What is third-party logistics (3PL), and what can it offer you as an Amazon seller or wholesaler? For multiple reasons, these companies have played a more prominent and more significant role in the Amazon world for some time now. Let’s take a look at what they are and how they can help you take your business to the next level!
Some of you may have started the way, so many of us did, with a bit of product stacked up in your garage or maybe a small storage space. When you made a sale, you picked, packaged, shipped your inventory. Perhaps you added a coupon or a personal touch to your packaging, or maybe you knew the Purolator agent by name. This is all fine and dandy when you are shipping a couple of items, but what about when your inventory increases and you or Amazon cannot house your stock levels?! Then what?
You don’t want to be spending all of your time on packaging; you need to prioritize!
One option is to use Amazon’s services, Fulfillment By Amazon (FBA). When you use FBA, you are essentially renting space in an Amazon warehouse and paying them to handle your inventory alongside sales and shipping. The downside to using FBA is that it is Amazon’s platform, and they can prioritize any seller or products they choose in any manner they choose.
In the early days of the Covid-19 pandemic, Amazon reacted to the skyrocketing demand for Personal Protective Equipment by shifting storage and shipping priority away from its third-party sellers. Suddenly sellers were forced to limit the amount of product shipped to or stored in the warehouses. Many are still facing inventory restrictions and challenges, and many have yet to seek the benefits of a good 3PL!
These small (sometimes local) logistics companies take care of you and your products, and smaller 3PL businesses can be slightly undervalued aside from the known 3PL businesses. 3PL big and small business services include onboarding and implementation, storage, picking, packaging, and postage.
Unlike with FBA, when you choose your 3PL provider, you can prioritize what is important to you.
Some 3PL’s will offer packaging customization, so you can continue to bolster your brand by providing coupons, flyers, or branded packing. If accuracy is the most important metric for you, you can choose a 3PL with an excellent track record in that area. Or maybe developing a solid relationship with your logistics company is essential. You want to feel like you are more than just a number!
There are so many 3PL options available; no matter your current scale or needs, you can find one right for you.
Let's say you hope to create a gift box made up of multiple products for the holiday season; DCL logistics will design the kit for you and create a new SKU for it as part of their kitting service. Or, what if you want to expand into monthly subscription boxes? In that case, you may want to look at some of Shipmonk’s features.
Most 3PL’s only charge you for the specific space you’re using, so when using a 3PL, you’ll have the freedom to grow or contract your business as you see fit. Gone are the days when you’re forced to put your expansion dreams on hold because of the size of your storage! You won’t be charged for what you aren’t using when you’re low on inventory.
Using this kind of service can take a lot of the stress out of inventory management. Many 3PL providers offer user-friendly dashboards that can help you manage and control your inventory. Track, view, and manage your inventory from the comfort of your home! The usability you’ll find with many of these providers works well with the Amazon FBA sales method.
Another vital stage that a 3PL can help with is the sale of your business. If you’re still managing your inventory, your business will be less desirable to any prospective buyers. So if you’re getting to the point where you’re ready to sell, you will want to consider having a 3PL in place to get the best price for your business.
How do you choose the right third Party Logistics partner for your business?
Make a list of what is most important to you! Think about flexibility, cost, special services, personalization, efficiency, and scalability. Are most of your sales international? Do you require customs inspections? After making a thorough list, take a look at your options. A quick search in your area can tell you if local partners are available or if you’ll want to choose a more global company.
When you find a company that meets your needs, use their online calculators or request a quote to find out who has the best price. Remember to take note of which services are included and which are extra.
When you have narrowed it down to your preferred 2-3 companies, ask for client references. This is an important step where you’ll find out about how the 3PL is to work with. Find out what their customer experience is like and whether there are any surprises you should be aware of regarding processes and billing.
As a final step, it is always prudent to look into the financial health of any 3PL you are considering. The last thing you want is an unexpected interruption in your logistics!
Another essential thing to know about starting a business with a 3PL service is that you can still have an integrated relationship with Amazon. Many 3PL’s have an interface that is integrated directly with Amazon’s system, so you’re able to seamlessly continue your FBA business once your inventory goes from the 3PL warehouse to Amazon. More flexible facilities offer a few options aside from warehousing and meet your needs as you potentially grow off the platform.
Where is your business going? Are you ready to make a move to a 3PL? Try out Marketplace Prep today!