Guide to Choosing the Right 3PL Provider for Your Business

eCommerce businesses will continue to grow in the coming years. By 2027, 23% of retail purchases could occur online.  As eCommerce businesses expand, the logistics department’s role becomes increasingly crucial. They must ensure smooth operations and customer satisfaction. 

As your business grows, your workforce needs a helping hand to manage all the orders you’ve been receiving. A third-party logistics (3PL) provider can support their logistics in handling hundreds and thousands of orders. Outsourcing can help break through to new channels and the global market. Selecting the best third-party logistics provider is essential to ensuring everything runs smoothly.

Numerous third-party logistics firms are competing with one another to offer their services. You must select the one that helps you achieve your company’s objectives.

A 3PL, or third-party logistics company, provides other businesses with outsourced logistics and supply chain operations support. These include offering services related to order processing, fulfillment, and warehousing.

In terms of eCommerce fulfillment, a 3PL can be in charge of some of the following tasks:

• Receiving, sorting, and storing your inventory after acquiring it from suppliers
• Picking and sorting customer orders
• Shipping goods to customers by collaborating with freight forwarders, carrier partners, or their transportation staff
• Monitoring delivery
• Reverse logistics, which includes overseeing the process of pickups and returns

As you move into new international markets, 3PL services can include additional logistical procedures, such as transporting freight and completing orders overseas. Many will also handle customs brokerage and trade compliance for you.

Today’s supply networks revolve around relationships and teamwork, which are critical to the success of end-to-end supply chains. Shippers and third-party logistics providers collaborate strategically to make better decisions, control costs, and boost agility. The 2024 Third-Party Logistics Study reports that 89% of shippers believe 3PLs have improved their delivery service. Eighty percent (80%) of businesses say 3PLs lower their total operating expenses.

Selecting a 3PL is not a simple choice. It’s an important decision to get right. Doing the proper research to ensure a provider is a good fit is essential. A 3PL relationship is a significant commitment that can take months to establish. But finding the right partnership will help your business save a lot of money, time, and hassles.

Five Advantages of Using a 3PL Provider

Third-party logistics services a wide variety of businesses and industries. 

These include retail businesses, pharmaceuticals, consumer eCommerce, wholesale and distribution. 

_{What is 3PL? A Complete Guide with Definitions, Examples, and More | Flowium}

Although many businesses can benefit from 3PL fulfillment, it’s not for everyone.

Understanding all the advantages businesses enjoy when using a 3PL and how they relate to you is essential. When assessing 3PL logistics services, remember that your need for their fulfillment procedures is on a case-by-case basis.

1. Helps Save on Logistics Costs

You can reduce expenses associated with operations and logistics by working with a 3PL provider. These suppliers have expertise in logistics operations and access to a vast network of warehouses and carriers.

eCommerce enterprises can save an average of 15-20% on logistics expenses by outsourcing to a 3PL provider. With them as partners,  you won’t need to make additional investments when managing logistics and warehouses. A 3PL also helps your company take advantage of economies of scale.

2. Saves You Time

Working with a 3PL supplier can help redirect time and resources toward growing your company.  The logistics provider can handle labor-intensive duties associated with order fulfillment, inventory management, and shipment.  This capability is critical since more customers expect their orders to arrive within 2–3 days. Additionally, they can shorten lead times and optimize the logistical process by utilizing their in-depth understanding.

3. Access to Logistics Expertise

Success in logistics requires you to have a specific set of skills. Working with a 3PL provider gives you access to professionals with years of industry expertise. They can handle logistical issues that come up and assist you in creating an effective and efficient supply chain.

4. Flexible and Scalable

The modern global market is prone to instability and unpredictable shifts. Outsourcing logistics to a 3PL provider provides flexibility to adapt to demand fluctuations. 3PL suppliers are prepared to manage volume variations, including assistance during peak seasons and unforeseen demand spikes. 

5. Focus on Your Core Business Functions

When your business works with a 3PL provider, professionals manage logistical tasks. It frees time, allowing you to concentrate on your core competencies

Outsourcing logistics can assist your company in maximizing performance and focusing on its core skills and areas of expertise. With a 3PL supplier,  your business can effectively deploy resources to areas that increase profitability.

What to Look for in a 3PL Provider

There are several 3PL businesses on the market, and they’re all diverse in the services, knowledge, and specializations they provide. There are some important attributes that a 3PL can have to help distinguish it from the competition. Reliability, handling times, inventory control, breadth of services, and carrier partnerships are vital. Consider small parcel prices, existing clientele, and specializations as well.

