Are you tired of struggling to keep up with the logistics of your eCommerce business? You’re not alone – in fact, according to a report by Armstrong & Associates, 90% of Fortune 500 companies utilize a third-party logistics partner. When using an eCommerce integration with a 3PL, you can streamline your operations, improve customer satisfaction and take your business to the next level. Let’s dive into how a 3PL can help you take control of your logistics and supercharge your eCommerce growth.
What Is a 3PL?
A 3PL (Third-Party Logistics) is a company that provides outsourced logistics services to businesses. Think of it like hiring a personal assistant to handle tasks for you. But instead of scheduling appointments or making travel arrangements, a 3PL handles tasks related to logistics, such as warehousing, transportation, and inventory management. By outsourcing these tasks to a 3PL, a business can focus on its core competencies and leave the logistics to the experts.
How Does a 3PL Work?
Imagine a small retail clothing business called “Fashion Avenue” that specializes in trendy and unique clothing. Her business is growing rapidly and the owner, Sarah, is finding it difficult to keep up with the demands of handling the logistics of her business so she outsources her needs to a 3PL company.
To get started, Sarah and the 3PL of her choice create a customized plan for Fashion Avenue, including warehouse space to store the clothing, transportation services to move the clothing from the warehouse to the store, and inventory management systems to keep track of the stock levels. Once the plan is in place, the 3PL company takes over the logistics for Fashion Avenue. They handle the receiving and storage of new clothing shipments from the manufacturers, making sure everything is properly cataloged and stored in the warehouse. When orders come in from the store, the 3PL company uses their transportation services to get the clothing to the store quickly and efficiently. They also use their inventory management system to keep track of stock levels, making sure that the store always has the right clothing in stock.
Sarah is now able to focus on what she does best, which is designing and sourcing new clothing while leaving the logistics to the 3PL company.
eCommerce Integration With 3PL
An eCommerce integration with a 3PL is a way for a business to connect its online store with the logistics services provided by the 3PL. This allows for a seamless flow of information between the two systems, making it easier for the business to manage its inventory and fulfill orders.
Examples of eCommerce integrations with a 3PL include:
- Automatically sending new customer orders from the online store to the 3PL for fulfillment
- Updating inventory levels in the online store in real-time, based on the inventory levels in the 3PL’s warehouse
- Automatically generating shipping labels and tracking information for customer orders, based on the shipping information provided by the 3PL
- Providing customers with real-time tracking information for their orders, using information from the 3PL’s transportation services
- Automatically sending customer returns to the 3PL for processing and inventory management.
Please note that the integration options and depth of integration can vary depending on the 3PL and the eCommerce platform. Some 3PLs may offer their own eCommerce integration while others may need to be integrated via API or other methods.
3PL Myths and Misconceptions
There are some common myths and misconceptions when it comes to using a 3PL provider. Here are a few you may have heard:
Myth: “It’s too expensive to use a 3PL.”
In reality, using a 3PL can actually save your business money in the long run. A 3PL has economies of scale and can often negotiate better rates for things like warehousing and transportation. And by outsourcing logistics to a 3PL, you’ll have more time and resources to focus on growing your business, which can ultimately lead to more revenue.
Myth: “A 3PL will take over my business.”
A 3PL is there to support your business, not take it over. The idea is to work together to create a logistics solution that works for you. You’ll still be in control of your inventory and customer relationships.
Myth: “I’ll lose control of my inventory.”
When working with a 3PL, you’ll have access to real-time inventory data, giving you more control and visibility over your inventory than ever before. Plus, 3PLs often have advanced inventory management systems in place, which can help you keep track of your inventory and reduce the risk of stockouts.
Myth: “A 3PL can only handle basic logistics tasks.”
3PLs have a wide range of capabilities, and many offer a variety of services beyond just storage and transportation. For example, many 3PLs can also handle things like order fulfillment, reverse logistics, and even eCommerce integration.
Why Do Companies Choose to Work With a 3PL Provider?
Companies choose to work with a 3PL provider despite the misconceptions surrounding the use of 3PL because it is often the most cost-effective solution for their needs. Not only can 3PLs negotiate better rates for warehousing and transportation, but they have also put in the money to develop a logistical infrastructure. While companies like Walmart might have the capacity to spend the cash required for such an infrastructure, many other companies do not. In addition to this, they are also logistics experts and can help you strategize the best approach for your business.
What Is a Reason for Using a 3PL Logistics Partner?
Let’s go back to Sarah who runs “Fashion Avenue”. Before using a logistics provider, her business was growing quickly, and she found herself spending more and more time on manual tasks. Despite her best efforts, she was struggling to keep up with the volume of orders and was frequently running out of stock. But her day-to-day changed when she decided to partner with a 3PL logistics provider. The 3PL provider was able to take over the handling of her inventory, packing, and shipping orders, and coordinating with carriers. This freed up Sarah’s time and resources, allowing her to focus on growing her business. Ultimately, picking a 3PL logistics provider saved Sarah both time and money. And it can do the same for your business as well.
Benefits of 3PL Logistics Partner
Let’s get down to brass tax, what exactly are the benefits anyways? I know Sarah’s story above is cute, but what does it all mean? Here are the 10 benefits you’ll receive when working with a logistics provider like ShipHero:
- Cost savings: Reduced costs associated with warehouse and logistics operations, such as rent, utilities, and labor expenses.
