Third party logistics companies act as intermediaries between business owners and consumers. Whether your business is a brick and motor or online, you may need 3PL’s for fulfilments. For the website based businesses, 3PL’s are needed to fulfil the following roles.
Picking of goods from warehouses
A 3PL saves on time and money. As a small business owner, you are spared of expenses that might be incurred on a personal basis while fulfilling orders. Furthermore, 3PL’s provide a competitive delivery option that perfectly fit into the budgets of most online businesses.
Common e-commerce websites like Amazon and eBay have allied 3PL’s to perform the above-mentioned roles. For instance, Amazon has Fulfillment by Amazon (FBA) to carry out picking, packing and shipping of its products.
How do 3PL’s work?
Once you set up your e-commerce website, you will need to outsource some services to support the operations of your business. Assuming you operate internationally, you will have to make shipments all over the world. In addition, you also need to store inventory by keeping track of the flow of goods to and from your warehouses.
The nature of online businesses makes it quite difficult to manage customers effectively. While there are online ERP systems that can do this work, 3PL’s are most preferred in this kind of environment. 3PL’s are tasked with ensuring that both the business and customers are satisfied. They collect a return on behalf of businesses.
How to Choose a 3PL Company
Most renowned online businesses already have notable 3PL companies to manage their shipments and inventory. However, as an upcoming seller, you need to identify which 3PL company will best serve your needs, while the services of 3 PL’s may be generalized, individual 3PL’s provide different packages to suit businesses’ needs. Here are some factors to consider.
Prices- this is mostly based on the size of your products and how valuable they are. Depending on the value of your products, you should consider contracting a 3PL that will charge proportionally to the value of products.
Warehousing- Do you need warehousing services? Again this will determine if you have to pay for costs like picking and inventory management.
Returns- Some 3PL’s provide services that include management of returns. As an upcoming business, this should be an excellent place to start managing your cash inflows.
Customer care support- Customers are always bound to raise inquiries concerning some aspects of the products they are buying. Some 3PL’s perform the role of responding to queries. Depending on your business structure, you should consider if you need a 3PL to do this.
A 3PL is an important part of any online business. It sometimes acts as the intermediary between that business, the e-commerce platform and the customer. The above mentioned factors will determine if you need a 3PL to play the intermediary role.