3PL Distribution: A Comprehensive Guide

For e-commerce businesses to grow large and scale, managing and handling everything in-house is not an optimal approach. 

With several activities and processes to look after such as inventory reception, picking, packing, shipping, and returns, outsourcing a third-party logistics service provider is the best option. 

When signing a contract with a 3PL, you should consider the scale of their distribution network. 3PL distribution comes to play when an e-commerce business leverages the services of a 3PL including order processing, fulfillment, and shipping. 

The scale of the distribution network of a particular 3PL holds prime importance in your decision to work with a specific 3PL. In this blog, we’ll explore the benefits of 3PL distribution, and inform you how can it make your business grow.

Continue reading, and you’ll understand why 3PL distribution is one of the most important parts of third-party logistics.

What do We Understand by 3PL Distribution?

In simple terms, 3PL Distribution stands for the way businesses handle the movement of their products with the help of a third-party logistics provider. 

The role of a third-party logistics service is to handle the following aspects of your business’s product distribution:

Warehousing and Storage

• Receiving: Accepting and logging incoming inventory from suppliers
• Storage: Managing the storage of products in a warehouse, optimizing space and organization
• Inventory Management: Tracking and updating inventory levels in real-time, to maintain accurate stock information

Order Fulfillment

• Order Processing: Receiving and processing customer orders promptly for a robust order fulfillment process
• Picking: Selecting items from the inventory to fulfill orders
• Packing: Properly packaging products for shipment, making sure they are secure and intact
• Shipping: Coordinating the shipping process, providing last-mile delivery/shipment, choosing appropriate carriers such as FedEx, USPS, and UPS, and generating shipping labels

Distribution and Transportation

• Shipping Coordination: Managing the logistics of getting products from the warehouse to the end customer
• Transportation Optimization: Selecting the most cost-effective and efficient transportation methods
• Route Planning: Optimizing delivery routes for timely and cost-efficient shipments

Customs and Compliance

• Customs Clearance: Managing paperwork for international shipments to make sure your products smoothly pass through customs
• Compliance: Making sure the business follows industry rules and standards, keeping operations legal and ethical

Returns Management

• Returns Processing: Handling reverse logistics efficiently and updating inventory accordingly
• Product Inspection: Inspecting returned items to assess their condition and determine whether they can be restocked

Technology Integration

• Order Tracking: Providing real-time tracking information for both businesses and customers
• Data Analytics: Utilizing data analytics tools to optimize processes, identify trends, and improve overall efficiency
• Communication Systems: Establishing effective communication channels between the e-commerce business and the 3PL provider

Now, let’s see how DTC (Direct-to-Consumer) brands can benefit from outsourcing distribution from a 3PL fulfillment service.

Exploring the Benefits of 3PL Distribution Centers

Here's a closer look at the advantages of a 3PL service that has multiple distribution centers located at strategic locations. 

Cost Savings

Utilizing a third-party logistics provider can result in significant cost savings for businesses. By outsourcing logistics functions such as transportation, warehousing, and order fulfillment, DTC brands can avoid hefty investments in infrastructure and manpower. 

No Need to Manage Your Inventory

Managing inventory can be a significant challenge for DTC companies that don’t have the budget or the time to keep an eye on the inventory 24/7. If you own an ecommerce business that has started to scale, you might consider utilizing a distribution center to keep up with the flow of orders. 

Helps You Focus on Your Core Competencies

While a 3PL service takes care of your logistics operations and distribution, feel free to take care of the other aspects of your DTC business. 3PL suppliers let companies concentrate on what they do best while leaving the shipping and storage to the experts.

Smart Inventory Placement

By having your products strategically located in different places, your deliveries can reach customers faster. That's what 3PL services excel at. They figure out the best spots to store your inventory, making sure it's close to the people who want to buy it.

Established 3PLs have sophisticated analytics and management software tools that allow companies to distribute inventory strategically. 

Fast Shipping

Your shipping times will decrease with a third-party partner. Most 3PL companies have various distribution centers across strategic locations offering last-minute fulfillment. They have smart and strategic ways to get things from point A to point B quickly, making sure your customers get what they want when they want it. 

