If you own and operate an eCommerce business, ensuring that you have an effective logistic system is a key to long-term success. While you could purchase and maintain your product supply on-site and manage your own logistics, modern digital business requires that order fulfillment happens much faster than any on-site business can handle.
The meteoric rise of 3PL solutions has come as eCommerce opens the door to new business opportunities without the need for understanding shipping and logistics management.
If you are ready to maximize your business’s efficiency and optimize your fulfillment process, you may want to consider partnering with a 3PL. With 3PL, you can own and operate your entire business without the need to oversee a massive product warehouse and staff.
What is a 3PL, and how do they help your business scale and grow effectively? Read on to learn more about how 3PLs can help your company exceed your customer expectations fast.
What Is Third-Party Logistics (3PL)?
If you are ready to supercharge your eCommerce business logistics, you may find it beneficial to partner with an experienced third-party logistics (3PL) service. 3PL is the process of outsourcing the common eCommerce logistics that are required for the successful fulfillment of orders.
A 3PL company can help you manage your business logistics seamlessly, letting you focus on the aspects of your business growth and development that you are passionate about. A 3PL service will often cover a variety of service aspects:
- Product Sourcing
- Inventory Management
- Warehousing
- Order Fulfillment
An experienced 3PL provider is equipped to help eCommerce business owners build and scale their business with tools that increase automation for order fulfillment.
How Does 3PL Fulfillment Work?
When you decide to partner with a 3PL service for your eCommerce business, you are hiring an all-in-one system for your entire fulfillment process. From the initial order receiving to the final shipping of your products, you can trust that your 3PL is handling every aspect of the process with speed, efficiency, and professionalism.
However, what actually happens when a customer places an order? While the entire fulfillment process may seem mysterious, it’s actually fairly simple. The key is having your products ready and available through a 3PL warehouse and the ability to speed the products on to your customers as fast as possible.
To get a better understanding of how a 3PL handles fulfillment here is a breakdown of what happens the moment your customers push “BUY” on your eCommerce site:
Receiving Products & Warehousing
The bread-and-butter of a 3PL is its ability to quickly collect and ship your products to customers. However, a 3PL can’t send out orders if they don’t have stock on hand. The first part of any successful fulfillment system is the ability to “receive” inventory. This can pay off, as logistics warehouse tenants are expecting to see their rates go up by almost 10% beginning in 2021.
When you work with a 3PL, you will connect directly with the team that will be receiving products as you order them for storage. This may require the process of filling out a Warehouse Receiving Order (WRO) that allows the 3PL to know exactly what they should be expecting to store in a warehouse.
Once the 3PL has received your inventory, they will then store those products in warehouses – or “fulfillment centers.” Each item (SKU) will have its own storage location within the fulfillment center that allows for the fast identification and “picking” or inventory when orders are placed.
Not all 3PLs are made identical, and will often have different warehousing capacities. Make sure when you consider partnering with a 3PL that they have the system and space that you will require. If you plan to scale and grow your business, you will want to ensure that your 3PL has plenty of options for you to scale.
Picking The Products For Fulfillment
After your customer has selected and purchased their product, it’s time for the process to begin to “fulfill” their order. If you have ever purchased from a big-box online company, you may have wondered what happens once you click the payment button and your order is confirmed.
As the order is placed, a powerful and efficient workflow begins on the backend with your 3PL company. Depending on your 3PL and your own operations, you may either upload your orders to the 3PL system for management or automate the process through integrated software.
Most modern 3PLs have automation that connects directly with your online store to activate the fulfillment process once the order has been placed. These software systems allow the 3PL to receive the order, print shipping labels, manage inventory and stock, and much more.
As the order comes in, a member of the 3PL team at the corresponding warehouse will receive the notification and set off to “pick” the product for shipping. In most cases, a single team member will receive a list of items to be “picked” from a single area of the warehouse, and will quickly collect them and send them down the line to be packed for shipping.
Packing Orders
After picking the products in the warehouse, your 3PL will then prepare them for fast and safe shipping. The 3PL will have shipping materials on-site that they will choose from to package the product based on best practices.
Depending on the shipping style and product, your 3PL may package your products for fulfillment with the following materials:
- Unbranded boxes
- Bubble mailers
- Polybags
- Packing tape
- Dunnage
- Paper-based dunnage
A 3PL may charge their clients for the use of materials, depending on the type of products being sent to customers. However, many 3PLs will include shipping materials as part of their overall fulfillment management service. This is essential, as many eCommerce analysts report that failing to adapt packaging can cost companies nearly 20% or more of their total packaging costs.
When you are unsure of the exact type of shipping materials to use for your products, you can trust your experienced 3PL to handle the process for you. With experience working with a variety of eCommerce businesses, 3PLs know exactly the shipping material to pick for your products to ensure they arrive safely.
Another benefit of 3PLs is their ability to optimize your shipments in such a way that they are not forced into split shipments – saving you shipping time and money when customers purchase multiple products online.
Don’t Forget The Branding!
Many 3PLs also offer customization services that will allow your packaging to stand out with personalized branding. With branding playing a huge role in the customer experience, if you can increase their satisfaction with high-quality, branded materials you are more likely to earn a repeat customer!
When you select your 3PL for your eCommerce fulfillment, make sure that you ask if they offer branded materials for shipping.
Shipping Purchases With 3PLs
Once your customer has made a purchase and their order has been prepare, it’s time to finish the fulfillment process with shipping. Today’s consumer expects the time between purchase and delivery to be almost instantaneous – so having a 3PL at your side who can help you supercharge the process is essential.
In order to ship your customer’s orders, 3PLs automatically purchase and print shipping labels for you. Many 3PLs will have a preferred shipping carrier, while also offering to compare shipping costs across most of today’s top shipping companies.
By completing the research on their end, the 3PL will help you save time and money from having to hunt down the best shipping costs and supplies. This can also help you keep your prices down for your customers with a variety of potential shipping options.
When a carrier has been selected – such as DHL, USPS, or UPS – that company will collect the orders directly from the 3PL warehouse for delivery. At this point, the 3PL will have prepared the shipment with tracking capabilities that will allow your company and customer to track their order as it travels to their front door.
Having an experienced 3PL company on your side is more important than ever. Due to pandemic-related shopping behavior, parcel shipping has seen a 49% growth YoY since May 2019. This means that parcel shipping carriers are struggling to keep up with demand. A skilled 3PL team will vet all shipping options to find the option that provides the fastest delivery.
How 3PL Processes Returns
One growing service that many 3PLs offers is return processing. When an eCommerce customer returns an order, a 3PL makes the process fast and easy – which will help boost your customer satisfaction despite the return they are making. In a study by DC Velocity, 40% of eCommerce sellers interviewed said that they choose to partner with 3PL for their return management.
When you partner with a 3PL, the customer will return their purchased product directly back to the 3PL rather than to your store. As with other logistics, your 3PL team will automate the process of the return and choose whether to restock the product or dispose of it – depending on the policy that you have set up with the 3PL company.
One way to boost customer appreciation is to have your 3PL company include return shipping labels in each fulfillment. This will help you and your customers enjoy the convenience of fast and easy returns, complete with online tracking of the return order.
