What does 3PL mean
for e-commerce?

Third party logistics, or 3PL, has become a major part of an effective e-commerce supply chain. 3PL firms provide services that allow companies to outsource some or all of their logistics and warehousing.

Online shops can easily outsource the responsibility of inventory management, product order lists, and order fulfillment to a 3PL provider. This way, online shops utilise logistics networks to deliver orders fast and effectively to the end customer.

 

E-commerce changes logistics

The rise of e-commerce enterprises has changed the logistics industry. The volume of shipments continues to rise among growing pressure for faster international deliveries and shipments. To rise to this challenge, the whole supply chain must operate dynamically. As the industry transitions its changes require constant innovation from service providers at every touchpoint.

Warehousing is changing too. Traditional warehousing was designed for wholesale use and is less suitable for small or medium e-commerce storage solutions.

Customers expect fast deliveries but are unwilling to pay for higher shipping costs. To remain competitive, e-commerce firms need to outsource their logistics and warehousing together with multi-storage options reducing the time deliveries take

An e-commerce owner’s survival guide for seasonal sales

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How 3PL works in practice?

1.

A customer orders a product from an online store

2.

The order is automatically transferred to the 3PL provider and processed in storage

3.

The stock balance is automatically updated in the online shop

4.

The product is stored in the warehouse that best fits your needs

5.

The order is processed, neatly packed, and delivered

6.

The customer receives their product anywhere in the world by their chosen delivery method

The most common reasons for outsourcing e-commerce storage and logistics to a 3PL provider

Handling the logistics of an e-commerce business by yourself might be reasonable when the quantity of orders is really low or if it is a recently launched business. If the online store’s products are sold from within a brick and mortar store, it might be possible and even sensible to combine the physical shop and storage.

But managing your logistics from start to finish by yourself will inevitably deprive time from other things, like business development. When the shipment volumes reach a certain point, it usually becomes too onerous to manage logistics on your own. When outsourcing logistics and storage, there is no need for you to handle basic functions on your own.

 

Advantages of 3PL for an e-commerce owner:

  • With small shipment volumes, it is difficult to negotiate good terms and prices for shipment contracts.
  • Having your own warehouse will tie up your capital, and acquiring extra seasonal workers could be a challenge.
  • A 3PL provider can offer multiple choices for delivery so the online shop benefits from previously negotiated competitive logistics contracts.
  • Planning for seasonal changes is a 3PL provider’s responsibility
  • The e-commerce owner’s time is freed up for important development and online sales growth.

When is the right time to outsource the logistics and warehousing of an ecommerce endeavor?

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A brief glossary of logistics terms:

Q: What does 2PL mean?

A: 2PL, or second party logistics, means that a customer buys single services such as shipping goods, customs or storage.

Q: What does 3PL mean?

A: 3PL, or third party logistics, is when a company outsources services related to the whole supply chain. A 3PL provider manages the material flows or related actions on behalf of the client company.

Q: What does 4PL mean?

A: 4PL, or fourth party logistics, is when a service provider provides logistics services for the customer’s whole supply chain and is also in charge of directing and developing their logistics.

Q: What does dropshipping mean?

A: Dropshipping is an operating model where an e-commerce owner sells products in an online shop, but the manufacturer delivers the products directly to the customer.

Q: What does reverse logistics mean?

A: Reverse logistics includes things like customer returns, warranty and service returns. In reverse logistics, the direction of the material flow is from the customer to the supplier.

How to choose the right 3PL provider?

A well-functioning and effective logistics operation is the backbone of any e-commerce business. To choose a good fit when outsourcing your logistics it’s important to find a trustworthy partner from the service providers. Before comparing service providers, it’s good to deliberate what your primary goal for outsourcing is.

For example do you want to:

  • Make global sales easier
  • Streamline your supply chain
  • Lower costs
  • Save time and resources

When the goal is explicit, it is easier to compare solutions from different service providers. When comparing different options you should take into account not only the current situation, but also your plans for the next year or two.

  • Do you have the capacity to remain flexible and scalable with this partner? What about pricing and resources?
  • Does transparency increase in regard to both logistics and expenses?
  • Is pricing transparent and predictable?
  • Is there a range of delivery methods that suit the needs of this particular e-commerce industry?
  • Does the 3PL partner offer worldwide deliveries and shipments outside of customs area?

Warehouse management systems

A central part of outsourcing the logistics and storage of an e-commerce is a warehouse management system. For it enables the e-commerce owner to manage the central logistics functions.

 

When you are comparing warehouse management systems, make sure that:

  • Is the warehouse management system tailored for an e-commerce enterprise’s needs?
  • Is the warehouse management system integratable to your own e-commerce platform?
  • If an integration does not exist, is the provider capable of making it?
  • Does the integration cause extra costs?
  • What kind of reports and data does the software offer for an e-commerce owner?
  • Does the software help e-commerce owners streamline inventory management and increase the profitability of the online shop?

 

myOGO warehouse management system

The warehouse management system myOGO by OGOship is specially developed for e-commerce needs. myOGO fully integrates with most common e-commerce platforms.

myOGO transfers order processing information to your online shop as well as receiving information about products and orders from your store. The warehouse management system shows real time views of stock inventory and shipment statuses. Try myOGO for free by creating an account: my.ogoship.com.

A free myOGO integration is available for the following platforms: Shopify, WooCommerce, Magento, PrestaShop, OpenCart MyCashflow and Vilkas. In addition, an integration is available via Flashnode: Prospercart, Clovershop, ZenCart and ViidakkoStore.

 

Would you like a demo of myOGO warehouse management system?

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OGOship and 3PL services

Customers who choose OGOship as their 3PL provider receive the following benefits:

  • No start-up fees
  • No minimum order volume
  • No minimum contract period
  • The possibility for multiple storage locations
  • A global warehouse network
  • The possibility for multichannel sales
  • The possibility to sell one product with multiple prices
  • Easy integrations to the most common e-commerce platforms
  • Clear and predictable pricing models
  • A quality customer service

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Customer case studies:

Case Arktiks

International growth
with OGOship

Arktiks expanded its production and sales in the Nordic countries in under three months with OGOship.

Read more

Case Mukama

Rapid
growth

By outsourcing e-commerce logistics and warehousing, Mukama was able to focus on marketing and customer service.

Read more