For Irish companies wishing to sell online into the U.S. it is imperative to be aware of how to best manage the shipping process. With the constraints around time and cost, shipping from Ireland greatly limits potential sales. Third-Party Logistics companies alleviate this by completely taking care of the product once an online purchase is made.
What is third-party logistics (3PL)?
Third-party logistics (or 3PL) refers to the outsourcing of ecommerce logistics processes to a third party business, including inventory management, warehousing, and fulfilment. The third party logistics also allow ecommerce merchants to accomplish more, with the tools and infrastructure to automate retail order fulfilment.
Third-party logistics providers manage inbound and outbound transportation for their clients, as well as warehousing. Most 3PL companies own or lease warehouse space, which they provide to their clients. They generally don’t own their own fleet of trucks but contract with other carriers for freight and shipping.
Benefits of third-party logistics
There are several benefits of this operational model.
- Lower cost of goods sold. When you purchase products upfront, you will pay the wholesale price. The more you buy, the lower your costs and the higher your profit margins.
- Greater flexibility in product sourcing. When you use an E-Commerce fulfilment business model, you can more easily source products from more than one manufacturer. All your items will be stored in the same warehouse, so orders that include products from multiple suppliers can ship in the same box. This saves on shipping costs.
- More control over your logistics operations. You get to choose an order fulfilment partner that provides the services your customers expect.
- Faster order fulfilment. You can pick a third-party logistics service with warehouse locations that will get your orders delivered quickly.
- Easier returns processing. The 3rd-party logistics warehouse that shipped your products can provide customer service and seamlessly process any returns. This improves customer satisfaction and lets you put products back into inventory quickly.
3PL Order Fulfilment Process
A 3PL’s warehouse receives your company inventory and stores the products before they go out to the customers. The 3PL will need to coordinate the inbound shipments with the company who often use freight forwarders. This is part of their warehouse management process. A good 3PL would have warehouse management software integrated to make the process easier. The software will identify where a product is stored and when it was placed in storage to make it easy to fulfil and decide what to fulfil once an order comes in.
Once they receive your inventory, they store your items in our fulfilment centres. Each SKU has a separate dedicated storage location, either on a shelf, in a bin, or on a pallet.
Note: A 3PL is different from an on-demand warehousing company that just matches you with excess space in miscellaneous warehouses without operating any logistics centres themselves.
When a customer places an order, it’s time for the 3PL fulfilment process to begin. (You may have heard the phrase “pick-and-pack fulfilment” before — this is the first half of that.)
Some 3PLs require you to manually upload orders to their system. Sometimes, this involves spreadsheets including order details, customers’ shipping details, and more. This can be an inefficient and complex way to manage orders.
Other 3PLs have sophisticated technology that integrates directly with your ecommerce platform or marketplace. These 3PL fulfilment software integrations bring orders, shipments, inventory tracking and stock levels, and more together in one place to streamline the fulfilment process for more automated shipping.
This includes automatically pushing customers’ online orders to your 3PL as soon as they’re placed.
When an order is sent to your 3PL, it is assigned to the warehouse picking team. The picker receives a picking list of the items, quantities, and storage locations at the facility to collect the ordered products from their respective locations.
When all items in an order have been picked, it’s time to get them securely packed for shipping. The packing materials used will depend on your 3PL’s capabilities, your brand preferences, and the items being shipped.
Some 3PLs will charge for packing materials as a separate line item, while others include them as part of their fulfilment management services.
Dimensional weight is a shipping pricing technique that takes into account package dimensions to determine shipping rates. Using the right packing materials can help keep logistics costs low.
The next step is shipping your order. Most 3PLs will purchase and print shipping labels on your behalf. Some 3PLs have preferred carrier partners, while others compare shipping costs from a variety of carriers. The latter helps 3PLs offer clients the most affordable pricing possible for the delivery speed that each customer chooses.
Carriers such as DHL, USPS, and UPS pick up orders from 3PL warehouses to ship. The carrier and shipping speed for each order depend on the 3PL’s partnerships and policies as well as the ship options offered by the client and selected by the end customer.
Once the order ships, 3PLs with the integrated technology mentioned above will automatically push tracking details to merchants’ online stores.
Whether the item is ordered by mistake, damaged during the shipping process, or other various reasons, returns are part of the shopping process and an important part of the customer experience. If a customer returns an order by shipping it back to your 3PL, your 3PL will process the return and restock or dispose of the item depending on their policies and your preferences.
You can choose to have your 3PL provide return shipping labels for your customers. This offers convenience for both you and your customers; you won’t have to handle returns in-house, and customers can easily track the status of their return order.
Read more about 3PLs in our Newsletter
- 3 valuable services 3PLs offer
- How does 3PL pricing work?
- 3PL Order Fulfilment Process