In 2023, Amazon dominated 57% of all online retail sales and nearly 6% of all retail sales in the US. Following the explosive growth, the options for selling on Amazon have multiplied, along with the complexities that come with them.
Are you selling on Amazon but feel overwhelmed by the choices and challenges? An experienced third-party logistics partner (3PL) could be your answer. Working with a 3PL can streamline your operations, saving you both time and money.
This article will break down the sales options available to Amazon sellers and show you how a 3PL can bolster your business on Amazon. Ready to make your selling journey smoother and more profitable? Let’s dive into how a 3PL can make that happen for you.
What is Third-Party Logistics (3PL)
Third-party logistics (3PL) companies help e-commerce businesses grow by managing different parts of selling online. These services include:
- Storing goods in warehouses
- Managing shipments
- Taking care of orders
- Sending goods to stores
Using a 3PL makes it easier to expand your e-commerce business. You pay them a fee, and they store and send your products, freeing you up to focus on your business.
What Are The Different Types of 3PL Services
There are several kinds of third-party logistics (3PL) providers, and they generally fall into three main types:
- Transportation: These 3PLs focus on moving products from one place to another. They typically handle direct deliveries to customers but may not manage returns and exchanges. Common examples are shipping companies, bicycle couriers, and freight transporters.
- Space Management: This type of 3PL offers storage solutions like warehouses and fulfillment centers. They often handle additional services like inventory management and processing returns, ensuring products are stored and redistributed efficiently.
- Full-Service: These providers cover all aspects of logistics from start to finish. They might even get involved in product creation, such as with print-on-demand services, and extend to managing the entire supply chain. This can include advanced services like analytics, IT solutions, and customer support to streamline operations and improve efficiency.
What Are The Advantages of Using 3PL Services
Teaming up with a third-party logistics provider (3PL) comes with huge perks for Amazon sellers. Let’s dive into why this could be a game-changer for your business.
Tap Into Expertise
3PL companies are pros in order fulfillment and logistics. You can dive deep into their wealth of knowledge by teaming up with them. This is a huge plus for navigating the tricky waters of the global supply chain.
Cut Costs
Did you know that 3PL companies handle orders for many businesses, not just yours? This scale allows them to get better deals on packing materials and shipping costs. What’s great for you? They can return those savings to your business, letting you pump more money into growth.
Unlock Resources
Choosing a 3PL means getting access to their robust network of global shipping partners and resources like manpower and tech. This can seriously boost your efficiency and cut down costs in your fulfillment process. You’ll also benefit from no storage limit, compared to FBA.
Scale Without the Pain
Growing means needing more space, more equipment, and more hands on deck. Hiring staff takes time, and opening new warehouses costs a pretty penny. With a 3PL, you can quickly tap into the resources you need without the hefty upfront investment. This is super helpful for businesses that see seasonal spikes in demand. They can adjust quickly and smoothly.
Go Global
Dreaming of taking your business international? It’s an exciting move but can be loaded with costs and complications. A 3PL with a strong global network can slash those costs, speed up shipping, and help keep your customers happy, no matter where they are.
The Downsides of Using 3PL Services
Less Control
When you hand over your order fulfillment to a 3PL, you might feel like you’re losing grip on your operations. If something goes wrong—like a mix-up in orders or a delay—customers will still turn to you for answers, not the 3PL. Since you don’t manage the inventory directly, fixing these issues quickly can be tough.
Upfront Costs
Getting started with a 3PL isn’t cheap. There are upfront costs to consider, like setting up your account and integrating your systems. You might also face charges for entering all your product codes (SKU) into their system. These initial expenses can be pretty steep.
How to Choose the Best 3PL Partner for Your Amazon Business
Picking the right third-party logistics (3PL) partner is crucial as you scale your Amazon business. Here’s a straightforward guide to finding a 3PL that’s a perfect match:
Services That Cover Everything
Your ideal 3PL should handle every aspect of logistics. Make sure they offer:
- Warehousing and Inventory Management: Keeps your products organized and ready.
- Pick and Pack Fulfillment: Efficiently packages and ships your orders.
- Shipping with Major Carriers: Ensures reliable delivery through trusted carriers like UPS or Canada Post.
- Freight Forwarding: Manages the logistics for your bulk shipments.
- Customer Service: Quickly resolves issues like returns or damages.
Tech-Savvy Solutions
The best 3PLs use advanced technology to make your life easier. They should have systems to:
- Track Inventory: Offers real-time visibility of your goods across locations.
- Optimize Operations: Enhances speed and accuracy in picking and packing.
- Streamline Shipping: Provides automated solutions for shipping estimates and labels.
- Monitor Performance: Tracks important metrics like fill rates, transit times, and customer happiness.
High Standards
Pick a 3PL that commits to:
- Accuracy: Gets every order right and to the correct customer.
- Speed: Delivers quickly to meet Amazon’s promises, especially for Prime members.
- Communication: Keeps you in the loop on any challenges or updates.
- Continuous Improvement: Regularly upgrades their processes and invests in training.
Fair Pricing
While cost shouldn’t be your only consideration, getting good value is important. Compare a few 3PLs to find competitive rates, understanding their fee structures—whether that’s flat fees, per unit, or per shipment. Watch out for extra charges like storage or handling fees.
Factors to Consider When Choosing a 3PL Provider
Deciding on a third-party logistics (3PL) provider is a big move for your ecommerce business. Here’s how to make sure you pick the best one for your needs:
- What shipping options are available? Check if they offer both full truckload (FTL) for big orders and less than truckload (LTL) for smaller shipments. This flexibility can save you money by only paying for the space you need.
- How is inventory managed? Ask about their tools for tracking inventory. Good systems help avoid too much or too little stock. For example, some services alert you when stock is low, helping you manage reorders effectively.
- What fulfillment services are included? Beyond basic picking, packing, and shipping, does the 3PL offer custom packaging or branding? This can really make your products stand out to customers.
- Do they offer kitting and assembly? If you sell products that go well together, like gift baskets or bundled outfits, check if they can package these as one unit. This could cut costs and speed up delivery.
- Is advanced data analytics included? Advanced analytics can reveal more than just stock levels. They can tell you about your customers’ buying habits, what other products they consider, and more. This data is gold for planning your stock and sales strategies.
- How do they handle returns? Returns are a part of the business. Ensure the 3PL handles them the way you want, whether that’s restocking like-new items, creating discount SKUs for slightly used goods, or properly disposing of returns.
- Where are the warehouses located? Location matters. More warehouses mean faster delivery to your customers. Check if the 3PL has facilities near your main customer bases.
- What’s the customer support like? Good support is crucial. You want a 3PL that responds quickly and effectively, especially when issues arise. Make sure their support hours work with your schedule.
- Do they offer distributed inventory? Storing your goods across multiple warehouses can speed up delivery and reduce shipping costs. Make sure they can store your inventory where it best meets customer demand.
- What are their operation hours? If you’re working with a 3PL in a different time zone, check their operating hours to ensure they’re accessible when you need them. If not, consider a provider that aligns better with your schedule.
Elevate Your Amazon Journey
Choosing the right third-party logistics (3PL) provider can be a game-changer for your Amazon business. A 3PL streamlines operations, cuts costs, and scales with you—without the headaches of managing logistics yourself. With the right 3PL, you’re free to focus on growth and customer satisfaction.
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