If you’re an eCommerce brand owner looking to scale you’ve probably heard about third-party logistics (or 3PL). Basically, 3PL companies are businesses that allow online retailers to outsource much of their labour-intensive processes. Covering everything from storage and inventory management to order fulfilment and returns handling, 3PLs provide a range of services to help eCommerce brands along their growth journey.
So why do some people still say that 3PLs aren’t worth it? As you will know, every business is different and requires different facilities to succeed so for some, a 3PL is just what they need and for others maybe not so much. Below we will go over some of the pros and cons that come with working with a 3PL to help you decide if it is the right fit for you and your business.
Pros:
- Time – by outsourcing your logistics processes to a 3PL, you are freed up to focus on growing your business. Most 3PL clients experience significant growth when they start using a 3PL simply because they are allowed more time to spend working on the business and less time working for it.
- Work with professionals – by working with a 3PL, you are putting your products and orders in the hands of industry experts. With the logistics industry ever evolving, you can be sure that the best 3PLs will be keeping up with all the latest technologies and fulfillment practices.
- Scalability – when storing your inventory at a 3PL, you are only paying for the space you use, having a down period? Scale back your inventory levels and pay less for storage. Sales picking up again? Have more stock shipped to the warehouse and only pay for the extra space used. This is particularly effective for seasonal apparel brands who sell more during different times of the year.
- Ship with ease – some 3PL’s will provide their own means of distribution, whereas others will partner with companies who specialize in shipping orders e.g AusPost, DHL etc. If your 3PL works with various couriers to ship your products, they will have access to bulk-shipping discounts which they can then pass onto you.
- High-level inventory management and tracking – as an eCommerce business, you may have hundreds or even thousands of SKUs in your inventory. Managing this by yourself can be a handful and takes countless hours of organizing. Outsourcing your inventory management to a team of experts will free up a lot of time so you can focus on other important parts of your business, like marketing and customer communications.
- Resources – a typical 3PL has greater access to the necessary resources for storage and distribution than the average small business owner. By partnering with a 3PL you are tapping into this resource pool, therefore you will have more options for things like order packaging and void fill, racking space, carton storage etc. at a fraction of the price.
Cons
- Less Visibility – you will have less direct contact with your inventory and orders. You will still have access to any relevant data but physical access to your products will be limited. Therefore, it is exceptionally important to ensure you partner with a 3PL that exercises transparency of operations and good communicative practices.
- Up-front costs – when looking to partner with a 3PL, the up-front cost may seem a bit expensive for smaller eCommerce brands still looking to grow. While this is true, many business find they save significantly over the long term.
- Poor Service – if you work with a 3PL who doesn’t care about your brand, this can reflect badly on your company as they are responsible for how your packages are received by your customers. Therefore, it is crucial to only partner with a 3PL you trust.
Overall, for most online retailers working with a good 3PL the pros outweigh the cons over the long term. The best way to ensure that a 3PL works for you and your business is to find one that you trust early on. If you’re working with the best, they will make sure your brand identity is reflected in the services they provide and go above and beyond to help you feel at ease with the process.
If you want to hear about how Malpa 3PL can help you scale your business, you can Book a Free Discovery Call at the top of the page, or fill out our contact form ‘here’ and we will get back to you with a quote within 24 hours.
