There are plenty of options for e-commerce businesses that seek a fulfillment solution. They can choose 3PL services, Fulfillment by Amazon, freight brokers, freight forwarders, or even contract directly with a specific carrier.
The problem isn’t one of a lack of choice. There’s an abundance of that. The problem for most firms is choosing the most efficient and effective solution from the world of options available to them.
Because there’s no one-size-fits-all solution, for most firms the selection comes down to examining the pros and cons of each choice as it relates to their specific firm and industry. In other words, your choice of fulfillment provider is going to depend on which industry you’re in and what your needs are.
In this week’s article, we take a look at 3PL vs. carrier services. Or, more accurately, we’ll examine whether you’re better off directly contracting with a shipping company to move your products or going with a firm that offers a full suite of logistics services. Continue reading below to find out more!
What is 3PL?
In case you’re unaware of what 3PL is, we’ll provide a brief explanation. 3PL stands for third-party logistics. Third-party logistics firms are companies that specialize in the provision of full-service logistics and fulfillment solutions to other companies and individuals.
A typical 3PL will warehouse, package, and ship the goods you sell on your website. In other words, 3PL companies take all of the steps in the fulfillment process off your hands, freeing you to focus on the other aspects of your e-commerce business.
Full Disclosure: Fulfyld is a 3PL firm. We provide a comprehensive suite of custom fulfillment services to all of our clients. We specialize in serving the needs of e-commerce businesses that look for efficient ways to warehouse, package, and ship their goods.
What are Carrier Services?
Carrier services are the companies that actually take possession of, and deliver, products to customers around the world. Many of these firms are “asset-based,” meaning they control or own the physical vehicles and facilities that are used to transport goods.
When you think of a traditional “shipping company,” you may be thinking of typical carrier services.
3PL v. Carrier Services: Which is Superior?
While we, as a 3PL company, would like to be able to simply come out and say “3PL is always better,” the answer is actually more nuanced than that. The choice you’ll wish to make depends on your particular needs and circumstances, as well as the particulars of the firms you consider to be candidates to serve your company.
What we can confidently say is, that for the vast majority of e-commerce companies, a 3PL is a better permanent solution than contracting directly with a carrier to store and move your products. 3PL simply offers more convenience, cost-savings, features, benefits, and solutions than your average carrier service.
We’ll discuss the benefits and drawbacks of both 3PL and carrier services and help you make the right choice.
Benefits of 3PL
The benefits of using a 3PL firm are wide-ranging and varied. Even better, the upsides to 3PL companies will be realized by virtually any e-commerce business, regardless of the industry in which they operate or the nature of their organization.
3PL companies are inexpensive. Considering the scope of the solutions they offer (everything from warehousing to packaging to shipping), and the services they provide, good 3PL companies do not charge a lot.
3PL can actually shave money off of your shipping, packing, and storage costs by relying on economies of scale and specialized expertise that the typical e-commerce firm simply doesn’t have access to.
While you might think that adding another layer to your fulfillment operations would add costs, the increase in efficiency associated with a 3PL can actually work to lower your expenses below what they would be if you tried to do everything yourself.
3PL companies are convenient. Instead of relying on piecemeal services of the kind offered by freight brokers, freight forwarders, or carriers and couriers, good 3PL firms handle all of your fulfillment requirements. They take every aspect of product logistics off your hands and free you up to work on those things that demand your immediate attention.
You’ll have more time to operate and grow your business when you’re not spending half of your time dealing with shipping hassles and product warehousing problems.
Competent 3PL providers are long-term partners. We know that, at Fulfyld, we spend a great deal of time getting to know our clients, their businesses, and operations strategies. We work every day to optimize their ability to get their products from Point A to Point B in as little time and with as little expense as is humanly possible.
Good 3PL firms will anticipate your needs, quickly responding to regular, seasonal sales trends and patterns, changes in your customer demographic, and increases or decreases in product sales caused by sales and promotions. Because e-commerce businesses are able to work with 3PL companies so closely, the logistics of these companies works hand-in-glove with the rest of their operations.
3PL companies are experts at getting products from you to your customer. They know the carriers, the brokers, and the facilities that can help get your products to where they’re going. They know who’s reliable and careful, and who’s untested. They know who’s cheap and who’s expensive.
All of that knowledge and expertise benefits the clients of 3PL firms, who realize increased customer satisfaction caused by fewer shipping delays and much lower rates of product damage.
Downsides of 3PL
There are a few downsides associated with 3PL companies and one in particular stands out.
There are always some initial setup and familiarization costs associated with partnering with a 3PL firm. In other words, as with any long-term relationship, you’re going to spend some time and money up-front as you move your business to the 3PL company and get to know their processes and operations.
Similarly, it will take a little bit of time for the 3PL to get to know your firm. They will need an opportunity to familiarize themselves with your operations and processes before they’re in the best position to help reduce your costs and increase your efficiency.
Benefits of Carrier Services
There is one primary benefit to dealing directly with carrier services. You’ll sometimes be able to get the best price possible (from that particular company) because you’re dealing directly with the company and there are no intermediaries between you and the carrier.
Now, we should point out a pretty big caveat with respect to this benefit. Sometimes, an intermediary is able to get a better price than you would directly because they’re able to access discounts that apply to parties who move large amounts of product. So, for example, a 3PL might get a better price than you would from a carrier because they move more products in a given month than you would by yourself.
Downsides of Carrier Services
For the typical e-commerce business, there are several drawbacks to dealing directly with carrier services.
Dealing directly with carrier services is cumbersome. After all, in order to compare the rates of multiple services you would have to call and negotiate with each one individually. You might have to repeat this process for every large shipment you intend to make.
- A Limited and Ad-Hoc Solution
Far from providing a holistic and global solution for your fulfillment requirements, dealing directly with carriers generally only solves one shipping problem at a time. You’ll still need to deal with warehousing your products and packaging them for shipment.
For the vast majority of e-commerce businesses, a 3PL company provides a more convenient, cost-effective, and reliable way to get your products from your warehouse to your customer. You’ll simply have access to more and better services. You won’t even pay very much to have the benefit of these services since the aforementioned gains in efficiency and expertise will serve to lower your costs when dealing through a 3PL firm.
There are a few exceptions to this general rule. Those businesses that have a specific shipment that needs to get to a customer might be better off dealing with a carrier directly. Although even those folks might want to look into the services of a freight broker or forwarder with expertise in the logistics industry.
In any event, people looking for a carrier to make a large, one-time delivery of goods may not benefit as much from the long-term relationship provided by 3PL companies as a typical e-commerce business might.
We at Fulfyld pride ourselves on providing effective, reliable, and inexpensive logistics services to e-commerce businesses of all sorts. We love helping companies get their products from our warehouses to their customers with ease and speed.
Contact us today to learn how we can help take your e-commerce company to the next level.