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Third Party Logistics Providers: Companies, Distribution, Fulfillment & More

Learn how to integrate third party fulfillment into your supply chain. Brandon Rollins from Fulfillrite walks us through 3PLs for e-commerce.

Jude Abraham

What is 3PL Fulfillment?

E-commerce delivery can seem like a paradox. 

It’s complicated, but must look simple. It’s a long process, but must look quick. A lot of companies are involved, but it has to feel like one person is steering with all the parts moving in perfect unison.

Intimidating, right? But it doesn’t need to be.

A good 3PL order fulfillment company can take a lot of the work off your hands. With experts taking care of the grunt work, you don’t have to worry about e-commerce shipping best practices; you only have to worry about building your brand and growing your business.

But how does this work? And where exactly does 3PL order fulfillment fit into the supply chain? 

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Supply Chain Overview

If you want to provide customers with the smoothest possible e-commerce shipping experience, then you need to first understand the supply chain

The supply chain is how goods go from raw materials to finished products in the hands of your customers. It’s a long journey!

Supply chains have 10 distinct parts:

  1. Planning for demand – determining how many items to make in the first place!
  2. Information flow – making sure all parties in the supply chain have the information they need to act in a timely manner.
  3. Materials management – the procurement of raw materials.
  4. Inventory management – the ability to have the right stock at the right places in the right levels at the right time.
  5. Manufacturing and production – turning raw materials into finished products.
  6. Transportation – sending products from the manufacturer to a fulfillment warehouse.
  7. Warehousing and distribution – storing products until they need to be shipped.
  8. Order fulfillment – sending products to customers once they are ordered.
  9. Returns management – retrieving products from customers if the products are damaged or unwanted.
  10. Customer experience – making sure that everything listed above feels seamless.

The Role of Third Party Logistics in the Supply Chain

As you can imagine, because the supply chain involves so many different moving parts, a lot of companies get involved. They all take on different responsibilities and must work together well enough to keep goods moving seamlessly.

When this works well, end customers have no clue how complicated it is to get their purchased items delivered to them!

That’s why it helps to know where certain companies fit into the supply chain. 

For example, is a freight marketplace, meaning they help you procure transportation for goods by land, air, or sea. 

Put another way, helps find companies to handle step 6 (which is a big one).

(3PL) Third Party Management & Fulfillment

Third-party logistics companies (also called 3PLs or order fulfillment companies), help you with steps 7 through 10. 

That is to say, 3PLs receive inventory, store until it’s ready to be shipped and ship them out as needed. Those are steps 7 and 8. If something goes wrong and the customer needs to make a return, most 3PLs will handle that too (step 9).

Step 10 customer experience. While this is present at every step, 3PLs have noticeable influence. A lot of buyers’ feelings about a company are based on shipping speed and whether items arrive intact. 

A good 3PL can increase the odds that your items arrive quickly and unbroken in the hands of your customers.

3pl fulfillment

How To Choose A 3PL Provider

Of course, if you want to run an efficient operation, you can’t just drop your products off at any old 3PL and hope for the best. You need to be aware of some order fulfillment best practices so you can find the right companies to help you make magic happen for your customers.

5 Order Fulfillment Best Practices

Keep these best practices in mind to help you choose the right 3PL for your fulfillment needs:.

  1. Outsource before you’re desperate.

If your company is rapidly growing, don’t wait until you’re drowning in orders to outsource fulfillment. In some cases, it takes just 50 orders per month to break even on the expenses associated with outsourcing fulfillment. 

  1. Consider offering same-day order fulfillment.

This isn’t possible for all companies, but if you’re in a position to pull this off, you should consider doing so.

Customers expect fast shipping these days, with many of them expecting same-day order fulfillment available as an option (with an upcharge). COVID-19 did not change that either.

It’s essentially impossible to offer same-day order fulfillment without a network of warehouses working in unison. You want to have this set up before you need it.

  1. Offer expedited shipping options.

Even if you can’t offer same-day shipping, at least try to offer next-day shipping options (with an upcharge). You can do this by allowing customers to pay extra for faster shipping, and your 3PL can take care of that by printing priority postage instead of standard postage for applicable customers.

  1. Warehouse in different countries.

If you have a lot of orders in foreign countries, consider finding a warehouse within the borders of those countries. That way, you can ship faster and without the associated customs charges.

  1. Make returns easy.

Returns for online purchases are extremely common. Shopify estimates that 20-30% of online purchases are returned. Therefore, if you want a chance at retaining the customer, offer easy return options. Allow them to print return postage and have items picked up free of charge.

Final Thoughts

Letting someone else take care of a big chunk of the steps in the supply chain for you will free you up to run your business. Finding the right order fulfillment partner can go a long way in doing this. Meanwhile, your customers will benefit from an overall better experience. Everyone wins! 

Don’t want to fulfill your own orders? Consider sending the unglamorous work of fulfillment to a trusted partner! Request a quote from Fulfillrite today.

Brandon Rollins is a Marketing Consultant at Fulfillrite.  His main areas of expertise are online marketing and supply chain management. He also runs Pangea Marketing Agency and writes for Marketing is the Product.

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