Warehousing and distribution is certainly a complicated business. Between countless automation solutions, battling space constraints, managing a large team, and completing physical labor jobs, plenty of businesses struggle to operate a safe and efficient warehouse. Luckily, there are businesses that specialize in warehousing and distribution and have a wealth of experience to offer. For good reason, more companies are turning to a 3PL for their warehousing needs. But what is a 3PL, and is a 3PL the right move for your business?
What is a 3PL?
What is a 3PL? A 3PL is a third-party logistics company. These companies specialize in warehousing, inventory management, and distribution. Considering how challenging it is to run a warehouse, more and more companies are choosing to offload that burden onto the expert. A third-party logistics company will receive your inventory, store it at their facility, and ship the order directly to your customer. A 3PL will charge a fee for doing so, which is ultimately how the 3PL makes money.
Why Do Companies Turn to a 3PL
There are plenty of reasons why a company may turn to a 3PL to handle this part of the operation. Some of the most common reasons include:
Reduce the Payroll Expense
If you have a 3PL managing your receiving, picking, and shipping aspect of your business, those employees will not live on your payroll. This can save your business a great deal of money!
H3: Space Constraints
Depending on what part of the country you’re in, finding a warehouse large enough to service your operation can be challenging. A 3PL assumes this burden and typically has large warehouses capable of handling your demand.
Keep Everyone Together
Instead of having a back-office facility, and a facility for your warehousing needs, you can offload the warehousing aspect of the business to a 3PL. Therefore, all of your employees can be under one roof.
Your Business Isn’t Logistics
Simply put, your business isn’t logistics. Perhaps you are in the clothing business, accessory business, furniture business, or book business. You need to focus on what you do best, and let the logistics experts at a 3PL handle what they do best.
The Mechanics of a 3PL
How does a 3PL work? Each third-party logistics company will have its own nuances, but on a high level, all third-party logistics company will support their customers in the following fashion.
The 3PL will receive all your inventory and stock it on their shelves. The product can ship directly from your suppliers to the 3PL warehouse, and you never need to touch another box again!
Pick, Pack, Ship
In addition to storing your product, the 3PL will run the pick, pack, ship aspect of the business. As you send the 3PL your customer’s orders, the 3PL will pick the inventory in its facility, pack it in the right-sized box, and ship it directly to your customer. They will do all of this while meeting SLA’s – or service level agreements.
Integrate Into Your Store
An established third-party logistics company will also integrate into your store. Whether you’re selling products on Shopify, WooCommerece, Amazon, Squarespace, Walmart, Instagram, or Esty, you’ll want to make sure the 3PL you’re working with integrates into your eCommerce software so you can have a seamless experience.
Things to Consider When Choosing a 3PL
Whenever you turn over distribution to a third-party logistics company, there are variables you need to be mindful of.
You’ll want to make sure the 3PL can service your core customer group within acceptable lead times. If the majority of your customers are in the southeast, it may not make the most sense to have a 3PL partner that ships from Portland Oregon. Shipping across the country takes longer and is more expensive.
You’ll also want to make sure the 3PL partner can service your business needs. Some third-party logistics companies specialize in servicing specific product types.
Offloading your distribution to a 3PL comes with fees, that’s understandable. But some 3PL companies can get sneaky with their fees. Ultimately, you want to make sure the 3PL fees do not completely erode your profit margins.
Is a 3PL Right For Your Business?
If you have warehousing and distribution needs, you may be wondering if a 3PL is the right move for the business. This is a large decision to make and should be made thoughtfully and carefully. Print Bind Ship has years of experience, and we’d be more than happy to help answer some of your questions or concerns. Our 3PL integrates well with hundreds of eCommerce software companies, and we pride ourselves on providing an outstanding experience for our customers!