you have contacted enough services and agree the best fit for your business’s needs.