From the past few years, online businesses have picked up a massive share in the share market. Especially if we talk about e-commerce, this industry is at the forefront of online business in terms of annual sales, customers and profit. Even more, e-commerce is now beating all the records of offline shopping businesses. It’s because e-commerce shopping has numerous benefits. Read about 3PL for small businesses below.
Such as refund policy, authentic products, availability, home delivery and honest reviews; all these things make the e-commerce industry the most significant industry in the world. Logistics plays an essential role in the e-commerce industry. Without logistics, e-commerce stores can never work in the market.
However, when starting an online store, a question might appear in your mind: how can you manage the logistics part and deliver the customer’s parcel all over the country or internationally? Because did you know, you can start your online shopping store from only 500$-1000$. Whereas, if you build your logistics, it will cost you at least 90,000$-300,000$. Of course, this scheme doesn’t sound profitable. Some of important points are discussd below about 3PL for small businesses.
Logistics solution for E-Commerce Businesses
First of all, doing e-commerce isn’t an accessible business. To step into this business, you need to invest and set up many other things. Logistics is one of them. It’s obvious, without logistics, how will you deliver the parcels to customers? Unless you’ve Anywhere door. Setting up a logistics company will cost you at least 40x more than the cost of your e-commerce business.
Here, when 3PL comes to the ground, To come up with this logistics solution, the term “3PL” is used. 3PL is a short form of 3rd Party Logistics used by 99% of small scale e-commerce stores, and 80% of all e-commerce industry uses 3PL. If you’re planning to start your online shopping store or casually want to know about the 3PL system, this article is for you. Because, in this article, we’ve written an ultimate guide on everything you need to know about 3PL.
What the Hell is 3PL?
As the name suggests, 3PL (3rd Party Logistics) refers to the collaboration of a 3rd party logistics service that manages and solves all the delivery problems of an e-commerce company. A 3rd party logistics is responsible for managing all your product deliveries and delivering your products to your customers. Read awesome explanation about 3PL for small businesses.
Of course, a 3PL will not work for you for free. In return, they charge you a small amount of money for managing all your online store deliveries. This system proved to be a beneficial collaboration for both the 3PL company and the brand. But that benefit was only in ideal cases. Like any other system, 3PL also has some pros and cons that we’ll discuss later in the article. But, first, let’s see how 3PL works!
How does the 3PL System Work?
The working of a 3PL system is pretty straightforward. Below we’ve explained how the 3PL system works in detail:
The very first thing in a 3PL system is the product’s storage. Depending on the package you’ve chosen, the 3PL company will store all your store products in their warehouse. Again, it depends on the package you’ve chosen. Usually, in Singapore, the warehouse storage cost is high because the per-square area is much higher than in American and other Asian countries. In this package, you’ll send all your store products to the company’s warehouse, and they’ll store all your products safely in the warehouse. Moreover, if anything goes wrong with the products, such as if they break in the warehouse or delivery, the company will pay your compensation and the customer.
Products fulfillment refers to the packaging of products so that they can safely be delivered to the customer. 3PL companies in Singapore will handle all the products filled. You give them effect only, and they’ll take the rest. The company will pack your product, cover it with necessary safety things and deliver it safely to the customer.
Moreover, if the product breaks due to packaging issues, the company will be responsible for it and pay you a compensation amount. On a personal note, the fulfillment of the product is highly beneficial. First of all, it saves your time, your packaging costs and gives your insurance. Depending on your 3PL company, they may charge you according to the product’s weight, price of the product, monthly fixed charge or size of the product.
Now here comes the most-awaited and essential part. The primary and most basic purpose of your 3LP is to deliver your online store parcels to your customers safely. We know a smooth and safe delivery of your packages is extremely important to build customers and gain their trust. If something goes wrong in the delivery, even a tiny scratch on the product due to the delivery can affect your customers to a great extent.
Moreover, maintaining timeliness is another major thing to consider. That’s why 80% of e-commerce businesses use 3LP. 3rd party logistics are skilled in delivering your order safely to the customer while maintaining timeliness and professionalism. They always have backups which they use if something goes wrong so that your customers will never face any issues with the delivery and receive their products on time.
We know returns and refunds are some of the worst parts of every e-commerce business. We know you might think to remove the return and refund policy from your online shopping store. But, unfortunately, things don’t work like that. In any business, you’ve to work according to your customers, not according to yourself.
And, of course, no one’s going to buy anything from your online store if you don’t offer a safe and easy return and refund policy. So sadly, you can’t remove the return and refund system but can make someone else responsible for this policy. Yes, with 3PL collaborations, you can get rid of return and refund losses.
Depending on their TOS and your selected package, 3PL will compensate for all the refund losses. Moreover, they also offer a safe and easy return to the customers to gain their trust for your business. Important point as part of 3PL for small businesses guide.
3PL vs Drop Shipping
One of the enormous confusion in people’s minds regarding the 3PL is that dropshipping and 3PL are the same. But both are different and work in various manners. Below we’ve explained the difference between 3PL and drop-shipping:
In dropshipping, the retailers list the product in their online stores. Once the customer purchases the products from their store, the retailer order’s the product from the manufacturer and deliver it to the customer.
They manage everything related to the sales, such as order handling, packaging, fulfilment, etc. Now, it depends on the seller, how he wants to deliver the product to the customer. They can either hire a logistic company or deliver the product themselves to the customer.
The 3PL services are different from drop shipping. The work is straightforward. The retailer purchases the products at wholesale price (bulk amount) from the manufacturer. The seller lists the products online and handles everything except the order and deliveries. Then, they send all the products to the 3PL company.
- The 3PL company is responsible for storing the products of the seller in their inventory.
- They will manage all the pending orders and handle the customers for the seller.
- They take all the deliveries and are responsible for delivering the product to the customer on time and complete safety.
Advantages of using 3PL Companies
It’s an apparent reason that if the 3PL system exists in business and e-commerce companies are using it, then there should be some advantages that companies are using. However, in most cases, people eliminate the 3PL’s from their investment to save money. But, in reality, 3PL companies have many benefits that you’ll get after using them. For your ease, we’ve mentioned some of the main advantages of using 3PL companies for your business.
Save Time and Money
By choosing 3PL companies, you get rid of investing a considerable amount of money in renting a warehouse or any space where you’ll store your products. Moreover, as time passes and your business grows, fulfilling orders becomes a bit difficult and consumes a lot of time.
Of course, when your order ratio increases after some time, you can never handle a vast load alone by yourself. That’s the time when you need to hire labour for fulfilling your orders. The labour might help you in fulfilling the order much efficiently but will cost you much higher. But, if you buy a package from a 3PL company, they’ll handle all your demands.
One of the benefits of hiring 3PL companies is their skilled staff. A 3PL company is an expert and has got a team that are experts in what they do. They handle all your deliveries, fulfilment, returns and deliver your orders safely to the buyer on time without any mess. Believe us, maintaining a professional delivery system is extremely important if you want to make your 1st customer into a returning customer. Hope you love reading about 3PL for small businesses.
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