The Telltale Sign You Need a 3PL for Order Fulfillment - ShipBob
Monday, July 5, 2021Eric Zegarski
Discover When It's The Right Time to Include a 3PL in Your Fulfillment Strategy
In the early stages of a new eCommerce venture, self-fulfillment or shipping orders yourself is pretty standard. It’s manageable, you keep costs down, and you have complete creative control over packaging.
But after a while you may begin questioning if you should outsource fulfillment or keep doing it yourself. After all, shipping orders isn’t why you started your business.
This article will help you make an informed decision if a 3PL for your eCommerce business’ order fulfillment is the right decision for your business.
What is Third-Party Logistics (3PL)?
Third-party logistics (or 3PL) refers to the outsourcing of eCommerce logistics processes to a third-party business, including inventory management, warehousing, and fulfillment. 3PL providers allow eCommerce merchants to accomplish more, with the tools and infrastructure to automate retail order fulfillment.
If you’re considering working with a 3PL company or are new to outsourcing shipping, what goes on in a 3PL fulfillment center may seem like a black box.
But the 3PL fulfillment process doesn’t have to — and shouldn’t — be a mystery! Here’s what happens inside a 3PL’s warehouse:
- Receiving & storing: Storing and managing your inventory in the 3PL’s facilities (not just an on-demand warehousing platform that just matches you with warehouses that have excess space).
- Picking: Following a pick list and retrieving the item(s) from their spot in the 3PL’s warehouse as soon as an order is placed on your website.
- Packing: Packaging all items in the order using the appropriate box or poly mailer and packing materials, then adding the shipping label to the package.
- Shipping: Scheduling shipping carriers to pick up packages from the 3PL’s facility to be sent to your customers along with electronic order tracking information.
- Returns processing: Facilitating the returns process and getting your unused merchandise back into your available inventory.
How do you Know When You’re Ready for a 3PL?
It boils down to one major factor: your order volume has increased, and you can’t keep up.
It’s at the point when you’re asking friends and family members to help you pack boxes just to meet demand. We’re talking hundreds of shipments a month.
This is a problem because you’re swamped by low-dollar activities that don’t generate revenue, and it’s holding you back from achieving growth. And as you continue to grow, you will spend more time on order fulfillment and less time running your business.
Partnering with a 3PL company helps your business save time and money, freeing up resources to focus instead on product development, marketing, and business growth.
To make the decision easier, here is a checklist to help you decide if you’re ready to partner with a 3PL.
- I spend several hours a week packing boxes and shipping orders.
- I don’t want to fulfill orders myself.
- I’m running out of space to store my inventory.
- I need more time for strategic projects like marketing and product development.
- I don’t want to invest in distribution infrastructure (e.g., warehouses, forklifts, labor, etc.)
If you checked off any of the above statements, then partnering with a 3PL could be worth the investment.
Choosing the Best 3PL Company
It’s important to find a fulfillment company that you trust to handle your inventory, provide a positive customer experience, maintain high customer satisfaction, and ultimately help you grow your business. If you feel that partnering with a third-party logistics company is the right decision for your business, there are three questions you should ask a potential partner:
1. How are you different from traditional 3PL partners?
When outsourcing order fulfillment, it’s important to look for a solution that goes beyond the traditional pick, pack, and ship model. This modern approach to fulfillment can help your business make more informed decisions about demand forecasting and give your customers a better overall experience.
2. How does your technology work?
One of the most important elements of choosing a fulfillment solution is finding technology that works not just for you, but with you. There are two main technological elements to look for:
- How the 3PL’s technology will connect to your online store(s)
- How the 3PL’s software helps you leverage data
These two elements make up what we call a tech-enabled 3PL. A tech-enabled 3PL is a technology company that has developed streamlined, integrated shipping and fulfillment solutions for eCommerce businesses.
In addition to traditional fulfillment services, such as warehousing, picking, packing, and shipping, the 3PL’s technology helps with everything from automation, order, and inventory management to tracking orders and managing ecommerce returns.
3. Where are your 3PL fulfillment centers located?
When it comes to considering a 3PL’s location, we aren’t just talking about where their headquarters or offices are. You also need to know how many fulfillment centers the 3PL operates, as well as where each one is located.
This information will help determine if you can offer the fastest delivery and most affordable 3PL shipping options to your customers. As mentioned above, the number and location of 3PL warehouses can help inform your shipping strategy, including distributed inventory and two-day shipping — not only for domestic fulfillment centers, but global locations as you grow.
Leave Order Fulfillment to the Pros
3PLs like ShipBob help thousands small to mid-sized eCommerce businesses spend less time on fulfillment and more time doing what they love. We’ve even automated the entire process, so you can set it and forget it. You simply connect your store and within minutes, your products and orders are synced. Then you send your inventory to our network of fulfillment centers and let us do the rest!
The above are just a few of the things to keep in mind when deciding if you need a 3PL for order fulfillment.
We know there are a ton of options and lots of information out there, and it can be hard to decide what next steps to take. That’s why we created a free guide, “How to Choose a 3PL for Your eCommerce Business,” to help you find the right partner for your business.
This guide covers:
- How to find a fulfillment company you can trust to help your eCommerce business grow
- The right questions to ask a potential 3PL to make sure you’re a mutual fit
- What technology and features to look for to achieve faster, more affordable eCommerce order fulfillment
- And much more…
Download the guide here, or visit shipbob.com/quote to talk with a fulfillment expert about your shipping needs.