If you own an e-commerce business, you know that keeping all operations in-house is impossible and ineffective. It may be true for smaller eCommerce businesses, but it becomes very hectic for larger businesses. This is where third-party logistics can help you scale your business, save time, and stay within budget. So you can concentrate on marketing, expansion, scaling, and customer satisfaction.
What are third-party logistics services?
Third-party logistics (abbreviated 3PL or TPL) is the use of third-party businesses to outsource elements of an organization’s logistics and supply chain management distribution, warehousing, and fulfillment services.
Before you join a 3PL, you should understand what it is and what services it provides.
A third-party logistics company can store your inventory for you, pick your product, pack it, and ship it. It also plays an important role in the development of your business.
A third-party logistics provider offers all of the services required to outsource your logistics operations. 3PL companies are experts in the integrated operations of:
- Shipping and Receiving
- Picking and Packing
- FTL and LTL freight shipping
- Reverse Logistics
- Inventory Management
Various 3PL service providers specialize in various types of fulfillment and warehousing. Some have warehouses where they can store and ship food that needs to be refrigerated or frozen. Tenaxx Logistics is a leading third-party logistics provider for heavy, bulky, and valuable goods.
Within the 3PL industry, on-demand transportation is a growing and evolving niche. Based on market conditions, all of our services can be scaled and customized to meet the demands and delivery service requirements for their products.
Why is 3PL good for your business?
There are numerous benefits to using 3PL. It saves you a lot of time, eliminates the need for a large warehouse, and has many other benefits.
Cost and time saving
Third-party logistics providers are experts in logistics. Third-party providers have more relevant knowledge and expertise than the producing or selling company, as well as larger global networks that allow for greater time and cost efficiencies. 3PL providers’ equipment and IT systems are constantly updated and adapted to meet the needs of their customers and their customers’ suppliers. Companies that manufacture or sell products may not always have the time, resources, or expertise to adapt their equipment and systems as quickly.
This saves time and keeps your budget in check.
Low Capital Commitment
Similarly, if a client outsources operational functions that a 3PL provider can handle, they do not need to own their own warehouse or transportation facilities, which reduces the amount of capital required for the client’s business. This is useful for small clients as well as if a company’s warehouse has wide variations in capacity utilization, which could result in overbuying of warehousing capacity and lower profitability.
Companies with limited logistics expertise can focus on their core business by outsourcing logistics. Companies may benefit from not devoting resources to areas in which they are not skilled as business becomes more complex.
3PLs frequently specialize in a specific industry. Clients can benefit from their experience by leveraging the logistics provider’s industry knowledge.
Third-party logistics providers provide greater geographic distribution flexibility and a broader range of services than clients can provide for themselves. Postal services and private couriers typically calculate shipping costs based on distance; many 3PL providers market the benefit of zone skipping to potential clients because it reduces the distance between products to be shipped and customers, resulting in lower shipping costs. This also allows businesses to manage their resources more predictably, including workforce size, and convert fixed costs into variable costs.
3PL providers typically have a large network of carriers (air, ground, and ocean) located all over the state, country, or region of the world. This enables them to connect the dots and provide service to their customers regardless of where they are attempting to transport their commodities.
Your 3PL can handle returns as well as shipping, this saves you time and gets our product back on the shelf more quickly.
How to find the best third-party logistics services?
By far you’ve known what 3PL is and what its types are, but the question still arises, how to find the best third-party logistics services? Here are some factors to consider that will help you decide the best eCommerce fulfillment services company.
Customer Support – Adding 3PL providers is always a good idea, but what if something goes wrong? You need active customer support that can collaborate with you and quickly solve your problem. Find out what kind of customer service your service providers provide. The company’s response time and how long it will take to resolve the problem.
Shipping Costs – To stay within your budget, ask the providers about their shipping costs for typical orders.
Additional factors that you should keep in mind while deciding the best 3PL Logistic services.
- Warehouse Locations
- Speciality 3PL Services
- 3PL Services’ Expertise
1PL vs 2PL vs 3PL
First-party logistics providers (1PL) are single service providers in a specific geographic area who specialize in specific goods or shipping methods. Carrying companies, port operators, and depot companies are some examples. If a company’s logistics department has its own transport assets and warehouses, it can also be a first-party logistics provider.
Second-party logistics providers (2PL) are service providers that offer specialized logistics services over a larger (national) geographical area than first-party logistics providers (1PL). There are frequently framed contracts between the 2PL and the customer that regulate the conditions for the transport duties, which are mostly placed on a short-term basis. 2PLs provide internal and external logistics resources such as trucks, forklifts, warehouses, and so on for transportation, cargo handling, and warehouse management. Second-party logistics emerged as a result of globalization and the rising trend of lean management when businesses began to outsource their logistics activities in order to focus on their core competencies. Courier, express, and parcel services are examples, as are ocean carriers, freight forwarders, and transshipment providers.
The primary distinction between a second-party logistics provider and a third-party logistics provider is that a third-party logistics provider is always integrated into the customer’s system. In contrast to the 3PL, the 2PL is only an outsourced logistics provider with no system integration. A 2PL is frequently on call (for example, express parcel services), whereas a 3PL is almost always informed about the upcoming workload.
Drop Shipping vs. 3PL
You don’t have to use 3PL to outsource your order fulfillment; you can also use Drop Shopping. However, there are some subtle differences between dropshipping and 3PL; here’s what you need to know to determine which one is best for you.
What is dropshipping?
It is a method of order fulfillment in which a store does not keep the product it sells in stock. Instead, the item is purchased from a third party and shipped directly to the customer. As a result, the seller is not required to handle or ship the product directly.
3PL vs Dropshipping? What’s best for your business?
The primary benefit of 3PL over dropshipping is that it saves the client significant time. Business owners can invest time in critical business operations by utilizing 3PL providers.
Additionally, businesses can scale by integrating third-party logistics services.
3PL fulfillment is a better option than dropshipping if:
- Your business is scaling up and has a large daily order volume.
- Businesses don’t have enough labor or resources to finish the order fulfillment process in-house.
- Businesses that have sufficient upfront capital to partner with a 3PL provider.
Why is Tenaxx Logistics the best option for you?
Tenaxx Logistics comprises a team of expert, dedicated and experienced personnel. It has been in operation in the logistics industry for many years. In the spirit of experience, dedication, integrity, and innovation, we offer our customers tailored services that meet their supply chain needs.
We strive to deliver on our promise by ensuring the accuracy, seamless and timely delivery of cargo to their various destinations. Our doors are open to anyone and everyone who needs reliable logistics services. Whether you are an individual, small, or established company, we have something for you.
Our comprehensive services entail:
- Cross Docking/ Transloading
- Third Party Logistics (3PL)
- Dedicated Warehousing
- Shared Warehousing
- Order Fulfillment/ Pick and Pack
- Retail Distribution In Canada
- Transportation Management
- The value of our relentless efforts and dedication to serving with efficiency has endowed us with the honor of fostering long-term partnerships with businesses and individuals, alike. We hope to strengthen the bond and make new alliances with other prospective clients too.
To ensure that our clients receive a wholesome package, we offer our service at competitive rates. Whether you are in need of a warehousing solution for your business or need to track your shipping, our lines are open 24/7. Improve the efficiency of the management of your businesses’ supply chain by partnering with us, today.