What is 3PL and how to choose a 3PL partner?

Are you an e-commerce merchant struggling to keep up with the logistics?

Worry not!

Partnering with a 3PL can prove to put an end to this struggle

But wait!

The real question arises: what does 3PL even mean?

Well, we have got you covered with this blog.

Here, we'll break down what a 3PL is, how they work their magic, and how to find the perfect partner for your business. We have got your back with this guide.

Let's make logistics less of a nightmare and more of a breeze.

Understanding 3PL: What it Means and Why it Matters

For most expanding companies, logistics and fulfillment can get out of control quickly. Managing warehousing, packing orders, and coordinating shipments takes time, money, and resources that could be better spent on expanding your brand.

This is where third-party logistics (3PL) providers step in.

A 3PL is a business that handles your logistics functions, from warehousing to order fulfillment and shipping, so you don't need to. Rather than deal with storage room or shipping lag times, a 3PL will see that your products reach customers promptly and efficiently.

As per studies, 90% of Fortune 500 companies are known to use third-party logistics services.

By collaborating with a reliable 3PL provider, your company can be able to grow quicker by lowering shipping expenses, and enhance customer satisfaction without having to manage inventory and fulfillment complexity on its own.

How Does a 3PL Partner Help Businesses Manage Logistics?

As your company grows, handling inventory, order packaging, and shipping coordination becomes too much. A third-party logistics (3PL) provider handles these duties so you can concentrate on selling, product innovation, and customer satisfaction rather than shipping.

Here's how 3PL providers can assist your business in handling logistics more effectively:

1. Warehousing and Inventory Storage
   One of the largest issues for expanding firms is sufficient storage space for inventory. 3PLs offer warehouse space to hold your products, making expensive storage expansions unnecessary. Most 3PLs operate multiple fulfillment centers, enabling companies to stock inventory nearer to customers for quicker shipping.
2. Order Fulfillment and Packing
   Whenever a customer orders, the 3PL picks, packs, and prepares for shipping. This has the advantage of processing orders efficiently and accurately, making fewer errors, and cutting down on shipping time. Most 3PLs also provide customized packaging and branding services, enabling companies to have a uniform customer experience.
3. Shipping and Delivery Optimization
   A 3PL negotiates bulk shipping prices with carriers such as FedEx, UPS, and DHL and enables businesses to save money on shipping. They provide quicker delivery alternatives, such as same-day or two-day shipping, which is essential to fulfill customers' expectations in the competitive era.
4. Returns and Reverse Logistics
   Return processing can often be a major source of distress for companies. A 3PL streamlines return processing through the handling of product inspection, restocking, and refunds and provides customers with a seamless, trouble-free experience for returns.
5. Real-Time Inventory Tracking and Management
   Several 3PLs align with inventory tracking tools such as Sumtracker and provide real-time updated stock quantities on all points of sale to ensure that products are not sold and subsequently oversold or available when needed, to avoid running out of them.

Key Benefits of Using a 3PL for Order Fulfillment

Partnering with a 3PL comes with a lot of pros. Here are some of the reasons why outsourcing fulfillment to a 3PL partner makes sense:

1. Faster Shipping and Improved Customer Experience
   Well, Who doesn’t like getting their orders delivered in the blink of an eye?
   3PL partners make it possible by having multiple warehouses opening in various locations, satisfying your customers.
   The research even proved this, which found that 86% of shippers accepted that their customer services improved after using a 3PL.
2. Scalability Without Logistics Headaches
   Your company can expand easily without much thinking about warehousing capacity or labor shortages. Your 3PL partner can manage seasonal fluctuation and global expansion, allowing easy order fulfillment during peak periods.
3. Smooth Integration with Inventory Management Systems
   Nowadays, Integration with inventory management systems is necessary to track how orders are fulfilled. 3PLs are integrated with inventory software such as Sumtracker to keep stock in real-time, avoid overselling, and automate multi-channel fulfillment, minimizing human errors.
4. Effective Return and Reverse Logistics Management
   A 3PL processes returns, inspections, and restocking for a smooth refund and exchange process. This improves customer trust and retention, as shoppers prefer brands that offer hassle-free returns and exchanges.
5. Warehousing and Shipping Cost Savings
   You can save money on warehousing and shipping by collaborating with a 3PL, as you don’t need to spend on activities like leasing a warehouse and packaging, so companies only have to pay for the storage and services they consume. In fact, 75% of shippers have admitted that 3PL has helped in cutting costs of various operations.

