As most things moved online including commerce too, there has been much talk about brick-and-mortar businesses losing out. It was even opined that everything eventually will move online. However, one important thing that this position refused to recognize is fulfillment. What does this mean? Sure it is possible to order for a wristwatch online, instead of buying one from a retail shop, but the fact is the wristwatch will still have to reach you physically. Therefore, the issues of inventory, warehousing, packing, shipping, plus tracking will need to be addressed.
So what exactly is third-party logistics?
Third-party logistics otherwise known as 3PL or even TPL refers to a business firm that provides outsourced logistics services to its clients for whole or part of their supply chain management functions. 3PL providers usually specialize in warehousing, integrated operation and transportation services, which can be scaled as well as customized to meet the needs of customers based on market conditions as well as the demands and delivery service requirements for their materials and products.
Why your business might require a 3PL
If you run a retail shop, you may not need to engage the services of a third-party logistics provider, but this isn’t the case with running an ecommerce business. This is because people access your business from different locations and so you will need to spread your reach much wider. And, as an ecommerce business, you are the one who is responsible for making sure that customers get what they asked for, in the right condition and at the right time. This is why engaging the services of a third-party logistics provider is simply spot on.
The services of a 3PL provider
A full third-party service provider will provide the following services, which involves all logistics requirements. This includes:
- Supply chain management
This one is at the very heart of any successful ecommerce business. Therefore, if your incoming freight delivery requirements are addressed, then the third-party logistics provider doing this has taken over something important.
Operating a warehouse as an ecommerce business is not cost-efficient. A third-party logistics provider will usually take care of this. It will invest in the technology plus space required to efficiently do so since it will be able to spread overheads over several clients.
- Consolidation service
It is often the case that ecommerce merchants send a lot of small items to the same place. This at the end of the day is expensive; a better option will be to engage the services of a consolidation service. Such business will consolidate all these little items into a shipment. This service, which is equally known as cargo consolidation or freight consolidation is also provided by 3PLs.
- Order fulfillment
Not being able to fulfill your orders as they come can make you lose business to the competition. It is in the light of this reality that enlisting the services of third-party logistics provider is important. Remember to fulfill such orders; they need to be timely, according to specification and in good condition.
Why you should choose third-party logistics
- Efficiency and specialization
Allowing 3PLs to handle your logistics is a wise decision since this is an area they specialize in so they will do a better job. Also, this will free you to do concentrate on doing yours, and much in a better way.
- Flexibility and scalability
Not every business will start big. This is true as well for ecommerce businesses. Starting small is not a sin and it will involve outsourcing your logistics to a 3PL. After which you can scale up at the right time.
Outsourcing to a third-party logistics provider will ensure that you get the latest and the best when it comes to equipment, hardware and software in the logistics field. The third-party logistics provider will be able to do this because this is its core business.