3PL (Third-Party Logistics) Pros, Cons, Use Cases

For any eCommerce business owner, you know order fulfillment and logistics play a significant part in your overall success. Securely storing inventory, fulfilling online orders accurately, and providing fast and reliable shipping to your customers is what will keep you competitive in this market.

However, there comes a time when providing these services in-house actually hurts your business more than it helps. When that happens, it’s time to work with an experienced third-party logistics company (3PL).

What Are the Pros and Cons of Hiring Third-Party Logistics Firms?

For smaller online businesses with limited inventory and fewer than 100 orders per month, you’re most likely not in a position to hire a 3PL company yet. What third-party logistics firms do best is allow you to grow and scale your business when operations become too complex to handle in-house. If you’re not quite at that point in your eCommerce journey, it can actually be more expensive to hire an established 3PL than to do it yourself.

If the time is right, here are some pros and cons to consider when hiring a third-party logistics company.

Benefits of Hiring a 3PL Company

The biggest benefits of choosing to partner with a 3PL are the opportunities to save both time and money. You no longer have to invest in your own warehouse space, dedicate time to packing and shipping, or needing additional staff to handle your orders. Outsourcing your logistics to the experts gives you access to a network of resources you wouldn’t have on your own. You’ll be able to grow your business by leaning on the experience, expertise, and cost-saving connections of a 3PL.

Possible Challenges When Hiring a 3PL

Some eCommerce business owners find it hard to outsource their logistics needs because they don’t like the idea of giving up a level of control, especially those who have been doing it on their own for a long time. Working with a third party requires a lot of trust and confidence that they can get it done. However, when you find the right 3PL, it can provide the relief you need to focus on expanding your business and growing sales.

When Should I Work With a 3PL?

Some things to ask yourself if you’re considering hiring a 3PL provider include:

• Is my team overwhelmed by the number of orders we get?
• Are costs related to labor, packing materials, and equipment increasing?
• Have you noticed a sudden uptick in customer complaints?
• Are your inventory records inaccurate and you’re not sure how to get back on track?
• Are you running out of space to store your inventory?
• Are you hoping to expand to another region but don’t have the resources to handle it in-house?
  

If you’ve answered yes to any or all of these questions, you may benefit from hiring a 3PL firm. When your business has really grown, and you find it challenging to fulfill online orders effectively, a 3PL will help you streamline that process.

By outsourcing all your logistics needs to the experts, you will have more time to focus on other essential business tasks, including expansion of your product line, building a successful eCommerce team, creative brand marketing, and better business strategies.

RELATED: How Do I Get Better Logistics?

What Is the Difference Between 3PL & 4PL Service Providers?

If you’re familiar with the term “3PL,” you may have also heard of “4PL” service providers. So, what’s the difference? Should you switch fulfillment companies? Fourth-party logistics providers (4PL), also known as lead logistics providers (LLP), offer much of the same as you’ll find with a 3PL, with a few exceptions.

The main difference is that a 4PL may also offer a broader set of services related to the entire supply chain, which can be beneficial for larger companies with very complex operations. However, it does remove an element of control over the fulfillment process and its outcomes.

A 3PL is geared more towards providing eCommerce businesses with highly focused logistics services, including warehousing, order fulfillment, cost-effective shipping options, and return management.

RELATED: How Can a 3PL Help Resolve eCommerce Shipping Challenges?

Third-Party Logistics Company vs. Having Your Own Warehouse

Although having your own warehouse to store your inventory may sound like a good idea, you’ll quickly find out that there’s more to it than simply keeping items secure. The fulfillment process starts in the warehouse with picking, packing, and shipping. That involves several elements, including trained warehouse staff locating the items, keeping inventory numbers accurate, and having packing materials ready to go.

Again, it comes back to whether demand for your products is enough that hiring a 3PL is beneficial. Many eCommerce companies may offer a number of products consisting of several parts that must be shipped together. Also, the number of orders may be so high that they run the risk of shipping delays if they try to fulfill the orders themselves. In these cases, working with a third-party logistics firm is a better choice than managing your own warehouse.

What Are the Order Fulfillment Best Practices?

As mentioned before, one of the most significant advantages of working with an experienced 3PL provider is being able to lean on their logistics expertise. A successful 3PL always stays up to date with order fulfillment best practices to deliver fast and accurate shipments to your customers. Your third-party logistics partner should provide a streamlined process for:

• Receiving inventory
• Picking items from the warehouse
• Kitting services
• An optimally designed packing station
• Online subscription box fulfillment
• Freight services
• Quality control
• Affordable shipping
• Handling return orders
  

Outsourcing your logistics needs to a 3PL gives you access to the best order fulfillment process for your eCommerce business. Because a 3PL is focused only on logistics services, they have the experience and resources to fulfill orders the right way.

Finding the Best 3PL for Your eCommerce Business

If you’re ready to work with a third-party logistics provider that can help you take your eCommerce business to the next level, Rakuten Super Logistics (RSL) has everything you need to optimize your operations. When you trust the experts at RSL, we can work together to improve your order fulfillment process with better shipping options, inventory management, and integration with all leading eCommerce platforms.

We have several warehouses across the country to reach your customers wherever they are. You can also use our network of fulfillment centers to lower shipping expenses and speed up delivery times. To learn more, contact our logistics team today!