What is 3PL Inventory Management and Fulfillment?
3PL fulfillment center stands for third-party logistics fulfillment center. The 3PL center is a warehouse and distribution facility operated by a third-party logistics provider (3PL) on behalf of another company. Third-party logistics can streamline and systematize your ecommerce business, making it easier to grow. By outsourcing your inventory and order fulfillment process to a third-party professional, you can access advanced tools to monitor, stock, and predict inventory to meet your customers’ needs. 3PL fulfillment centers handle all of the order fulfillment processes for your ecommerce business, including receiving inventory, picking and packing orders, shipping orders, and managing returns.
3PL fulfillment centers can pick inventory for your business, box and pack orders, and ship them. 3PL is often called “pick pack ship” services to sum up the process. If you have a growing custom products ecommerce business, you need pick pack ship services when you can’t manage things out of your garage any longer. If your operation is growing faster than your available space and staff, it’s time to hire a superior third-party logistics company to help manage your inventory, shipping, and logistics.
Examples of 3PL
3PL Case Study #1: Allbirds
3PL fulfillment centers have helped many companies grow from lean start-ups to common household names. For instance, Allbirds, a sustainable footwear and apparel company, was experiencing rapid growth. The company’s order volume increased by over 50% year-over-year, and they were quickly outgrowing their in-house fulfillment capabilities. Allbirds partnered with a 3PL fulfillment center, ChannelApe, to handle their order fulfillment needs. ChannelApe’s network of warehouses across the U.S. allowed Allbirds to ship orders quickly and efficiently to customers all over the country. Since partnering with ChannelApe, Allbirds reduced their fulfillment costs and shipping times while improving customer satisfaction scores.
3PL Case Study #2: BAKblade
BAKblade is a men’s body shaver company that experienced rapid growth after partnering with ShipBob, a 3PL fulfillment provider. BAKblade was able to leverage ShipBob’s network of fulfillment centers to offer faster shipping times and reach a wider audience of customers.
BAKblade’s fast growth began when the company created a viral video with over 35 million views, spurring orders of 20,000 to 30,000 units.
“We were not set up to fulfill thousands of orders or prepared to manage the complexities of shipping,” says BAKblade founder and CEO Matt Dryfhout. “It just made a lot more sense for us to put our trust in somebody we knew that was number one in their game and would continue to get better and better.”
BAKblade hired ShipBob to manage order fulfillment. ShipBob’s cutting-edge technology and features like live inventory management, 2-day shipping, custom shipping packaging, and excellent customer service have helped BAKblade continue to grow rapidly. As a result, BAKblade’s sales increased by 291% in three years.
Benefits of 3PL - Pick Pack Ship Services
If you’re not sure if you need a 3PL partner for your business, consider the benefits. Outsourcing your fulfillment process to a third-party logistics provider can help your custom products business expand by offering the latest technology and best practices for order fulfillment, inventory, and shipping. Also, pick pack ship services free you from detailed logistics work so you can focus on expanding your business and revenue.
Using a third-party logistics service offers many benefits for custom product ecommerce businesses, including:
Reduced Costs. 3PL companies often have access to economies of scale, allowing them to negotiate better rates with carriers and provide more cost-effective shipping solutions than in-house fulfillment. They can also optimize warehouse space and inventory management, minimizing storage costs.
Scalability and Flexibility. Third-party logistic services can scale their operations to accommodate fluctuating order volumes and seasonal demand, ensuring timely order fulfillment without costly infrastructure investments. This flexibility is crucial for growing ecommerce businesses.
Expertise and Efficiency. 3PLs possess specialized logistics, warehousing, and order fulfillment expertise, ensuring efficient and accurate order processing. They can handle complex tasks like customs clearance, international shipping, and product customization, streamlining the entire fulfillment process. Their ability to personalize products is especially helpful for custom products businesses.
