The 3 ‘P’s of Third Party Logistics (3PL)

3PL or third-party logistics play a bigger role in facilitating distribution of product to customers than most brand managers make you believe. While brand managers boast about controlling every part of the brand experience, there are parts where 3PL partners carry a larger load of the operations. For example, not every brand has experience selling on Amazon and when they enter anyhow without the right amount of experience, they fall flat on their face in the overcrowded marketplace.

When a leading brand was experiencing high-growth, they realized they were taking too much on time-consuming tasks rather than focusing on the position they were hired for. As a result, their team decided to outsource fulfillment to a 3PL. Outsourcing the fulfillment and distribution to 3PL helped them increase accuracy, reach more customers, and increase profitability. The story is relevant to every leading brand today. That’s why big brands tend to rely on one of more 3PL to boost their prospects in the ecommerce market.

What About Smaller Brands and Customer Experience?

Order-splitting provides your brand with the ability to split items in an order into two or more different shipments. This is especially helpful for brands when they experiment with pre-orders or encounter backorders. Optimizing order fulfillment so that the available item ships immediately will make the customer happy. Once the pre-ordered or back-ordered item becomes available, it will signal the 3PL to ship that as well.

Providing the best customer experience is first and foremost the goal but implementing order-splitting can be difficult in the absence of a 3PL.

Additionally, order holding can be a powerful tool. If your brand puts a hold on a customer’s order for a designated period of time, it will stall the order from being sent to the 3PL. That way, your customer can change any incorrect information that was accidentally sent in their order. This includes changing payment information, sizes, colors, products, and shipment information.

The customer will not only be relieved that they will be getting the product they meant to order however they ordered it; but you also will be saving on shipping costs by not immediately having that item fulfilled and shipped by the 3PL, without any leeway room for changes.

1. Positioning

Implementing a 3rd party logistics company reduces time spent on managing orders, and reduces overall error. Having a 3PL provider is like having an additional department dedicated to fulfilling product for your customers. 3PLs aid brands with quality control, compliance regulations, and inventory security. Inventory management software helps regulate and keep accurate the information that goes through to fulfillment, so if there are any discrepancies they can be properly reconciled. Additionally, inventory management software that connects to your 3PL will also regulate complex order workflows like pre-orders, order-routing, order-splitting as well as the pick-pack-ship process.

2. Personalization

Brands often worry that outsourcing packaging will have a negative effect on the brand’s image. In fact, third party logistics are often willing to go above and beyond to accommodate brands’ specifications on customizing and personalizing packaging. Some 3PLs also brand inserts, shipping labels, and confirmation emails to maintain their clients’ need to stay authentic.

If your brand has weight-sensitive products, 3PLs are able to package your product accordingly. As an example, if there are multiple products in an order, the 3PL can pack the heaviest product on the bottom with specific directions. Similarly, they are able to package your items horizontally large to small for an aesthetic appeal.

3PLs that have a good relationship with your brand are often willing to go above and beyond in keeping your brand authentic.

3. Profitability

Insisting on 3PL reduces cost to improve profits:

Shipping cost: 3PLs receive reduced shipping costs by providers since they are constantly shipping product.

Packaging cost: Separate from the return-on-investment of a brand’s employee’s time spent on fulfilling and shipping the item themselves, the cost of outsourcing packaging and shipping reduces cost as well.

Manual error: Investing in a third party logistics company also reduces manual errors which saves money as well since the risk of upsetting or losing a customer is too great.

The Cost of 3PL Gone Rogue: Inventory Inaccuracies

Sometimes, 3PLs that don’t have risk protection and don’t process orders or track inventory properly can wreak havoc on the operations team of a brand. This is due to the fact that 3PLs charge for inventory storage; and having a 3PL claim that a product is out-of-stock when it isn’t means the brand has to manually reconcile that item, also making it unavailable for sale.

If your brand is experiencing poor service and mishandled inventory, it’s time to look for a different 3PL that can properly meet your brand’s demands and needs. While this can be a daunting task, finding the right partner can make or break the success of your brand.

Why Do You Need Our Inventory Management Solution?

eSellerHub’s inventory management system is constantly syncing with your 3PL to ensure the 3PL is held accountable. This means that we will always have an accurate count of your stock, and make sure that we are communicating with your 3PL if there are any discrepancies; saving you time on the phone with the 3PL and with the customer in reconciling orders.

We’re able to ensure accurate stock updates, track the availability of product at your 3PL(s); and make sure that any transferred inventory has the appropriate costs associated with it. The solutions acts as a centralized hub which stores crucial information; providing your brand with the stability, accuracy, and safety it needs to not only scale efficiently, but thrive.

Build an inventory management solution to sync with 3PL. Talk to our experts!