Signs Your Business Needs a 3PL Partner

How do you know when it’s time to bring in a 3PL partner?

If you’re facing any of these challenges, outsourcing fulfillment might be the right move:

You’re spending too much time on packing & shipping. Instead of focusing on growth, you’re stuck fulfilling orders.

Shipping costs are cutting into profits. A 3PL has better rates and shipping efficiencies.

Your storage space is maxed out. Expanding your warehouse is expensive—3PLs offer affordable storage solutions.

You’re struggling to keep up with demand. If orders are getting delayed or fulfillment mistakes are increasing, it’s time for a 3PL.

You want to offer faster shipping. According to a study, 61% of customers are willing to pay extra for same-day or two-day shipping, and a 3PL can facilitate that.

How to Choose the Right 3PL Partner for Your Business

Finding the right third-party logistics (3PL) partner can be a game-changer for your business. The key is to choose a 3PL that fits your specific business needs, not just the cheapest option. Here’s how to make the right decision.

1. Identify Your Fulfillment Needs

Every business has different fulfillment challenges. Before looking for a 3PL, ask yourself: What problem am I trying to solve?

For example, if you run a Shopify store selling skincare products, your biggest challenge might be slow shipping times and high carrier fees. Or, if you’re a growing fashion brand, you might need a 3PL that offers custom packaging and international shipping options.

2. Select a 3PL with the Right Fulfillment Network

The location of your 3PL’s warehouses plays a huge role in shipping speed and costs. A 3PL with multiple fulfillment centers strategically placed near your customers ensures faster delivery and lower shipping rates.

For example, if most of your customers are in California and New York, choosing a 3PL with warehouses on both the East and West Coast will cut shipping times significantly. If you plan to expand into Europe or Asia, working with a 3PL that already has fulfillment centers there will help you avoid high international shipping fees.

3. Compare Their Pricing Structure

Not all 3PLs price their services the same way. Some offer low storage fees but charge high fulfillment fees, while others bundle everything into one flat rate. Understanding exactly what you’re paying for before signing any contract is important.

For example, a small clothing brand might find a 3PL with low per-order fulfillment fees appealing, but if they have a large product catalog, the storage costs could quickly add up. On the other hand, a business with just a few high-ticket items might prefer a flat-rate pricing model.

4. Assess Their Shipping Speed and Return Handling

Shipping delays can ruin customer experience and hurt your brand’s reputation. If your 3PL takes too long to ship orders, customers will go elsewhere.

For example, imagine you run a subscription box business that promises monthly deliveries on the 1st of each month. If your 3PL regularly ships late, customers will start canceling subscriptions and leaving bad reviews.

Check for Seamless Inventory and System Integration

Your 3PL should work seamlessly with your inventory management system to prevent overselling, stockouts, and fulfillment delays. Without real-time inventory syncing, you risk selling products you don’t actually have in stock—leading to refunds, negative reviews, and unhappy customers.

For instance, let’s say you sell home decor on Shopify and Amazon. If your 3PL doesn’t update inventory in real-time, a customer might place an order on Shopify for a product that was just sold out on Amazon. This creates a fulfillment nightmare, where you must either cancel the order or scramble to restock.

Common Mistakes to Avoid When Choosing a 3PL Partner

It is easy to get swooned by various 3PL partner with their specific services.

But you might end up making the biggest blunder and damage your business’s reputation if you choose the wrong one with late deliveries and whatnot

Here are some of the mistakes you must avoid in order to have a 3PL that you can consider the “right one.”

Choosing Based on Price Alone

It is easy to take the lowest-priced 3PL, but inexpensive is not necessarily the best. A low-cost 3PL can give you delayed fulfillment, errors, or low-quality customer support, which can damage your brand.

