eCommerce, a vibrant global market, has undergone radical transformations in the past few years. And these changes are fueled by innovative technologies, changing consumer habits, and the increasing popularity of platforms such as Shopify, eBay, and Walmart. One significant transformation within eCommerce businesses is the rise of 3PL companies—third-party logistics providers—that significantly reduce costs and facilitate operations for both small vendors and large manufacturers.

What is eCommerce?

eCommerce, or electronic commerce, refers to the buying and selling of goods or services using the internet. The realm of eCommerce companies encompasses a wide range of businesses of all sizes. From online marketplaces like eBay to platform-based stores on Shopify, and direct sellers on Walmart.

What is 3PL?

Third-party logistics (3PL) companies are service providers that manage and execute logistics operations for eCommerce businesses. They provide a host of services, such as order fulfillment, warehousing, packaging, and shipping. These 3PL companies play a significant role in eCommerce fulfillment, ensuring products move smoothly from manufacturers to consumers, across regions and countries, and even continents.

How Does a 3PL Reduce Costs?

By outsourcing logistics to 3PL providers, eCommerce businesses can save significantly on operational costs. Instead of investing in warehouse space, employees, and order processing systems, companies can rely on the expertise and infrastructure of 3PLs. This solution helps businesses mitigate the risks of over or under-stocking, eliminates the need for large upfront investments, and reduces shipping costs by leveraging the provider’s negotiated shipping rates.

Will 3PL Work for any Size Business?

Absolutely! From small eCommerce merchants operating on Shopify to large-scale brands selling globally, 3PL services can be tailored to fit businesses of any size. Even for markets such as the United Kingdom, the United States, Canada, or any European country, these service providers can scale their services to meet the dynamic needs of clients. They offer a global fulfillment network that can adapt to business growth and market demands, making them a perfect logistics solution for businesses in different industries.

Delving Deeper into 3PL Services

What Exactly Do 3PLs Do for Online Businesses?

3PL companies offer comprehensive logistics solutions for eCommerce businesses. This ranges from managing warehouse locations, order fulfillment including pick, pack, and shipping orders, to handling returns and reverse logistics. Some even offer additional services such as order management systems, packaging designs, and customized delivery options.

Elements of Logistics with 3PL Providers

The major services provided by 3PL companies encompass warehousing, order fulfillment, delivery, and reverse logistics. They handle the entire fulfillment process, from the moment an order is placed on your eCommerce site to the point it reaches your customers, anywhere in the world.

How Do 3PL and 4PL Companies Differ?

While both 3PL and 4PL play crucial roles in logistics, they differ in the scope of their services. 3PL providers typically specialize in specific areas of logistics such as warehousing, transportation, or order fulfillment. While 4PL, or fourth-party logistics providers, serve as a single interface between the client and multiple logistics service providers, handling the entire supply chain process.

What Can You Expect from a 3PL Partner?

With a 3PL partner like ShipHero, you can expect a dedicated team that works with you to tailor logistics solutions to your business needs. They will handle your logistics operations, enabling you to focus on core aspects of your business like improving your products or growing your customer base. They provide a reliable, scalable, and cost-effective solution that enables your eCommerce business to thrive in any market.

