3PL or Third-Party Logistics is an excellent option for Amazon sellers looking to outsource the storage and fulfillment of their products. They offer efficient, cost-effective solutions so that businesses can maximize their profits and streamline the order fulfillment process.
With accurate inventory tracking, real-time data updates, and secure shipping services, 3PL is the best solution for an Amazon FBA business.
What are 3PL and FBA?
Fulfillment by Amazon
FBA, or Fulfillment by Amazon, is a service provided by Amazon that allows sellers to store their products in Amazon fulfillment centers and have them shipped directly to customers. It eliminates the need for sellers to manage their inventory, shipping, or customer service.
Third Party Logistics (3PL)
3PL refers to a third-party logistics company that provides outsourced e-commerce logistics services to businesses. These services often include:
Additionally, 3PL providers are better suited for businesses that require rapid inventory replenishment or have various products for order fulfillment.
3PL Shipping Products to Amazon
Most 3PL companies directly integrate with Amazon’s FBA program, allowing the 3PL to ship products from their warehouses to Amazon fulfillment centers. This is an efficient and cost-effective way for businesses to fulfill orders and deliver products quickly and accurately.
Advantages of 3PL for Your Amazon Business:
There are many advantages to using 3PL compared to FBA centers. With 3PL, Amazon FBA businesses can choose their warehouse locations, have more control over the inventory and shipping process, have access to more advanced tracking options, and can manage costs on storage and fulfillment fees.
Below are some detailed advantages a seller can get from a 3PL company:
Costs Effective
A 3PL for Amazon FBA sellers can help reduce shipping, handling, supply chain, and inventory management costs. It allows Amazon FBA sellers to save money on overhead costs while providing excellent service and faster turnaround times.
Warehouse Location
A 3PL company will usually have multiple warehouse locations, allowing businesses to store their inventory closer to where the bulk of their customers are located and, most of the time, can offer same-day delivery. As a result, it helps reduce shipping costs and improves delivery times.
Efficiency
Businesses can streamline their shipping and fulfillment process, resulting in higher efficiency and quicker delivery lead times. In addition, it helps keep customers satisfied with faster order and fulfillment services and improved customer service.
Scalability
A 3PL for Amazon can help businesses grow by providing in-house fulfillment infrastructures and resources to handle larger order volumes.
Accuracy
With accurate inventory tracking, businesses can ensure customers receive the right product at the right time. In addition, it helps reduce costly mistakes or shipment delays.
Enhanced Security
Third-party logistics companies typically offer secure shipping services, which help keep customers’ data and store products safe. It provides added peace of mind for businesses and their customers alike.
In totality, Third-Party Logistics providers offer a range of benefits to Amazon sellers. They can reduce costs, increase efficiency and scalability, improve accuracy, and provide enhanced security. Therefore, if you are looking for a reliable and cost-effective way to outsource your Amazon business’s storage and fulfillment needs, 3PL is the perfect solution.
Advantages of using Fulfillment by Amazon
Multi-channel Fulfillment in Amazon
Amazon’s multi-channel fulfillment option allows many sellers to receive orders from multiple sales channels, such as Amazon Marketplace and their website. With this service, Amazon handles all the order processing, shipping, and customer service for sellers to all sales channels. As a result, it offers great convenience for small and medium-sized businesses struggling to keep up with their day-to-day fulfillment operations.
Low Operational Costs
Amazon fulfillment center has one of the lowest fulfillment costs in the industry, making it a great option for budget-conscious businesses. Amazon also offers discounts for high-volume orders and free shipping for eligible items.
Shorter Delivery Lead Time
Amazon’s fulfillment centers are strategically located worldwide, so orders can be shipped to customers quickly. This helps reduce delivery lead times and ensures customer satisfaction with faster shipping speeds.
Manage Returns
The efficient and hassle-free returns management system by Amazon greatly benefits its sellers. Amazon handles all the details associated with returns and refunds, from tracking inbound packages to issuing the customer’s refund.
