What does “Third Party Logistics” mean?
Third-party logistics ( often abbreviated as 3PL, or TPL) in logistics and supply chain management refers to an organization employing third-party businesses to outsource specific elements of its sourcing, distribution, warehousing, shipping, and fulfillment services.
These days many businesses also outsource their customer service to third-party service providers.
Companies often choose to go this route when they lack the in-house expertise or wherewithal to set up an operation of this scale by themselves. Using their existing budget to partner up with pros makes more sense.
Why 3PL and eCommerce are a good fit
The 3PL model is particularly applicable to eCommerce companies. Many have taken advantage of it to be able to expand far beyond their initial capabilities. Even small-scale “boutique” businesses gain the flexibility to tap into a global audience. It also works for brands and businesses hoping to be disruptive. With 3PL, they can capture a chunk of the audience’s mind-share in addition to a market share.
Benefits of using third party logistics or 3PL for your retail business
1. You can benefit from the economies of scale
Select a partner who has been around for a while, whose network has matured, and who already has a large roster of local or global clients. The cost benefits can be extremely useful to bootstrapped companies who would rather focus on acquiring new clientele.
Having a 3PL partner with an existing global network allows you to scale up rapidly out of your domestic area into international pastures. You can be agile enough to meet demand with a steady stream of supply without having to worry about the hows and wheres.
2. It saves you a ton of research, trial, and error
Imagine having to make a lot of calls, look at a lot of quotes, do a lot of calculations. Plus going over every aspect of the order fulfillment chain in detail to set up your own network of shippers. It is a lot of work, which someone has already done and excels at. You could skip reinventing the wheel by outsourcing to a 3PL service provider.
It is easy as a business to fall into the “do everything yourself” trap and spread yourself too thin. Outsourcing your order fulfillment to a reliable partner buys you precious time to devote to other aspects of your business that have more value addition over the immediate as well as long term
3. You could gain a competitive edge
You could find a 3PL partner who is sufficiently established to fill all the holes in your supply chain. They may even be able to offer specialized packing and shipping services or freebies to your end-users. For instance, express shipping, free shipping, same-day delivery all offer greater instances of customer delight. You could gain an edge over your competitors who cannot offer these perks.
Does your business have its fair share of exchanges and returns? Rather than try to squeeze reverse logistics into a forward logistics/ supply chain on your own, you can let your 3PL partner handle that aspect of your operations.
4. Tapping new markets? Third-party logistics can get your foot in the door
When you are expanding your business to new and unfamiliar geography, a local pal is just what you need. A good 3PL partner can help you establish a footprint in record time. They can bring years of experience to the mix and make it smoother for you to capture a market share.
5. You save on warehouse rent and overheads
Your 3PL partner should already have a slew of warehouses to serve all their clientele. They can handle your goods storage. Even better if their systems are fully automated, enabling bar-code generation, scannable barcodes, and other mechanisms for tracking stock. Think of all the money you save in overhead costs and by completely bypassing this huge infrastructure investment.
6. You can focus on your core competencies
If you are in a niche business area or just starting out, this can make a major difference. You are getting a feel for your customers’ preferences and your market. You may want to refine your product or service based on early data and feedback. Outsourcing your logistics allows you to focus on your core expertise and product development.
7. You reap heaps of customer satisfaction and brand loyalty
In the rapidly burgeoning and competitive eCommerce sector, customers have come to expect on-time delivery as the norm. With the right 3PL partner you can do one better by delivering before the projected date. Order fulfillment is the way to a customer’s heart and to keep them coming back.
How Primaseller can help enhance your third party logistics 3PL setup
Primaseller offers all the benefits of an excellent and intuitive omnichannel retail management software. Also, it now supports full integration with 3PL service providers.
You can track all shipments, sales, exchanges, and returns in real-time, even after they have been sent out to Fulfilled by Amazon (FBA) or any other 3PL Partner. You can auto-generate Purchase Orders or Transfer orders to your outsourced location for your best moving products and maintain a steady supply.
If interested, request a demo and we’ll be happy to walk you through all benefits of an integrated omnichannel retail platform.
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