Retailers seeking to streamline logistics operations, such as warehousing, order fulfillment, inventory management, shipping, and returns processing, typically look for specialized providers, including third-party logistics (3PL) providers and e-commerce centers . A 3PL stores inventory in strategic warehouses across various locations to allow quicker and cost-effective deliveries to customers. Since the service manages the complexities of the supply chain, it allows retailers, both small and large, to focus on other aspects, such as growing their business.

Benefits of third-party logistics

1 . Reduces capital requirements
A benefit that e-commerce businesses have over traditional product-selling ventures is that the owners are not required to set up shop. That said, online selling businesses still need a warehouse for storing their products, packaging them, and managing shipping. This process calls for a substantial increase in investment, given that the business would need to lease or purchase warehouse space, hire staff, and invest in logistics infrastructure. Partnering with a third-party logistics service for order fulfillment, however, will eliminate the need for these upfront capital expenses.

2.  Al lows keeping the focus on growing the business
Apart from capital investment, warehousing also requires a significant amount of the business owners’ focus and effort. Hiring a team, managing order fulfillment, implementing safety measures, upgrading technology, and overseeing leases and contracts for the space – there are numerous factors that can easily consume a significant portion of a business owner’s time and attention. By managing these day-to-day logistics operations, a 3PL company enables owners to direct their focus on other tasks that require more reasoning and decision-making, such as devising marketing strategies and introducing new products. A 3PL fulfillment company can therefore be especially beneficial for small businesses that are still in their early stages of expansion.

3. Fi xed costs become variable costs
Having an in-house logistics staff and personal warehouses increases a business’s fixed costs. Even when it experiences a dip in sales or seasonal slowdowns, the business will still have to bear the same expenses for rent, staff salaries, and warehouse and machine maintenance. This can end up being a huge strain on finances, especially during periods when profits are low. With a 3PL fulfillment service, however, these fixed costs become variable costs. This means that the business is only charged based on the number of orders it processes. Having such flexibility can help businesses manage their finances more efficiently, since it aligns their expenses with actual demand.

4 . Ensures efficient and fast deliveries
A major advantage of partnering with a third-party logistics provider for an e-commerce business is getting access to their well-established and widely spread network of warehouses and fulfillment centers. The more established a 3PL firm is, the more options it will have nationwide. Naturally, this will work in favor of businesses partnering with the firm, as it will allow them to reach customers located quite far from them . In fact, with warehouses spread throughout the country, orders to even far locations can be fulfilled in as little as one to two business days. Some 3PL firms may even have warehouses and fulfillment centers in different countries, which allows businesses to cater to a global audience.

5. Easy access to emerging fulfillment technologies
To ensure quick delivery of goods and keep pace with growing customer demands, it is essential for businesses to invest in emerging fulfillment technologies. This can include robotic picking systems, RFID tracking systems, software tools for managing customer communications and order returns, conveyor systems, and more . Constantly adopting these new technologies, however, is not financially easy, especially for small businesses. This is yet another reason why it is better to partner with a 3PL fulfillment company. Since these companies primarily deal with product storage and delivery, they actively invest in these emerging technologies. Partnering with them will, ergo, allow businesses to use those technologies to their advantage without having to invest in them directly.

6. Co st saving
3PL firms offer cost-saving opportunities in multiple ways. Apart from taking away the need to invest in a warehousing facility, technologies , and staff , they also offer bulk shipping discounts. Since they handle shipments for multiple clients, they can negotiate better rates with carriers, which ultimately benefits the business owners as well.

Tips to choose a suitable 3PL

Assess the company’s capabilities and offerings
Before choosing a third-party logistics provider, it is important to evaluate their overall infrastructure and services. Start by checking how many warehouses the provider has across locations. Businesses will need to make sure that these locations align with their current shipping locations as well as with their future expansion goals. Small businesses may also wish to choose a 3PL fulfillment center near their business headquarters to simplify coordination and inventory management, at least in the early stages. Next, business owners will also need to check the type of technology being used to ensure that the firm will be able to process orders quickly and minimize shipping errors.

Ascertain their reputation
Choosing a reputable 3PL firm is of the utmost importance, since the provider will directly impact customer satisfaction through timely deliveries, accurate order fulfillment, and efficient handling of returns. So, before choosing a provider, it is essential to check their reviews from existing or previous clients. One can also check the amount of experience that the provider has in the industry. Some of the top 3PL e-commerce companies that one can consider for their business include FedEx, DHL, and C.H. Robinson.