What is a 3PL Company? Tips to Select the Best 3PL

Virginia Miller

October 25, 2024

In this article

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Fulfilling customer orders is a crucial element for any eCommerce business. With business growth, managing the logistics for fulfilling customer orders becomes difficult for the company's in-house staff. This is where 3PL services come into the picture. 3PL stands for 3rd Party Logistics. 3PL enables eCommerce companies to outsource their logistical operations to a third-party logistics company and become free to focus on other aspects of the business such as growth, customer support, marketing, etc.

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What Does a 3PL Company Do?

A third-party logistics (3PL) company handles shipping, warehousing, and fulfillment services for ecommerce businesses. This allows online sellers to focus on sales and marketing while the 3PL manages the logistics operations.

Key Services Provided by 3PLs

Typical services offered by 3PL providers include:

Warehousing - Storing inventory in 3PL-managed warehouses
Order Fulfillment - Picking, packing and shipping orders
Returns Processing - Inspecting, restocking and disposing of returned items
Inventory Management - Tracking stock levels and managing replenishment
Transportation - Arranging freight shipments via truck, rail or air

Benefits of Using a 3PL

Outsourcing fulfillment and shipping operations to a 3PL offers several key advantages:

Cost Savings - 3PLs can negotiate better rates with carriers
Flexibility - Inventory and staffing levels can scale up or down
Expertise - 3PLs specialize in logistics management
Global Reach - 3PLs have an established worldwide infrastructure

How to Select a 3PL Partner

Important criteria to evaluate when selecting a 3PL provider include:

Services Offered - Do they provide all the services you need?
Locations Served - Can they handle fulfillment domestically and globally?
Technical Capabilities - Does their software integrate with your ecommerce platform?
Track Record - Do they have proven experience in your industry?
Cost Structure - Is their pricing model competitive?
Customer Service - Are they responsive in resolving issues?

Taking the time to find the right 3PL partner pays dividends through more efficient, scalable fulfillment and shipping operations.

FAQs

What is a 3PL?

A third-party logistics (3PL) provider is a company that handles shipping, warehousing, fulfillment, and other logistics services for businesses selling products online or offline.

What services do 3PLs provide?

Typical services offered by 3PLs include: warehousing, order fulfillment, returns processing, inventory management, transportation, freight shipping, and more.

What are the benefits of using a 3PL?

Key benefits of using a 3PL partner include: cost savings, flexibility to scale up or down, specialized expertise in logistics, expanded global infrastructure and shipping reach.

How to choose the right 3PL for my business?

Important criteria when selecting a 3PL provider include: services offered, locations served, technical capabilities, industry experience, cost structure, and quality of customer service.

Can a 3PL handle global order fulfillment?

Yes, many 3PLs have an established worldwide infrastructure that allows them to handle global order fulfillment, including customs clearance, duties and taxes, and international shipping.

Do I need to have my own warehouse when using a 3PL?

No, one of the benefits of using a 3PL is they provide warehousing services so you do not have to lease your own warehouse space and manage inventory storage.

Can a 3PL integrate with my ecommerce platform?

Many 3PLs provide advanced technical integration between their order management system and major ecommerce platforms like Shopify, Magento and BigCommerce.