Complete Guide to Outsourcing to a Third-Party Logistics Company in 2022

What Exactly is a Third-Party Logistics Company?

A Third-Party Logistics company (also known as 3PL) is a business that aims to help you out with the fulfillment part of your eCommerce store. It does that by holding your inventory and fulfilling orders as they come in.

The most well-known ones out there are ShipBob and Fufillrite. There’s also a similar service made by Amazon called FBA. Those services give you many opportunities to improve your company, which we’ll cover in the next section.

4 Benefits of Outsourcing to 3PL

And now that you understand the definition, you might be asking yourself why you would outsource your inventory and fulfillment to a 3PL. Isn’t it cheaper to do it yourself? Well, that might be the case to a certain extent, but there’s much more it has to offer!

The benefits include:

• Save Time and Money: With the fulfillment part outsourced to a 3PL, you won’t need to worry about it, giving you time to work on marketing and creating new products. Also, you won’t have to pay a huge upfront cost for buying a massive warehouse.
• Offer Better Service: There’s so much you can do when you fulfill your products by yourself. With a 3PL, you can offer much better service. For example, you could get lower shipping rates while providing a 2-day delivery service.
• Scalability and Flexibility: Depending on the 3PL, you can reach new markets with your online store. You could have your products in various locations, giving you the ability to sell in new markets.
• Get a Network of Powerful Resources: 3PL companies are always looking for ways to improve the speed of their service and lower their overhead. So when partnering with them, you’ll gain access to these benefits without having to lift a finger.

3 Step-by-Step Guide to Outsourcing to Third-Party Logistics

Now that you understand what benefits you’ll get with a 3PL, you might be asking how you can start outsourcing so that you can reap the benefits as well! Well, fortunately, it’s not that hard if you follow our 3-step guide to outsourcing.

Step #1 - Identify Your Needs for a 3PL

Picking a fulfillment partner isn’t as easy as finding the cheapest partner and calling it a day. Instead, it requires a lot of thinking before making any decisions.

Many 3PL companies offer additional services, so it’s essential to choose the one that fulfills your needs. So for this, here are a few things to consider:

• Where would you like the warehouse(s) to be?
• How quick shipping would you like to offer?
• What is your budget?

Once you find out precisely what you need, it’s time for the next step.

Step #2 - Research Your Options

Now that you’ve identified your needs, it’s time to start searching for potential fulfillment partners. For this, I recommend you do searches with these keywords:

• “Fulfillment center [your location]”
• “3PL [your location]”
• “Third-Party Logistics Company [your location]”

This way, you can find the most suitable options for you.

Once you’ve hit the search button, I’d recommend adding every potential partner to a spreadsheet. After that, review each one carefully and prepare for the next step.

Step #3 - Pick the Best 3PL for Your Needs

And lastly, it’s time to pick the 3PL that fits your needs the best. To make it simpler, here’s how I’d tackle this decision:

1. Remove all 3PLs that don’t fit all your needs on the spreadsheet;
2. Ask the remaining third-party logistics companies for offers;
3. Pick the best one for the price.

And then, you’re done! Then all you have to do is follow their instructions so your inventory gets to their warehouse!

Conclusion

If you own an e-commerce store that receives hundreds of orders per month and is constantly running out of warehouse space, partnering with third-party logistics companies is extremely beneficial.

Not only will you save time and money, but you’ll also be able to give your customers better service with faster shipping and better return policies.

(Contributed by Andreas Ojala & Hermes Fang)