Technology and Innovation. 3PLs often adopt cutting-edge technology solutions, such as warehouse management systems and transportation management systems, to optimize inventory management, route planning, and order tracking. This enhances visibility and control over the entire supply chain.
Geographic Reach. Third-party logistics services often have a network of warehouses and distribution centers strategically located across the country or globally, enabling faster delivery times and reduced shipping costs. This is particularly beneficial for ecommerce businesses targeting a broad customer base.
Focus on Core Business. Outsourcing fulfillment to a 3PL allows your ecommerce business to focus resources and expertise on core activities like product development, marketing, and customer service. This can lead to improved customer satisfaction and overall business growth.
Risk Mitigation. 3PLs assume responsibility for various logistical risks, such as product damage, shipping delays, and inventory discrepancies. This can help ecommerce businesses avoid potential liabilities and maintain a positive brand reputation.
Compliance and Regulatory Expertise. Third-party logistic companies stay up-to-date on complex shipping regulations, customs procedures, and tax laws, ensuring that ecommerce businesses comply with all applicable requirements. This can help avoid penalties and delays in cross-border shipments.
Global Expansion Support. 3PLs can help your company expand internationally by providing expertise in customs clearance, international shipping, and local regulations in different countries. This can help your business reach new markets and grow your global brand presence.
Sustainability Initiatives. Many 3PLs are implementing sustainable practices, such as using eco-friendly packaging materials, optimizing routes to reduce fuel consumption, and implementing waste reduction programs. This can align with the environmental goals of ecommerce businesses and improve customer satisfaction.
How to Choose a 3PL for Your Ecommerce Business
Choosing the right third-party logistics provider is crucial for ecommerce businesses to streamline fulfillment operations, reduce costs, and boost customer satisfaction. Here’s a comprehensive guide to selecting the best 3PL partner for your company:
1. Assess Your Needs and Requirements.
Understand your current fulfillment volume, order processing time, and growth projections. Identify any specific challenges or pain points in your existing fulfillment process. Determine your budget for outsourcing fulfillment services.
2. Define Your Expectations and Objectives.
Establish clear goals for using a 3PL service, such as reducing fulfillment costs, improving order accuracy, speeding up shipping times, or expanding your company’s geographic reach. Outline specific performance metrics you want to track, such as order fulfillment rates, shipping times, and customer satisfaction scores.
3. Research and Shortlist Potential 3PL Providers.
Check out our list of the best 3PL services based on location below. You can also use online directories, industry publications, and business networks to identify reputable 3PL providers. Also, you can look up potential 3PL partners on the Better Business Bureau website to check out ratings and reviews.
Consider the experience and expertise of each 3PL in handling your specific product type, industry, and market. Evaluate the geographic footprint of each 3PL to ensure it aligns with your distribution needs.
4. Research and Vet the Company.
Do your homework and thoroughly research and question your potential 3PL partner. Request detailed proposals from your shortlisted 3PLs, including pricing structures, service offerings, and customer references. Interview key personnel at each 3PL, including account managers, operations staff, and technology experts.
To better understand operations, visit the 3PL’s facilities to assess their infrastructure, security measures, and inventory management practices.
5. Evaluate the 3PL’s Technology and Integration Capabilities.
Assess a 3PL’s ability to integrate with your existing ecommerce platform, shopping cart software, and warehouse management system. Evaluate the 3PL’s technology infrastructure, including real-time inventory tracking, order management, and transportation management systems. Ensure the 3PL offers robust data security measures and compliance with relevant industry regulations.
6. Negotiate and Finalize the Agreement.
Carefully review the proposed service agreement, including pricing terms, performance guarantees, and liability provisions. Negotiate terms that align with your needs, budget, and expectations. Establish clear communication protocols, escalation procedures, and regular performance reviews.
7. Onboard and Transition to the New 3PL.
Develop an onboarding plan with your 3PL partner, including training for your team and data migration procedures. Establish clear communication channels and designate a point person to manage the transition process. Work with your new 3PL provider to ensure seamless integration and smooth operations.
