F. Curtis Barry & Company Blog

As ecommerce, retail, and wholesale companies continue to grow, so do the challenges they face in terms of fulfilling orders. These challenges include investing in warehouse systems, automating processes, managing warehouse space requirements, and staying competitive. 

Fortunately, third-party logistics (3PL) distribution can help address these challenges by outsourcing product fulfillment. We will explore the benefits and advantages of 3PL distribution and how it can help businesses scale.

Fulfillment is a crucial aspect of any ecommerce, retail, or wholesale business. With the continued rise of online shopping, businesses must ensure that they have a reliable and efficient system in place for fulfilling orders. One option is to handle fulfillment internally but outsourcing to third-party logistics (3PL) companies has always been a strong alternative.

In this article, we will explore the benefits of outsourcing fulfillment operations to 3PLs and why it can be an advantage and a key to success for businesses. We will also address common misconceptions and challenges associated with internal fulfillment operations.

As 3PL consultants, we have helped many businesses find their first fulfillment partner as well as switch to a new partner that may be more aligned in their goals or provides additional services.

3PLs play an integral part of many ecommerce and wholesale distribution supply chains. But if your company has ever researched costs, you will find that no two vendors have similar models when it comes to storage fees. Understanding how vendors charge for storage can be difficult, especially if you are starved for data.  

At a high-level 3PL storage costs follow one of two pricing models, on demand type storage, and dedicated space models which are more fixed cost. To understand which model is more advantageous for your ecommerce business or whole distribution, we need to look at each option further.  

After months of working with prospective 3PL vendors to support your supply chain, you likely received hundreds of pages of documentation and verbal promises.  Once you have determined your preferred 3PL partner, it is time to begin to negotiate the contract.  

All of the critical documentation from the sales process is important to capture in a 3PL agreement.  This step is critical to protecting your business. In this final phase, you will want to have two parties review the agreement, the first being your attorney.  

Your attorney will provide you legal advice to protect your business, do no skip this review for the sake of just moving ahead. 

Secondly, you will want to have a 3PL consultant analyze the contract language from a business perspective.  This review will help you to understand if the 3PL contract meets industry standards and expectations.  

Using third party fulfillment (3PL) partners for your distribution logistics needs can provide tremendous benefits for your multichannel and e-commerce business. One way some companies use 3PL is as an additional node in their distribution network. A strategically located warehouse can reduce time in transit to customers as well as lower shipping costs.

Many direct and e-commerce businesses make strategic and cost-effective use of 3rd Party Logistics (3PL) to provide warehousing and distribution services which include order fulfillment for clients. At the heart of this process is finding 3PL companies that provide fulfillment services that are in line with your needs and supply chain strategy. The following six criteria should be used to determine which 3PL companies are a good choice:

Companies that utilize third party fulfillment (3PL) services sometimes reach a point where they consider transitioning from the 3PL services to internal warehousing and order fulfillment. Some of what drives these decisions is to control costs, whereas others have had a bad experience with 3PLs and now only trust themselves with their product. Using a 3PL isn’t for every company.

Reviewing contracts for third party logistic (3PL) providers can be a daunting task – especially for those not familiar with the process.  One of the most critical aspects in any 3PL contract is the language surrounding pricing and rate increases.  It is vital to ensure that the language is fair for both the customer, as well as the 3PL.   

No one knows the business environment after COVID-19 or what the “new normal” will be. Considering the potential bankruptcies of large and small businesses, especially brick and mortar retail stores, we believe that businesses that emerge strong from COVID-19 will have a huge advantage in the typical fourth quarter peak of 2020 and beyond.

For more than 30 years, we have assisted clients in the selection, evaluation, and implementation of third-party logistics (3PL) projects. Clients using 3PL fulfillment and logistics span a wide range of companies and industries.  

These include consumer ecommerce, wholesale and distribution, traditional retail companies, pharma, collateral distribution, and more. While the benefits of 3PL fulfillment are advantageous for a variety of businesses, outsourcing logistics isn’t for every company. 

It is important to fully understand what the benefits of companies using a 3PL are, and how it applies to you.  When evaluating 3PL logistics services, consider that it could be for certain aspects of your operations, or all your fulfillment processes.

Here are the major ways that partnering with a 3PL can improve your supply chain.