Understanding E-Commerce
Third-Party Logistics – 3PL
One of the basic strengths of the e-commerce
paradigm is that participants get to perform roles
that they specialize in.
outsourcing to a third-party logistics
organization fits well with the e-commerce
ecosystem.
The Services a 3PL Provides
Supply Chain Management
A well-oiled supply chain is at the heart of a
successful e-commerce business. So if your
inbound freight delivery requirements are taken
care of, then the 3PL has done a good job.
Warehousing
E-commerce merchant may not have a physical
store.
A 3PL will typically take care of your
warehousing requirements(physical store. Of
goods).
It will invest in the space and technology required to
efficiently run a warehouse. warehousing by a
3PL will be more cost-efficient (spread its
overheads over multiple clients)
Consolidation Service
E-commerce merchants often send many small
goods to the same location. This is a situation
where the whole can be lesser than the sum of the
parts, i.e., if we consolidate all the small goods into
one shipment, the shipping charges could be
substantially lowered. A service provider sending
several small packages as one large package is
referred to as a consolidation service, also known
as freight consolidation or cargo consolidation. It is
one of the many services provided by a third-party
logistics provider.
Order Fulfillment
If an e-commerce business has not fulfilled the
order, it has done nothing. And order fulfillment
is not just about making sure that the goods
reach the buyer. The goods that reach the
customer must be the right goods; they must
reach on time, and in good condition. All of this
may sound obvious, but e-commerce is plagued
with erroneous order fulfillment. A good third-
party logistics service provider would be able to
take care of your order fulfillment requirements.
Reasons to Choose Third Party
Logistics
Flexibility and Scalability
Efficiency and Specialization
Technology
3PL Use Expected to Continue Due to
Uncertainty Over Government Funding
Increased Globalization Will Enhance Growth of
3PL Services and Capabilities
Shipper-Carrier Relationships Will Face More
Strain Throughout 2019
Information Sharing and Transparency Will
Affect Shippers
Automation of Workflows Will Contribute to
More Outsourcing
The Trucker Shortage Will Worsen in Accordance
With the Talent Shortage
Sustainability Will Affect Consumers’ Decisions
The Big Picture
3PLs will continue to grow approximately 7.1
percent per year, but actual growth may occur
much faster. It all depends on the speed and scale
of expansion of e-commerce, namely Walmart,
Target and Amazon. With the major retailers
looking to expand their e-commerce capabilities,
as well as take advantage of brick-and-mortar
sales’ opportunities, the allure of outsourcing will
become evident. Small and mid-sized businesses
will turn to 3PLs to stay competitive, and those
that recognize the value of an experienced,
reputable 3PL can succeed in 2019.
THANK YOU