Selecting the right 3PL is a strategic decision that can significantly impact your custom ecommerce business’s efficiency, growth, and customer satisfaction. Thoroughly evaluate your needs, research potential partners, and negotiate a mutually beneficial agreement for a successful relationship with your 3PL provider.
Best 3PL Companies Around the World
If you’re looking for the best 3PL fulfillment centers in the world, here is a comprehensive list of the top 3PL companies in major cities in the U.S., Canada, Europe, and Australia:
New York City: C.H. Robinson, Expeditors, Kuehne + Nagel
Los Angeles: XPO Logistics, Penske Logistics, Ryder Logistics
Chicago: UPS Supply Chain Solutions, J.B. Hunt Transport Services, DB Schenker
Houston: CJ Logistics, APL Logistics, Nippon Express
Phoenix: DHL Supply Chain, GEODIS, SEKO Logistics
Philadelphia: Hub Group, CH Robinson, Kenco Logistics
San Antonio: Coyote Logistics, Schneider Logistics, BNSF Logistics
San Diego: Penske Logistics, Ryder Logistics, XPO Logistics
San Jose: DHL Supply Chain, GEODIS, C.H. Robinson
Dallas: C.H. Robinson, J.B. Hunt Transport Services, XPO Logistics
Toronto: SCI Logistics, DSV Global Transport and Logistics, InXpress
Montréal: Groupe Morneau, Logistique CN, GENCO
Vancouver: Canadian Alliance Terminals, CDS Group of Companies, Agility Logistics
Calgary: Livingston International, Agility Logistics, DB Schenker
Edmonton: Purolator Logistics, DSV Global Transport and Logistics, InXpress
Winnipeg: SCI Logistics, Livingston International, Agility Logistics
Istanbul: DHL Supply Chain, GEODIS, DSV
Moscow: DHL Supply Chain, Kuehne + Nagel, DB Schenker
London: DHL Supply Chain, Kuehne + Nagel, C.H. Robinson
Paris: GEODIS, Kuehne + Nagel, DHL Supply Chain
Berlin: DHL Supply Chain, DB Schenker, GEODIS
Amsterdam: DHL Supply Chain, Kuehne + Nagel, DSV
Barcelona: DHL Supply Chain, GEODIS, DSV
Milan: DHL Supply Chain, Kuehne + Nagel, C.H. Robinson
Brussels: DHL Supply Chain, DB Schenker, GEODIS
Vienna: DHL Supply Chain, Kuehne + Nagel, DB Schenker
Warsaw: DHL Supply Chain, Kuehne + Nagel, C.H. Robinson
Stockholm: GEODIS, DHL Supply Chain, DB Schenker
Copenhagen: DHL Supply Chain, Kuehne + Nagel, C.H. Robinson
Helsinki: DHL Supply Chain, GEODIS, DSV
Prague: DHL Supply Chain, Kuehne + Nagel, C.H. Robinson
Budapest: GEODIS, DHL Supply Chain, DB Schenker
Sydney: Toll Group, DB Schenker, Linfox
Melbourne: Linfox, Toll Group, DHL Supply Chain
Brisbane: Toll Group, Linfox, DB Schenker
Perth: Linfox, Toll Group, K&S Freight
Adelaide: Toll Group, Linfox, DHL Supply Chain
Gold Coast: Toll Group, Linfox, SITA Australia
Partnering with a 3PL Company for Business Success
Third-party logistics services offer a range of benefits, including reduced costs, scalability and flexibility, expertise and efficiency, technology and innovation, better geographic reach, risk mitigation, compliance and regulatory knowledge, global expansion support, and sustainability initiatives. By leveraging the expertise and resources of a 3PL, your custom ecommerce business can streamline operations, improve customer satisfaction, and achieve exponential growth.