What is a 3PL?

Companies, especially e-commerce vendors, who need assistance with their supply chain and fulfillment often ask us: ‘What is a 3PL?’

A 3PL is short for ’third-party logistics warehouse’, which is a separate business that you hire to take care of your supply chain (managing suppliers, sourcing, etc) and fulfillment operations (warehousing, packing, shipping, etc). If you’re unfamiliar with 3PLs, here’s an example you will have heard of: Amazon!

Why use a 3PL?

A 3PL provides you with a great deal of peace of mind because your role is to get the orders from your customer and then your 3PL will fulfill the order for you by replenishing stock with your suppliers, storing it, and shipping as and when orders come in or you need inventory, taking all of that work out of your hands and leaving you with time to spend on growing your business.

Here’s a diagram that explains what a 3PL is:

Many e-commerce vendors and SMEs struggle to handle the fast shipping, packaging, warehousing, stock-ordering, software, and logistics while maintaining the delivery standards that customers expect. So, turning to an expert who specializes in all of the above makes a lot of sense, especially when scaling your business.

What does a third-party logistics warehouse usually specialize in?

A capable 3PL will take care of the following for you:

• Scheduling orders from your suppliers
• Receiving the inventory into their warehouse
• Checking that all inventory is as promised (possibly with incoming quality inspections*) and sorting it into categories
• Reworking parts or products which have defects but can be fixed*
• Returning defective parts or products that can’t be reworked to the supplier and arranging a refund for you*
• Storing your goods securely and in a way that keeps them in optimal condition
• Arranging shipping with logistics providers and negotiating the best rates possible
• Connecting with your e-commerce platform (if needed)
• As orders come in, picking, kitting or assembling, packing, and shipping them
• Sending repeat orders on a set schedule (if needed, such as by a subscription service)

*Not all 3PLs will provide these services, only those who have in-house inspection and manufacturing facilities.

Aside from their warehousing facilities, a 3PL is a useful ally because they provide:

• Local relationships with your suppliers – for instance in the case of a Chinese 3PL, the ability to deal with them as a Chinese company and speak Chinese which enhances trust
• Shipping and logistics – a 3PL will have logistics experts on staff who can deal with the minefield of freight forwarding and customs for you

👉 Related: Explore the questions you need answers to when sourcing a 3PL logistics company

Benefits of working with a third-party logistics warehouse

• You work with experts which will save you a lot of time
• You save a lot of money on needing to lease your own warehousing space and hiring fulfillment staff
• You can scale up and sell internationally with ease without needing to worry about logistics and shipping rules for different locations
• You’re able to offer fast free shipping on your site which is an important sales tool

Who needs to work with a 3PL?

• You need to commit to a fast and free 2-day shipping standard, such as demanded by Amazon – this can be a hard standard to maintain without specialist help.
• If your business is scaling quickly and you are struggling to handle logistics – if you’re overflowing with products in your small office or facility and seem to be spending an inordinate amount of time on packing and shipping orders, getting help from a 3PL will release the pressure.
• You are struggling to find and afford the space required for warehousing and fulfillment, never mind the additional staff costs – outsourcing to a 3PL who provides this as standard can make sense.

Is Sofeast a 3pL?

Yes, we are. We provide comprehensive 3PL activities at our Dongguan and Shenzhen Free Trade zone facilities:

In addition, you may be interested in:

• Dropshipping from china
• Logistics management
• Value-added procurement office (we act as your local buying office in China)
• Amazon FBA seller support