What is 3pl and how it fulfills orders ?

Whether you’re an e-commerce & crowdfunding business owner, when you decide to begin, order fulfillment is an integral part of your business. As your career progresses, you gradually find it difficult to handle the work of order fulfillment in-house and you prefer to spend more time and vigor to expand market and products but not fulfillment. Based on this, you will need to shift in strategy on fulfillment, and most companies chose to outsource order fulfillment to a 3PL (third party logistic) company.

If you’re within the same situation and need professional support, it’s essential to know these 3PL pieces of information.

  1. What is 3PL?
  2. How 3PL work to fulfill orders?

What is 3pl?

3PL, (abbreviated as Third-party logistics, or TPL) is the outsourcing of the e-commerce fulfillment process, including storing, fulfillment, global shipping, and value-added service.

These are the basic functions of 3PL, but not the major mission of the e-commerce and crowdfunding business.

Besides, 3PL can be scaled and customized to customers’ needs, based on market conditions, to meet the demands and delivery service requirements for their products.

More than that, in order to improve fulfillment efficient, some 3PL providers will utilize a fully automatic machine and warehouse ERP system to fulfill orders speedily.

If you want to understand how the importance of 3PL in e-commerce, the following data can answer:

  • The market for 3PLs providers exploded following the birth and exponential growth of e-commerce. Most Fortune 500 (86%) companies and 96% of the Fortune 100 use services like these.
  • The global 3PL market reached $75 billion in 2014 and grew to $157 billion in the US
  • Demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014.

How 3PL works to fulfill orders?

Based on the definition of 3PL, you’ll have an interest within the way of 3PL to fulfill orders, especially if you’re considering working with a 3PL company or your first contact with 3pl.

First of all, you don’t have to think that the fulfillment process is mysterious; actually, you cannot tell the huge difference from in-home until you understand the 3pl fulfillment process, and you’ll determine if you would like to use 3pl.

Now, SFC reveals to you the 3PL fulfillment service and process.

Warehouse: storing & inventory management

Storing & Inventory management

Fulfilling orders on time is predicated on the sufficient inventory in its warehouse, which is the same for in-home fulfillment or 3pl. But it’s vital to have enough space to store inventory meet your growing inventory need, use the tools and system to keep your stock safe and monitor stock levels. In this respect, the 3pl obviously has the advantage

For example, SFC has more than over 40,000m³ storage space in Shenzhen (China), which can store hundreds of times stock than your home warehouse and meet your product line and order volume growing.

And then, with the help of advanced Warehouse Management System (WMS), SFC keep the accuracy of inventory is higher than 99%, allows you to monitor stock levels and replenish the stock in time to prevent the shortage and sync real-time inventory with your online store.

Receiving

Backing to the starting point, the premise of storing and inventory management is to receive inventory.

In a 3PL warehouse, the “receiving” means that it accepts your stocks and stores it. Each 3PL has its own processes for receiving. For SFC, it is more likely to use tools to achieve, which can maximize efficiency and yet minimize errors.

Filling out an ASN before sending inventory to SFC China warehouse and SFC will know what products and quantities to expect, staying organized and timely with receiving and warehousing.

After receiving, the following work will also be carried out smoothly, such as inspecting, labeling, and storing.

Fulfillment: Pick, Pack, Shipping

Picking

When an order is placed on an online store, picking & packing process then takes place in a warehouse.

But how long does it usually take to go from placing an order to picking and packing?

Choosing to batch upload your received orders manually usually takes 1-2 days because you need to accumulate a certain amount of orders first, which will affect your delivery time.

How does 3PL usually do? They support API integration with your e-commerce platforms. It can help the 3PL system accept new orders quickly and response in time. For example, with SFC, orders can be synchronized to the system within 0.5h in their China warehouse.

In addition, the speed of picking &packing is also one of the benefits of 3PL.

Different 3PL have different capabilities of picking and packing; not all 3PL is fast and accurate in this respect. It is important to work with 3PL that is standardized, streamlined, and have sufficient automation equipment to improve speed and reduce errors.

Packing

After items picking is completed, it’s time to get them securely packed for shipping. The packing materials used will depend on the product’s properties, your preference, and 3PL capability.

Basic packing materials including:

  • Unbranded boxes,
  • bubble wraps,
  • Polybags
  • Corner protectors,
  • Packing tapes, etc.

Most 3PLs will charge packaging as a separate item, but the charging rate is different.

In the packing process, some 3PLs will select the most appropriate type of packing materials to keep the parcel light and small, which can help low the shipping costs.

It should be noted that logistics companies usually determine the shipping price of a package based on size and weight. Therefore, it is very important to choose the right packing materials to reduce the logistics cost.

Besides, if you want your brand logo to be visible, please make sure your 3PL partner can meet your demand for customized packing or value-added services, such as custom boxes and marketing inserts.

Shipping

With these preparations completed, the next step is shipping. Considering the cost, product pricing, and marketing strategy, you may choose the cheapest mode of transportation, or the safe, fast, but expensive model, or something in between.

No matter how you choose, most 3PL companies can meet your needs at the most affordable price possible. The reason for this is that 3PL usually have many carrier partners who have different shipping speed and service advantage, such as EUB, DHL, FEDEX. Similarly, 3PL can win more favorable prices through large orders.

The professional 3pl can do even better.

For example, if you want to send parcels to customers in Europe faster, but don’t want to pay for expensive delivery. Neither express delivery nor EUB is a good option. At this point, you can choose dedicated lines designed by 3PL.

A dedicated line is a logistics line developed by integrating express delivery, customs clearance companies and local high-quality logistics resources, which has the dual advantages of price and speed. This is a test of 3pl’s logistics resources and strength.

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