The Top 10 Best 3PL Companies for eCommerce

1. ShipHero: A robust 3PL provider, ShipHero specializes in eCommerce and provides services such as inventory management, batch order processing, returns handling, and shipping management. Their warehouses are strategically located across North America to ensure quick and efficient order fulfillment.
2. Red Stag Fulfillment: Known for its exceptional accuracy and fast shipping, Red Stag Fulfillment offers a range of services including order fulfillment, kitting, and customized packaging. They guarantee same-day fulfillment, which makes them a favorite among eCommerce businesses.
3. ShipBob: ShipBob provides end-to-end 3PL services to eCommerce businesses. Their strengths lie in advanced data analytics for inventory tracking, distributed fulfillment, and same-day shipping in certain locations.
4. Whiplash: Whiplash offers scalable 3PL solutions that are perfect for smaller eCommerce businesses. They offer real-time inventory visibility, efficient order processing, and a global logistics network.
5. Fulfillment by Amazon (FBA): FBA handles storage, packaging, and shipping on behalf of eCommerce businesses selling on Amazon. They also handle returns and customer service for these orders.
6. eFulfillment Service: This company offers flexible and scalable 3PL solutions for both B2C and B2B operations. They don’t enforce long-term storage contracts, making them a good option for small businesses.
7. ShipNetwork: ShipNetwork offers a variety of services, including order fulfillment, freight brokerage, and delivery. They also have a network of warehouses across the US, making for efficient domestic shipping.
8. FedEx Fulfillment: While a larger corporation, FedEx Fulfillment caters to businesses of all sizes, providing integrated inventory management, warehousing, fulfillment, and reverse logistics services.
9. WBX Commerce: WBX handles everything from product listing and pricing, to order fulfillment, customer service, and data analytics. They are especially popular among businesses that sell on multiple platforms.
10. Fulfillrite: Fulfillrite offers order fulfillment services, including pick and pack, shipping, and return handling. They have a user-friendly platform and provide excellent customer service, making them a favorite among smaller eCommerce businesses.

Want to chat about potentially outsourcing your fulfillment? Let’s chat! 

The Role of 3PL in eCommerce Platforms and Giants

3PL companies play a vital role in eCommerce, offering comprehensive logistics solutions that include inventory management, order fulfillment, warehousing, and transportation. Giants in the eCommerce space like Amazon, Shopify, and Walmart have recognized the benefits of 3PL, integrating them into their operations and services and many use 3PL services today to benefit their customers. 

Is Amazon a 3PL Company?

While Amazon is primarily known as an eCommerce platform, it also operates as a 3PL through its Fulfillment by Amazon (FBA) service. FBA handles storage, fulfillment, and customer service for products sold on Amazon, providing eCommerce sellers with a way to scale their businesses without the need for their own warehousing or logistics management.

Can you Use 3PL with Shopify?

Yes, Shopify integrates well with many 3PL companies, allowing merchants to outsource their logistics operations. Shopify’s infrastructure supports integration with various 3PL providers, enabling real-time inventory levels management, order processing, and shipping, which enhances the customer experience.

What is the difference Between FBA and 3PL?

Fulfillment by Amazon (FBA) is a specific type of 3PL service where Amazon handles storage, fulfillment, and customer service for products sold on its platform. However, a 3PL company provides similar services to a wider range of eCommerce businesses and typically works with multiple platforms, not just Amazon. This flexibility often makes 3PL providers a preferred choice for businesses looking for a more platform-agnostic solution.

Evaluating and Choosing a 3PL Company

Choosing a 3PL partner is a critical decision for an eCommerce business. It requires a careful evaluation of various aspects, such as cost, service levels, and integration capabilities, among others.

How to Choose a 3PL Company

When choosing a 3PL company, consider the following:

• Identify your specific needs in terms of order volume, warehouse space, shipping destinations, and specific services like prep, kitting, and returns handling.
• Assess the range of services offered by the 3PL company and ensure they align with your business requirements.
• Ensure the 3PL company has robust software and reporting capabilities and can integrate seamlessly with your eCommerce platforms.
• Consider all the fees involved in the service and how they align with your budget.

For a more in depth strategy, check out this blog post on picking a 3PL that is right for you! 

What to Look for in a 3PL Company

• Expertise in handling your specific product types and sizes
• Scalability to meet increasing order volumes
• Availability of warehouse locations in your target markets
• Level of customer support
• Technological capabilities, such as inventory management software
• Integrations with eCommerce platforms

Is Your Current 3PL Set-Up Good Enough?

Assess your current 3PL setup by examining your customer satisfaction levels, order fulfillment speed, and shipping costs. Also, evaluate if your current 3PL can scale with your growth and can handle international shipping if you plan to expand. If you are less than satisfied with the results, it may be time to look around! If you’d like to chat with an expert, we can help. 

