Do you need a 3PL?

Warehousing and storage can be costly and time intensive for SMBs (small and medium sized businesses). 3PL companies are a great way to save money and reduce risk. How do you know if your business is ready for a 3PL?

If you’re receiving more orders than your in-house team can reasonably handle, it’s time to think about a 3PL. If you’ve run out of fulfillment center storage and you’re looking for an upgrade, a 3PL with a larger fulfillment center might be less expensive than renting or buying warehousing space yourself.

When you hire 3PL companies, your capacity to grow and scale skyrockets. Since a 3PL is taking care of the storage, picking and packing, and managing shipping and returns for you, you’re free to focus on other areas of your business.

3PL companies can also save you money if you bundle warehousing, shipping and inventory management services. Plus, 3PLs have negotiated discounts with shipping carriers, so they’ll be able to get you and your customer lower shipping costs.

They’ll also stay up-to-date with regulations and the latest technology. 3PLs lower your labor risk and financial risk of investing in insurance, warehousing equipment, and storage racking. By outsourcing to a 3PL, you’ll have access to better resources and expand your reach. If you’re currently unable to offer expedited shipping, a 3PL’s network of fulfillment centers can ensure that your inventory is close enough to your customer to offer two-day shipping at an affordable price. If it sounds like your business could benefit from a 3PL, here are a few tips to help you choose a fulfillment partner.

Tips for choosing a 3PL partner

• Make a list of everything your business requires to run efficiently and grow to scale. Will your 3PL need specific material handling certifications? Are they set up for shipping on more than one eCommerce feed? Can they handle external data feeds? Are they well-suited to dropshipping? Think about what you are already doing and make sure they can do the same and more. Don’t be afraid to ask a lot of questions.
• Consider a 3PL with multiple locations if splitting inventory will allow you to offer expedited shipping.
• Visit the fulfillment center if you’re able to. It’s not absolutely necessary to visit the warehouse, but if you get the chance, take it. You can also arrange for a virtual tour. 
• Try it out! Send small quantities of inventory to your 3PL as a test run. If everything meets your expectations, consider the next step. 
• Beware of ultra-cheap 3PLs. When considering the sticker price of a good 3PL, keep in mind the consequences of hiring a 3PL with outdated technology, under-trained staff, and weak customer service. It might be cheaper in the short-term, but it could cost you customer satisfaction.

3PL Recommendations

Amazon is the largest 3PL, but they specialize in a specific channel and have requirements that optimize for their own convenience. A great 3PL can serve multiple sales channels and acts like an in-house team. A partnership with the best 3PLs feels like an extension of your team, equipping you to handle everything you may need because they’ve seen it all before. You’ll know exactly where your products are, and exactly who to call when you need help.

Most 3PLs specialize in either eCommerce or retail fulfillment, but the best ones do both well. Depending on your needs, you may need your 3PL to support distribution into D2C eCommerce, Dropship eCommerce, Small Physical Retail (ship to store), Large Physical Retail (ship to distribution center), and/or Private Label customers.

Each additional sales channel significantly increases the overall complexity of operations. In our experience, it also significantly reduces the number of external providers that are capable of managing the entire business. When you’re ready to explore a 3PL partnership, Endless Commerce can help. We have a network of trusted providers that we can introduce you to, and pre-built integration to their warehouse management systems (WMS) for quick and painless onboarding.

Want to know more? Contact us today.