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The 3PL method: Gain control over your inventory

Barbara Karen

Barbara Karen

Are you a bit of a control freak? Do you wish to start an online business “the right way”, but still don’t want responsibility of warehouse managing? Well, there is an option; Work with a 3PL (shortened from Third Party Logistics). A 3PL is a service a lot like the one dropshippers offer customers; A warehouse that handles the daily logistics management, such as inventory, staff, picking/packing and also shipping and freight forwarding. 

Dropshipping vs. outsourcing to a 3PL

Unlike dropshipping, you will need to invest in your own inventory, but if you have a clear product in mind that you want ownership over, this is definitely the way to go for you. You will naturally also have to pay to have this inventory at a 3PL warehouse, but the cost of outsourcing your warehouse can surely be worth it depending on the volume of your shipments. This is because 3PL’s have great carrier agreements that you yourself just can’t compete with. Read about Cost Control here.

 

Let’s view the benefits of outsourcing your warehouse to a 3PL: 

  • Cost reduction
    This is the big plus. Freight companies will, as mentioned above, give better pricing on carrier agreements to 3PL’s since they have a lot more goods going out, than the small customer. This is great for the customers who can now save on large carrier expenses. 

  • Provide a better shipping experience
    Customers are demanding. They often expect same or next-day delivery. Third party logistics provider can meet your customers expectations, even in returns. Also, if any damage or loss of goods should happen during delivery, you will not be held responsible.  
  • No worries about international logistics
    You don’t have to lift a finger when out of country customers place an order in your online shop. Documentation, customs, duties etc. will be handled for you. 
     
  • Try new products and markets
    Since you don’t have to maintain your own warehouse, the flexibility and possibilities are endless. This gives you space to test out new concepts in your shop, without having to commit to large investments in the warehouse.

  • Sell your own chosen products
    You will know exactly what you’re selling from the product’s strengths to its weaknesses. You have the control to brand the products and packaging to a more suitable style for your business, which in return will signify seriousness and professionalism. 

Is outsourcing to a 3PL worth it in 2021? 🤔

That’s a definite yes! Outsourcing of your warehouse is something that is here to stay and will most likely only become more popular as times go by. A 3PL is worth considering if you’re business is fulfilling more than 10-20 orders a day, running out of valuable storage space, or if you’re afraid any spike in sales will be hard to accommodate causing you to damage your reputation. View all our 3PL partners

Alternatively, you can start out with drop shipping to get an insight into the world of e-commerce and logistics. It’s a relatively inexpensive way to test the potential of yourself as a business owner. 

When you know the future of your online business with the products you wish to sell, you can redirect your business’ logistics from your dropshipper to a 3PL. Thus increasing your profit margins and gaining insights to your logistics and control of the product quality. Still, you don’t need to take care of packing, shipping or returns, since the 3PL will handle this.

If you want to know more about 3PL and warehouse management you can read the guide “Warehouse management and optimization for e-commerce“.