Do You Need One or Many 3PL Service Providers?

The decision to use one or multiple 3PL service providers depends on your business’s specific needs. If you sell on multiple platforms or in multiple countries, working with multiple 3PLs might be advantageous. Conversely, for a small eCommerce business selling on one platform, one 3PL allows you to condense your contacts and get your order needs fulfilled in one place. 

Understanding Different Types of 3PL Companies and Services Provided

Third-party logistics providers vary in terms of the types of services they offer and the specific industries they serve. Understanding these differences is crucial for selecting the right 3PL partner.

Types of Third-Party Logistics Provider (3PL) Companies

Broadly, 3PL companies can be categorized as:

• Standard 3PL providers: Offer basic services like transportation and warehousing.
• Service developers: Offer a more comprehensive set of services, often supported by robust IT capabilities.
• Customer adapters: Take over a company’s entire logistics operation and adapt it to meet specific needs.
• Customer developers: Fully integrate with a company to take over and optimize their complete supply chain.

Types of Services Provided by 3PL Companies

Common services offered by 3PL companies include:

• Warehousing and distribution
• Order fulfillment
• Transportation
• Inventory management
• Reverse logistics 

Looking Ahead: The Future of 3PL in eCommerce

The role of 3PL in eCommerce is set to become even more important as businesses increasingly recognize the benefits of outsourcing logistics to experts. 3PL companies enable eCommerce businesses to scale rapidly, handle international shipping, and focus on their core competencies. Which means using a 3PL is a competitive advantage many companies can’t afford to pass up. 

Why 3PL is Important for the Future of eCommerce

3PL providers play a key role in the growth of eCommerce by enabling businesses to scale their operations and reach new markets more efficiently. As eCommerce continues to grow, 3PL providers will evolve, offering more advanced logistics solutions and technologies.

Outsourcing eCommerce Logistics to a 3PL Partner

Outsourcing logistics to a 3PL partner can help eCommerce companies streamline their supply chain management, free up resources, and focus on their core business. It also helps in managing increasing order volumes, expanding internationally, and improving customer satisfaction.

How 3PL Supports Scaling and International Expansion of eCommerce Companies

By handling complex logistics tasks, 3PL companies allow eCommerce businesses to focus on their growth. They offer scalable solutions that can easily adapt to increasing order volumes, inventory levels, and shipping demands. Moreover, their global presence and knowledge of international logistics make them a valuable partner for businesses looking to expand overseas.

The Role of 3PL in the Rise of Cross-Border eCommerce

With their global warehouse networks and expertise in international shipping regulations, 3PL companies play a crucial role in supporting cross-border eCommerce. They handle logistics complexities, such as customs, taxes, and international shipping, enabling businesses to sell to customers around the world.

Key Takeaways

Selecting your 3PL partner is not just about who they are now, but who they will be in the future. Are they ready to stick with you through thick and thin, through sales highs and low inventory times? Will they be there when your eCommerce business is but a fledgling store selling handmade crafts, and still stick around when it’s grown into a mammoth enterprise that sells across continents? In the world of eCommerce, choosing the right 3PL partner isn’t just a business decision. It’s a commitment to a future of shared growth, mutual support, and success. It’s a lot like finding the peanut butter to your jelly, the cheese to your macaroni, or the Batman to your Robin—it makes everything better!

Frequently Asked Questions

What are the Four Types of 3PL?

The four main types of 3PL companies are standard 3PL providers, service developers, customer adapters, and customer developers. Each type offers a different level of service and integration with the client’s business.

What is the Profit Margin for 3PL?

The profit margin for 3PL companies can vary greatly depending on a number of factors, such as the specific services they offer, their efficiency, and their pricing strategy. Generally, 3PL companies aim to offer cost-effective solutions that provide value to their clients while ensuring a sustainable profit margin for their own operations.