For example, if you have a low-cost storage 3PL with slow processing, your customers would receive delayed shipping and be left with negative reviews and lost business.

How to Avoid It: Balance price and service quality. Compare a few 3PLs on a network of warehouses, shipping speed, accuracy, and technology, not just price.

Not Checking Their Warehouse Locations

A 3PL's warehouse locations are a key driver when it comes to shipping time and cost. If your 3PL is located on the West Coast, and you have most of your customers on the East Coast, shipping will cost more and take longer.

For example, a clothing retailer with customers across the U.S. would be penalized if their 3PL only has one location in California, thereby charging extra shipping to East Coast customers.

How to Avoid: Partner with a 3PL that has more than one facility in strategic locations to reduce shipping costs and lead time. If you are expanding globally, ensure your 3PL has international fulfillment ability.

Leaving aside Technology and Integration Skills

Your 3PL must integrate seamlessly with your eCommerce platforms and inventory management system. Without real-time integration, you can end up overselling, having stock discrepancies, and fulfillment errors.

For example, if your 3PL is not syncing with your Shopify store, you might sell out-of-stock products since the inventory level is not synced in real time.

How to Avoid: Ensure your 3PL is connected with:

• Online stores like Shopify, Amazon, and WooCommerce
• Inventory management solutions like Sumtracker for real-time inventory tracking
• Shipping carriers for exact tracking and expense management

Failing to Review the 3PL’s Track Record and Reputation

Not all 3PLs fulfill what they have promised. Some have poor fulfillment accuracy, constant shipping delays, or no customer support. If you don't check reviews or ask for references, you might end up with a 3PL that creates more problems than it solves.

For instance, a company that manufactures beauty products in partnership with an inexperienced 3PL will experience regular mispacked orders, late shipments, and customer complaints, which destroy your image.

How to Avoid: Conduct thorough research on various websites like Trustpilot, check their reviews, and ask their previous or current clients about their performance.

Best 3PL Companies in the World

Finding the right third-party logistics (3PL) provider can greatly affect shipping speed, cost efficiency, and customer satisfaction. Here are three of the biggest and most reliable 3PL providers in the USA, known for their extensive logistics networks, technology-driven fulfillment, and global reach.

United Parcel Service (UPS)

UPS is one of the most recognized logistics providers in the world, offering comprehensive 3PL services that include warehousing, distribution, freight management, and last-mile delivery. UPS helps businesses optimize their supply chains with advanced tracking and fulfillment technology.

Key Features:

• Massive global logistics network with thousands of fulfillment centers.
• UPS eFulfillment for multi-channel order fulfillment.
• Real-time tracking and supply chain visibility for businesses.
• Customizable logistics solutions for businesses of all sizes.

FedEx (FDX)

FedEx is another industry giant in logistics, offering 3PL services that cover warehousing, order fulfillment, and express shipping. With a reputation for fast and reliable delivery, FedEx is a preferred choice for businesses that need speed and efficiency.

Key Features:

• FedEx Supply Chain Solutions offers end-to-end logistics support.
• Same-day and overnight shipping options for urgent deliveries.
• Advanced tracking systems with real-time shipment monitoring.
• Custom packaging and secure handling for fragile or high-value products.

3. Amazon FBA (Fulfillment by Amazon)

Amazon FBA allows sellers to store products in Amazon fulfillment centers, where Amazon handles picking, packing, and shipping orders. With Prime shipping benefits, FBA can help businesses increase sales by directly offering fast, reliable fulfillment through Amazon.

Key Features:

• Two-day Prime shipping for increased customer satisfaction.
• Multi-channel fulfillment (MCF) for non-Amazon orders.
• Amazon's vast warehousing network ensures faster delivery across the U.S.
• Automated returns and customer service handling by Amazon.

Conclusion

Finding the right 3PL partner is more than just outsourcing logistics—it’s about choosing a team that feels like an extension of your business.

A great 3PL makes fulfillment effortless, ensuring fast shipping, happy customers, and room for growth, while the wrong one can create delays, lost inventory, and endless frustration.

Now that you are fully equipped with what to consider and what to avoid before partnering with a 3PL. You can go ahead and find the right team.

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