Building a sustainable retail business requires comprehensive supply chain management. However, it has become increasingly challenging for small to medium-sized companies to create and operate a streamlined supply chain, particularly in the post-pandemic business environment.
SMBs often don’t have access to ample enterprise-level resources that can help them scale up their operations. That’s where Third-Party Logistics or 3PL Warehousing can provide your business with the much-needed opportunity to develop and reinforce an efficient supply chain.
One area where a third party logistics provider can give you significant support is in storing your goods once they arrive at their destination city until these goods are shipped to the end customer. Maintaining and operating warehouses is an expensive endeavor that many small businesses aren’t immediately prepared for – this is where a 3PL steps in.
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What is 3PL?
Third-party logistics or 3PL providers specialize in getting physical goods and products to the consumer.
A third-party logistics provider is frequently used by companies to delegate their freight and fulfillment operations as it enables them to offload the responsibility and avoid investing substantial manpower and financial resources.
Scaling businesses with limited resources and labor can be challenging – in particular securing storage when increasing quantities of inventory. By leveraging the services of 3PLs, small and medium-sized enterprises (SMEs) can access the resources to expand product offerings or business footprint.
What is 3PL Warehousing?
When your business does not have the resources to buy or rent storage space, 3PL warehousing can be an effective solution. It enables you to store large volumes of inventory that can be easily delivered throughout your distribution network.
3PL warehousing means that a major part of your supply chain management and logistical operations get taken care of for you.
3PL warehouses are external to your business so you save on the initial resources, maintenance, and operation of the facilities. Since 3PLs stock, store, and deliver the inventories of numerous businesses, you can benefit from larger scale supply chain management resources.
Logistics warehouses can also take on key supply chain tasks so that clients may concentrate on building their companies. Some additional services may include:
- Overlooking the process of planning and deploying the warehouse’s receipt of inventory
- Gathering, organizing, and recording every item in the warehouse
- Keeping an adequate stock of goods and maintaining records
- Getting a better deal on freight
- Handling the process of product selection, packaging, and shipment
3PL Warehousing Services and Benefits
For small to medium-sized businesses, it is essential to determine if they need 3PL warehousing services. Some of the common reasons include the following:
- When you are looking to scale up business operations quickly
- When you don’t want to deal with the issues of supply chain management
- When the cost of acquiring or renting a warehouse is too high
- When you want to expand your distribution network across multiple regions
3PL warehousing doesn’t only solve a multitude of challenges for your business but also offers a wide range of benefits.
- Precision-Oriented Inventory Management
It is a reality that most small businesses that are just starting do not have the capacity to handle logistical operations in-house. That’s why employing a 3PL that focuses on providing these services makes sense. Plus, modern 3PL services can also automate regular processes and deliver total transparency for informed decision-making.
- Ensuring Regulatory Compliance
Across the merchandise and business distribution chain, certain items may be at risk if the site or product isn’t designed to comply with laws and regulations. Some 3PLs offer special services to help small businesses navigate these challenges, for instance, storing and shipping regulated products such as hazmat items, nutraceuticals, spirits, and drugs.
- Convenient Scalability
If your business doesn’t have the production capacity to fill the volume of orders you are receiving, you may lose important business. A 3PL provider can ensure that you have enough storage space to scale and expand your business operations.
- Specialized Expertise
Third-party warehouse service provides a broad range of skills that can only be achieved through years of business experience and the necessary relationships. 3PL services can be combined into one package providing you with a convenient solution. Apart from that, you can also benefit from efficient sorting and packaging, delivery and returns logistics solutions, and other services.
Top 3PL Warehousing Companies
Although there are several 3PL companies out there, some of the leading service providers in the industry include:
- FBA – With 295 warehouses strategically located worldwide, FBA can serve most companies’ distinct supply management needs.
- ShipBob – Although this 3PL service provider operates within US and Canada, you can get robust inventory management with its 30 warehouses.
- FedEx – One of the most recognized names in the logistics industry, FedEx offers its services globally with the help of hundreds of warehouses.
How to Find the Best 3PL for Your Business
As a business owner, you know that not all services all created equal. That’s why it is crucial to understand your goals, needs, and expectations to find the right fit.
Some key features you may look for in your 3PL partner include inventory management, returns management, one or 2-day shipping, distributed inventory, B2B and D2C fulfilment, custom notes, kitting and customization, or custom labels, depending on what your business needs are.
To find a reliable 3PL, check out the online reviews from other small business owners.
3PL Warehouse Pricing & Other FAQs
How much is a 3PL warehouse?
You can go with the monthly flat rate, which can range between $70 and $300, depending on your warehousing needs. Or you can also choose a per-hour rate which may cost $30-$70 an hour.
Is Freightos.com a 3PL?
No. Freightos.com is an online platform for comparing, booking and managing international freight.
How many 3PL warehouses are there?
In the United States alone, there are over 14,000 third-party warehouse businesses.
To learn more about 3PL check out our other guides including (3PL) Third Party Logistics Providers, How Does 3PL Work, and Third-Party Fulfillment.