One of the biggest headaches for any business owner is shipping. This is especially true if you own an ecommerce business that relies heavily on shipping. You need warehouse space, staffing, training, insurance, utilities and more. Just handling the shipping side of things can feel like a business of its own — and meanwhile you still have your actual business to run. The disruption COVID has brought to the logistics industry has only added insult to injury. So, what can businesses do to alleviate this pain point? The answer is easier than you might think. It’s called third-party logistics, or 3PL.
A 3PL fulfillment center is a must-have for any business that ships more than a handful of packages per day, and yet most owners don’t know about this game-changing solution. Even large corporations like Colgate utilize these shipping centers.
Taking advantage of third-party logistics allows you to have multiple warehouses, if inventory allows, in multiple locations across the planet.
3PL centers are warehouses that store and ship inventory for a handful of different businesses simultaneously. They have a fully trained staff that will pick, package and ship your orders for you as they come in, along with any other special requests you may have. Because of the massive shipping volume these centers handle, they receive exclusive shipping rates with couriers — rates most businesses do not qualify for.
The price difference I personally experienced when switching from doing it myself to the 3PL center was roughly a 10% increase — but that 10% also saved me from having to do picking, packing and shipping, and from purchasing shipping materials. It meant not having to hire additional employees as we grew, or deal with the overhead and problems that come with a small warehouse. Factoring those advantages into the equation, I am actually receiving a massive discount on the overall process.
One of the best aspects of a 3PL center is its ability to scale with you. The bigger you build your business and the more order volume you require, the more resources they will provide to keep up with you. And your price per order doesn’t change when the 3PL center hires additional staff! This allows you to remove yourself from the logistics of your business and focus solely on what matters to you most: your actual business.
If you are already shipping internationally, you know how unreliable the shipping can be — lost parcels, parcels held in customs, or parcels arriving weeks after estimated delivery. Unfortunately, in the customers’ eyes, this makes your business seem unreliable. 3PL centers make it significantly easier to operate on a global scale and help mitigate these hiccups in logistics. Taking advantage of third-party logistics allows you to have multiple warehouses, if inventory allows, in multiple locations across the planet. Not only will this massively cut down lead time for your international deliveries and increase reliability and timeliness, but your shipping costs will also drop as a result. This a win-win-win situation.
Regardless of whether you utilize multiple or a single warehouse location, you still get full control of your inventory assets as if you were managing them yourself. You can specify any special needs that your inventory may require, any personalization, packaging requests, or any other specifications you may have that give your company that “special touch.” The warehouse will also provide you with real-time inventory levels so you are always aware of your stock. They can even conduct inventory counts on request to ensure your real-time tracker is accurate. All this without needing any warehouse management software of your own!
Most 3PL centers will also be able to integrate with existing shopping carts and software that you are currently using for your business, making your transition quite seamless. If a “plug-and-play” solution doesn’t already exist, they can usually find other alternatives to get connected to your preferred software. All of this may sound too good to be true, but we have been utilizing 3PL for years now, and it truly solves all our business needs. At this point, I honestly wouldn’t look for any other alternatives.
Getting Started With 3PL
For your experience with 3PL to be a successful one from the start, there are a few key points you want to keep in mind when finding the right match for your business. The first and most important detail is location. Where do you want your warehouse? Unlike doing it yourself, you do not need to find something in your backyard. Instead, consider the heatmap of your shipping destinations. If most of your business is in Europe, you may not want to set up a location in the U.S. Similarly, if you’re in the U.S. and most of your business is on the East Coast, it would be wise to find a warehouse on the East Coast to minimize cost and lead times.
The second and equally important factor is the warehouse business. As with all businesses in the world, no two owners are the same, and no two businesses are run identically. Compile a list of questions for the owner/representative at the warehouse. Your first question should be whether they are open to working with an adult company. Then ask about security, staffing, workdays, holidays, theft, minimum daily/weekly order volumes, pricing, software integration, etc. Get a firm grasp on how they are running their operation. Take notes on their responses. If everything aligns with your standards, the next step would be scheduling a walk-through of the warehouse, something I highly recommended.
A walk-through is a great way to experience the company culture firsthand to see if it would be an ideal fit for your business, and to verify that everything they told you over the phone is true. You will see the process of how they pick, pack and ship an order, how they receive and store inventory, and how everyone within the organization communicates with each other. Think of them as being an extension of your existing business, rather than a service you are utilizing. If everything seems to be a smooth-flowing operation from start to finish, and their culture and work ethic jibes with your own, they are likely going to be a great fit for your business.
After you have found the ideal warehouse for your needs, the final step is getting integrated with them, physically and digitally. Before you transfer any inventory, they should begin working on the integrations and conducting a test run to ensure that everything works smoothly. Once the integrations are complete, I recommend shipping 50% of your inventory to them to start, so you are able to maintain orders until it has been received and put into inventory on their end. From there, have them take over the reins but monitor the process closely, making them aware of any mishaps you notice. There will usually be a few in the very beginning. Once the bugs are ironed out, ship the remaining inventory to your new 3PL center, and enjoy running your business!
Austin Madore is the founder and owner of Locked in Lust, a manufacturer of chastity devices.
