What Should You Know About 3PL?

by David Woolf

What is 3PLdropshipping ? What are the pros and cons of dropshipping?

Third-party-logistics is commonly known as 3PL (not to be confused with dropshipping) is a fulfillment method where an eCommerce business sends goods to a third-party fulfillment company that then caters to warehousing, packaging, inventory management, and shipping the items to end-users the buyers. The fulfillment company acts as the intermediary between the buy and the seller. The seller buys bulk goods from the manufacturers and gets them delivered to the 3PL company. Once the seller receives an online order, the 3PL is notified since the seller eCommerce website is integrated with the 3PL system. The 3PL company then picks packs and ships the order to the buyer. This is what differentiates 3PL from dropshipping. Although both involve third parties in the shipping process, on dropshipping one is not required to own inventory, and no warehousing, storage and shipping cost is incurred.

What are the advantages of 3PL?

  1.  3PL does not limit the amount of stock one can hold. With the option of warehousing and NextSmartShip offering 90 days’ free storage in China warehouse, 60 days free storage in Europe, you can enjoy unlimited stock volumes.
  2. 3PL saves time and money. A professional 3PL company will offer transparency in their price quotes and handle multiple tasks that can save time and money.
  3. 3PL companies are highly flexible. Most will be in a position to offer you more or reduced space, depending on your needs and budget.
  4. 3PL companies improve customer satisfaction. Consolidating and tracking orders can be difficult. One of the 3PL companies’ functions is to ensure that your orders are shipped to respective customers and arrive on time. This helps improve customer satisfaction ratio.
  5. 3PL companies will consolidate all your orders and data, hence you do not need to do it manually.
  6. 3PL offers higher convenience at an inexpensive cost. They are a better option from other fulfillment alternatives inters of being convenient and cost-effective.

What are the disadvantages of 3PL?

  1. Finding a trustworthy 3Pl service provide can prove to be difficult. 3PL companies are trustworthy and reliable.
  2. 3PL provides limited control on the supply chain and the distribution network for the eCommerce seller since the 3PL assumes the responsibility of packaging and shipping to buyers.
  3. Some 3PL API systems are not compatible with most of the commonly used eCommerce marketplace. It makes it difficult to track orders, manage accounts, and consolidate data.
  4. Compared to dropshipping, 3PL requires capital to start operations. Since the seller is required to have inventory and pay for warehousing, there are other overheads that arise, for instance, shipping fees, packaging fees, etc.

In 3PL dropshipping, the 3PL assumes the responsibility of the operation from warehousing, goods receiving, inventory management, packaging, and shipping to the eCommerce client buyer. Most digital buyers determine their satisfaction experience through, fast delivery, easy delivery process, enough information on the product, and easy return policies.

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