Overall, Fulfillment by Amazon is a great option for businesses looking to outsource their storage and fulfillment needs. With its low costs, reduced shipping times, and hassle-free returns management, Amazon FBA offers many advantages over traditional 3PL providers.
Steps to find the right 3PL provider for your business:
Do Research
Research the different 3PL providers in your area to understand what services they offer, their fees, and customer reviews.
Identify Needs
Take time to think about your current and future needs for storage and shipping requirements. Consider tracking services, insurance coverage, packaging options, etc.
Rate Comparison
Compare rates of different 3PL companies to find the best fit for your budget.
Customer Support
Make sure that the 3PL company you choose has excellent customer service so that any issues can be quickly resolved.
Safety and Security
Ensure the provider takes all necessary steps to secure your products during transit and storage.
Mistakes to avoid when working with a 3PL Company:
Poor Research
Before partnering with a 3PL, it’s important to thoroughly research and compare different providers to ensure you choose the right partner for your business.
Not Considering Future Needs
Consider your current and future storage and shipping needs when selecting a 3PL company, so you don’t outgrow their services quickly.
Neglecting Feedback and Reviews
Make sure to check customer experience and read customer reviews to get a better understanding of their service quality and customer support.
Overlooking Insurance Coverage
Ensure that the provider offers adequate insurance coverage for your products in case of damage or loss during transit or storage.
No Knowledge of Shipping Policies
It’s important to understand what shipping policies are offered by the 3PL company and how they might affect your business.
How is Success Measured When Using a 3PL Service?
Measuring success with a 3PL requires careful analysis of important metrics such as cost-effectiveness, order accuracy, delivery efficiency, customer satisfaction, etc. Analyzing these factors can help businesses determine if their partnership with the 3PL companies is beneficial and make adjustments to ensure better results.
Evaluate Cost-Effectiveness
Calculate how much money you save by outsourcing your storage and fulfillment needs to a 3PL.
Track KPI
Track important KPIs such as order accuracy, delivery times, customer satisfaction, etc., to measure success with the 3PL provider.
Monitor Turnaround time
Monitor the rate at which your 3PL can turn items around. The faster they are, the more efficient and cost-effective it will be for your business.
Analyzing Shipping Costs
Analyze shipping costs through a 3PL to ensure you get a good deal.
Checking for Growth Opportunities
Check if any growth opportunities are available with your current 3PL, such as international shipping, additional storage, etc.
Choosing the right 3PL company can make or break any business. Amazon sellers can find a reliable provider that offers cost-effective solutions tailored to their needs by researching, comparing rates, and understanding their services. Additionally, it’s important to carefully measure performance metrics to ensure success with the 3PL and make necessary adjustments.
Frequently Asked Questions
What is third-party logistics (3PL)?
A 3PL company is a provider specializing in storing and fulfilling products. In addition, they offer services such as inventory management, order processing, shipping, and returns handling.
Can a 3PL help me improve my operational efficiency?
Yes, a 3PL can help you improve your operational efficiency by providing advanced technologies, expertise, and processes that can streamline your supply chain operations.
How to choose the right 3PL?
When choosing the right third-party logistics company for your business, it’s important to do thorough research and compare different providers. Consider your current and future needs, read customer reviews, ensure they offer adequate insurance coverage, understand their shipping policies, and analyze costs associated with shipping through a 3PL.
How much does it cost to use a 3PL provider for my Amazon FBA business?
The cost of using a 3PL varies depending on the services you need, the volume of your shipments, and the company you choose. However, most companies offer competitive pricing and can help you reduce overall logistics costs.
8-figure Amazon seller and serial online entrepreneur since 2015. Research and practice various online business models, and apply his in-depth learnings to further expand and grow his businesses as well as help others to achieve greater successes. Ex-VP of a high tech VC in Vancouver and a Management Consultant with over a decade of experience in the industry. Master's Degree from HEC Paris.