_{How to Choose the Right 3PL for your E-commerce Brand (hopstack.io)}

Companies should carefully assess the many facets of their business operations and ensure a 3PL can meet any unique requirements. eCommerce fulfillment, food-grade storage, and fulfillment center locations are in-demand requirements today. In an ideal world, a 3PL must be capable of meeting specific company needs but also have expertise in the same field.

Experience and Expertise

The experience and knowledge a 3PL provider has in the order fulfillment sector are among the most crucial factors to consider. Choose a supplier who has successfully managed logistical operations for businesses in your industry for years. 

They should be well aware of the unique requirements and difficulties you have. A 3PL provider must be able to offer solutions tailored to your demands and support you as your business expands.

Excellent Customer Service

Your chosen 3PL partner should be offered on-site customer care and various contact options. Customers should be able to speak with someone face-to-face, over the phone, or instant chat to resolve their issues quickly. 

In addition to providing shipping rates and expertly handling invoicing and order processing inquiries, your 3PL’s customer support staff should also be attentive listeners. These capabilities will give you more time to concentrate on crucial tasks like marketing, working with suppliers, and ensuring customer satisfaction.

Technology and Innovation

Technology is essential for increasing logistical operations’ transparency and efficiency in today’s digital era. You must consider a 3PL provider’s innovation and technology usage when choosing.

Choose a supplier that utilizes cutting-edge technologies to help you streamline your supply chain’s operations. Look for integrations with your shopping cart that are simple and free. A reliable 3PL should be able to offer systems that help you manage both your warehouses and transportation. Real-time tracking tools are a must-have to improve and automate business operations.

Effective communication tools can positively impact how you communicate with your suppliers and update your customers. It can update you on shipment status, whether they are coming in or going out.

Scalability and Flexibility

Your requirements for your 3PL partner will change as your company expands. Look for a supplier that can handle unforeseen changes to the supply chain, seasonal peaks, and demand variations. 

Additionally, they must be adaptable enough to your needs and offer specially designed solutions. A 3PL provider must meet any unique demands you could have, such as special packaging or cold-chain logistics.

But sometimes Murphy’s Law happens. Inevitably, something will go wrong. A trustworthy 3PL can think creatively to expedite a process or ensure that merchandise arrives on time, allowing you to satisfy your customers’ demands.

Reliability

Any eCommerce business that wants to run smoothly needs a reliable 3PL supplier. Your supply chain and, more significantly, your brand suffer when there is a lack of dependability. Evaluate the following key performance indicators for potential 3PL providers:

• Timelines for receiving inbound materials
• Order fulfillment
• Error ratios
• Inefficient processes that cost you time and money
• Action plan when deadlines are missed

The delivery schedules of the carriers are often beyond anyone’s control. However, you can help reduce customer attrition by giving your customers regular shipping updates and quickly communicating if issues arise.

Network and Infrastructure

A 3PL provider’s network and infrastructure are essential to guarantee that your items move smoothly through the supply chain.

Consider the location and capabilities of the 3PL provider’s warehouse. A direct connection to a transit hub near an airport means items can be shipped out much faster. A customs broker means transfers from the warehouse to the port are compliant and fast. 

A good 3PL provider will always provide updated and prompt reports and item tracking. Carriers will preferably have daily item pickups from the warehouse. Your inventory will be handled at every level if you work with a reliable 3PL supplier. They’ll help you maintain inventory levels, control stockouts, and avoid overstock scenarios.

Cost and Pricing

As with any negotiation with a business partner, cost is always a crucial factor to consider. Cheaper doesn’t always mean better.

Thoroughly assess prospective suppliers’ pricing structures to make sure they fit within your financial objectives and budget. Work with a supplier that provides clear pricing.

Find out if they have minimums for order processing or storage. When choosing your new 3PL provider, carefully weigh both options’ pros and cons. Take special note of shipping and storage expenses, including the pick-and-pack price.

With the best fit of a third-party logistics provider (3PL), you can eventually save costs by preventing expensive errors, delays, and inefficiencies. This might increase your profitability and provide you with a distinct market advantage.

Selecting the ideal 3PL provider is beneficial for any eCommerce business. The right logistics partner will help you develop, improve customer satisfaction, and manage your operations. Focusing on important factors like pricing, scalability, experience, and technology can help you make an informed decision that supports your company’s objectives.

ZhenHub gives your eCommerce business access to high-tech software solutions and a global network of fulfillment centers. Focus on scaling your business with our integrations specially designed for eCommerce. Sign up at our website to get access to our online dashboard. Contact our fulfillment experts for more details about 3PL provider integration.