- Scalability: Scale logistics operations up or down to meet fluctuations in demand.
- Flexibility: 3PLs offer a wide range of services such as warehouse management, inventory control, transportation management, and other logistics services.
- Improved customer service: Faster shipping times, better tracking, and updated inventory information for your customers.
- Improved inventory management: Real-time data predicts and prevents stockouts, ensuring that you always have the right products in stock to meet customer demand.
- Risk management: 3PLs mitigate the risks associated with logistics operations such as transportation and storage, by taking on these responsibilities on your behalf.
- Access to a global network: This connectivity allows 3PLs to provide better shipping rates and faster delivery times for international orders.
- Compliance and regulatory expertise: Experienced in dealing with local, national, and international regulations and compliance that may be required for your business, which can help you avoid penalties and fines.
- Increased efficiency: Often resulting in faster order fulfillment processes, improved inventory management, and better customer service.
- Strategic partnerships: 3PL providers like ShipHero may have strategic partnerships with other companies in the logistics industry, such as shipping carriers, packaging providers, and freight forwarders, which can help you to access better rates and services.
What Is the Difference Between a 3PL Logistics Partner and a Broker?
A 3PL logistics partner is a comprehensive and integrated solution for your logistics needs, providing a wide range of services such as warehouse management, inventory control, transportation management, and other logistics services. They are a partner in your business and work closely with you to create a logistics strategy unique to your specific needs. On the other hand, a Broker is a middleman who connects shippers with carriers and other logistics providers. A broker is not responsible for the physical handling or storage of goods and typically provides less visibility and control over the logistics process.
What Industries Use 3PL Logistics Partners the Most?
3PL logistics partners are the go-to solution for many industries that require a full-service logistics provider. They rely on the expertise and resources this logistical partner has to offer. Industries such as e-commerce and retail, manufacturing and production, healthcare and pharmaceuticals, food and beverage, automotive, industrial and heavy machinery, fashion and apparel, and chemical and hazardous materials all extensively use 3PL logistics partners to manage their logistics operations.
How Do You Manage a 3PL Logistics Partner?
Managing a 3PL logistics partner effectively is crucial for a smooth and successful logistics operation. You should clearly communicate your logistics needs, goals, and expectations to the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Performance should be continuously monitored against the agreed-upon metrics and SLAs, and regular data and reports requested to help measure performance, identify trends and make informed decisions.
How Can I Monitor My Third-Party Logistics Partner Performance?
Monitoring the performance of third-party logistics providers is critical to ensure that your logistics operations run smoothly and meet your business needs. So how do you monitor your 3PL partner’s performance?
- Service level agreements (SLAs): For example, you might set an SLA that requires your 3PL partner to ship 95% of orders within 24 hours of receipt.
- Key Performance Indicators (KPIs): For example, you might set a KPI to track the number of stockouts, the accuracy of orders, or the on-time delivery rate of your 3PL partner.
- Data and reporting: You could request a report that shows the number of orders shipped, the number of orders with errors, or the average time it takes to ship an order.
- Audits and inspections: These will help you identify issues and ensure the 3PL is following your agreed-upon procedures and standards.
Key Takeaways
Your business and your customers deserve the best. They depend on you to get their orders shipped on time and in one piece. Moving to a third-party logistics company for these needs allows you to keep your promises to those who buy your products. With this partnership, your orders can get there faster, with fewer mistakes, at a lower cost than if you were trying to achieve the same on your own. Meaning a 3PL solution is your ticket to keeping up with the competition!
eCommerce Integration With 3PL FAQs
How Do You Integrate With 3PL?
Integrating with a 3PL logistics provider is a process that requires clear communication, collaboration, and planning. Start by reviewing your logistics needs, goals, and expectations with the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Have a plan which outlines the logistics processes and procedures and includes details such as inventory management, shipping, and returns. Finally, monitor the performance of the 3PL logistics partner against the agreed-upon metrics and SLAs, and look for opportunities for improvement.
What Is 3PL in eCommerce?
A 3PL will handle the warehousing, shipping, and fulfillment of orders for an eCommerce business. This can include tasks such as receiving and storing inventory, picking and packing orders, and arranging for shipping and delivery. Using a 3PL provider can also help eCommerce businesses focus on their core business, such as product development, marketing, and customer service, instead of worrying about logistics operations.
What Are eCommerce Integrations?
eCommerce integrations refer to the connections and links established between an eCommerce platform and other software systems or tools used to manage and run an online business. These integrations can help automate and streamline business processes. Here are a few examples of eCommerce integrations:
- Payment gateways: PayPal, Stripe, Square
- Shipping and logistics: FedEx, UPS, DHL
- Inventory management: ShipHero, TradeGecko, Stitch Labs, Brightpearl
- Marketing automation: Mailchimp, Klaviyo, Constant Contact
- Accounting and finance: QuickBooks, Xero, Zoho Books
- Customer relationship management (CRM): Salesforce, HubSpot, Pipedrive
- Dropshipping integrations: Oberlo, AliExpress, Spocket
