If you’re new to e-commerce or exploring ways to streamline your order process, you’ve probably come across the term “3PL” and wondered what it actually means. Short for third-party logistics, 3PL providers handle key aspects of order fulfilment, from storage to packing and shipping. In this blog, we’ll break down some common 3PL terms and explain how 3PLs can help your business grow.
What Is 3PL?
Third-party logistics (3PL) is a service model where a business outsources parts or all of its logistics and order fulfilment processes to an external provider. For example, instead of storing products and packing orders yourself, a 3PL can take care of this, so you can focus on marketing, product development, or customer engagement.
Key 3PL Terms Explained
Let’s take a closer look at some common 3PL terms, simplified to give you a clearer understanding of how it all works.
1. Inventory Management
This is the process of tracking, organizing, and managing your products in a warehouse. A 3PL provider uses software to monitor your stock levels in real-time, alerting you when it’s time to restock. This helps prevent stockouts (running out of products) and overstocking, saving both space and money.
2. Warehousing
Warehousing is where your products are stored. 3PLs often have warehouses strategically located to get products closer to your customers. This cuts down on delivery times and shipping costs, which can be a big advantage if your customers are spread out across the country or internationally.
3. Order Fulfilment
Order fulfilment is the complete process of picking (retrieving the right products from inventory), packing (securing items for shipment), and shipping (sending them to the customer). When a customer places an order on your online store, a 3PL fulfils it, making sure it gets delivered accurately and on time.
4. Pick and Pack
Pick and pack is the step-by-step process of locating the item(s) in the warehouse (picking) and preparing them for shipment (packing). This is a central part of order fulfilment, as it ensures the right items are safely packaged and ready to ship.
5. Kitting and Assembly
Kitting is when multiple products are combined into a single package or kit. Assembly involves putting components together to form a finished product. For example, if you sell subscription boxes or bundle products, 3PLs can assemble and pack them as needed.
6. Returns Management (Reverse Logistics)
If a customer needs to return an item, 3PLs handle the process for you. Known as reverse logistics, this process involves receiving the returned item, inspecting it, and restocking it when possible. An efficient returns process is essential for customer satisfaction and can help improve brand loyalty.
7. E-commerce Integrations
3PL providers use software that integrates with e-commerce platforms (like Shopify, Amazon, and WooCommerce) and marketplaces. This means orders automatically sync to the 3PL’s system, making the entire process seamless from the time the customer places an order to when they receive their package.
8. Shipping Carrier Partnerships
Many 3PLs have partnerships with major shipping carriers (like Yodel, DPD, Royal Mail, etc.) to provide a range of delivery options at competitive rates. This gives you flexibility in choosing the best option for each order, balancing cost and delivery speed.
9. Scalability
Scalability refers to the 3PL’s ability to grow with your business. If you experience a seasonal rush or rapid growth, a 3PL can adjust resources to meet your demands, ensuring you never miss a sale due to limited logistics capacity.
10. Customer Support and Account Management
Most 3PLs offer dedicated support to assist you with logistics questions, tracking, and managing your account. Good customer support helps resolve any logistics challenges, making the 3PL partnership smooth and effective.
Why Use a 3PL for E-commerce?
For many e-commerce businesses, handling logistics in-house can become overwhelming as orders increase. Partnering with a 3PL simplifies this by outsourcing key parts of the process, helping you save time, reduce costs, and focus on growth. Plus, 3PLs have the infrastructure and expertise to handle logistics more efficiently, providing faster shipping, reduced overhead, and happier customers.
Ready to Consider 3PL?
Whether you’re just starting out or scaling up, a 3PL can be a valuable partner in helping your business evolve. By letting logistics experts handle the details, you can put more energy into building your brand and improving customer experience.
3PL might seem complex at first, but with the right partner, it can be a game-changer for your e-commerce business.
