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.
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
A customer orders a product from an online store
The order is automatically transferred to the 3PL provider and processed in storage
The stock balance is automatically updated in the online shop
The product is stored in the warehouse that best fits your needs
The order is processed, neatly packed, and delivered
The customer receives their product anywhere in the world by their chosen delivery method
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.
A: 2PL, or second party logistics, means that a customer buys single services such as shipping goods, customs or storage.
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.
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.
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.
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.
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.
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.
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.
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.
Customers who choose OGOship as their 3PL provider receive the following benefits:
Arktiks expanded its production and sales in the Nordic countries in under three months with OGOship.
By outsourcing e-commerce logistics and warehousing, Mukama was able to focus on marketing and customer service.