No Need for Your Own Warehouse

Warehouses can be expensive to build and maintain. But with a 3PL provider, you don't need to worry about that. What makes 3PL fulfillment warehouses different is that not only do they have the storage covered, but you can use your resources for growing your ecommerce business instead.

Easier Global Expansion

Going international can be tricky for smaller DTC brands, but not if you have a 3PL partner. They know the ins and outs of shipping globally, handling customs, and dealing with regulations. Other than that, the best 3PL companies have international distribution centers as well. 

If you have orders coming from out of the country, a 3PL with distribution centers in that particular country can help you reach customers much faster. This also helps you bypass customs duties, reducing your shipping costs in return. 

Enhanced Supply Chain Management

The presence of multiple distribution centers for your business makes way for easier storage and flow of the goods. Distribution centers ensure that:

• There are no backorders
• Products are not stockpiled 
• In-demand products remain stocked
• Deadstock and slow-moving products are eliminated to make space 

This, in return, makes sure that supply chain management process is as optimal as it can be. 

3PL Distribution Comes with Some Value Added Services

A number of 3PL companies offer value-added services to the businesses they’re working with. Other than the core services such as picking, packing, and shipping, you can benefit from other services such as:

• Customized packaging 
• Kitting and assembly
• Product labeling
• Quality control 
• Specialized transportation services 

Happy Customers

When your customers get what they ordered on time, they'll always be satisfied. 3PL providers make this happen. With their help, you can improve your customer service and build loyalty, all while focusing on the things that make your ecommerce business unique.

With all of the above benefits combined, you’re sure to reach unprecedented levels of customer satisfaction. Ultimately, the above advantages make way for quicker deliveries, and that’s what all customers want. 

Having said that, there are some factors to consider when choosing the right 3PL distribution partner for your e-commerce fulfillment. 

Factors to Consider When Outsourcing 3PL Distribution

When outsourcing distribution from a 3PL, consider the following factors to verify the credibility of the service: 

• Experience and Reputation: Have they demonstrated industry experience, and what is their reputation among clients?
• Service Offerings: Do their services align with the specific logistics needs of your business?
• Technology Integration: How compatible are their Warehouse Management Systems (WMS) and Transportation Management Systems (TMS) with your existing systems? 
• Global Reach and Network: Is the service an international 3PL? Can they handle international logistics, including customs and regulations?
• Scalability: Is the 3PL provider capable of scaling operations to accommodate the growth of your business?
• Cost Structure: What is the transparency of their pricing model, and does it align with your budget constraints?
• Compliance and Regulations: Are they in compliance with industry standards and regulations?
• Communication Protocols: How do they establish and maintain clear communication channels for updates and visibility?
• Performance Metrics and Reporting: What Key Performance Indicators (KPIs) are in place, and how regularly do they provide performance reports?

If a 3PL service has a solid answer to all of the above questions, you should consider outsourcing your distribution to that particular service. By using a 3PL provider, you can focus on your core business while entrusting logistics to capable hands.

Leave Your Distribution to a Single 3PL

Some ecommerce businesses partner with different 3PLs to expand into new areas. This strategy involves signing contracts with 3PLs that operate a single distribution center.

Although the business owner aims to cover a broad range of service areas, this strategy isn't optimal as it requires constantly staying in contact with multiple 3PL services. This can lead to inconsistent customer experiences as different services have different distribution SOPs. 

By working with a single 3PL running multiple distribution centers across multiple locations, you get the benefits of a streamlined distribution network. A standalone 3PL has a standard set of procedures for order processing and fulfillment. 

Utilize 3PL Fulfillment and Prep’s Distribution Centers to Boost Your Business

You can give your ecommerce business an edge over the competition with the help of 3PL Fulfillment and Prep. We have a broad network of distribution centers across the USA. 

With over 2000 SKUs prepared, 7000+ shipments received, and over 100 long-term clients, you can rest assured that your business is in good hands by outsourcing fulfillment from us.

Our 3PL distribution model and strategies are based on state-of-the-art technology, and we aim to deliver the best possible experience to you and your clients. 

Visit 3PL Fulfillment and Prep now, get unparalleled benefits from our warehousing and distribution centers, and give your e-commerce business the boost it deserves.