Why You Need To Hire A 3PL (& When You Shouldn’t)

Run a big enough eCommerce store and you’ll eventually run into this inescapable question: should I hire a 3PL?

Short for third-party logistics company, a 3PL basically takes the grunt work out of running an eCommerce store. That means you don’t have to ship your orders anymore. You can instead focus on growing your business.

Now the appeal of this is obvious and immediate. In fact, this is what we do at Fulfillrite. We’re a 3PL and we ship orders for eCommerce store owners and crowdfunding creators.

But our services – and those of 3PLs in general – aren’t for everyone. Sometimes you need a 3PL and sometimes you don’t. In this article, we’re going to talk about the advantages of hiring a 3PL, the advantages of in-house fulfillment, and how to choose between the two.

The Advantages of Hiring a 3PL

When you hire a 3PL, you delegate order fulfillment work to people who do nothing but ship orders all day at a massive scale. Even small 3PLs have sophisticated technology, well-refined processes, and specialized employees. This means that well-run order fulfillment centers can ship out far more orders than you can in-house, even though they’re doing the same for hundreds or thousands of other companies at the same time.

Another huge advantage of hiring a 3PL are the volume discounts. Because 3PLs ship out so many items, they get massive price breaks on common expenses like postage and supplies. Boxes that cost you a dollar each might cost a dime for a 3PL, and postage can be discounted by more than 50% in some cases.

While 3PLs will charge you for labor, the labor costs are often less than the money saved on postage and supplies. That can lead to a strange effect where outsourcing fulfillment can actually save you money, at least if your order volume is high enough!

In our opinion, the best advantage of hiring a 3PL is the considerable time you can save by not having to ship your own orders. Every minute you spend packing boxes is a minute you’re not spending growing your business. It can easily take an hour to ship out 10 packages per day, and that’s not even a particularly high order volume.

Take that time sink away, and opportunities start to open up! You can spend more time on selling and marketing. Instead of packing boxes, you can be fostering the business relationships you need to grow.

Finally, once you time is freed up and you are able to start working more freely on business-growing activities, when sales revenue come in, it will be much easier to scale your operation. The difference between 100 and 1,000 orders per month when you’re on your own is huge. The difference between 100 and 1,000 orders per month for any given client at a 3PL isn’t even noticeable.

The Advantages of In-House Fulfillment

For all the advantages of hiring a 3PL, handling order fulfillment in-house can also be very attractive. For one, you don’t have to hand over your inventory to strangers. In other words, you will maintain complete control over where inventory goes and when it leaves.

Along with that total control, you will also find it much easier to communicate with field personnel. If you’re not the one packing orders, then you know the person who is. You can call the delivery company if your inventory is late. If some of your stock is damaged, you can personally fix it.

All these things together mean that it is easier to resolve issues. You don’t have to contact your account representative or, worse, call a call center or submit a support ticket. If something is broken, you just fix it.

Can a 3PL properly handle issues when they arise? Yes. But you have to do your research to find one you trust, and besides, there will always be that slight risk that they just don’t handle it properly even though everyone says they will.

Finally, if you’re shipping your own orders, that means you can handle customer service issues without contacting any external parties. That means that you personally can fix a lost or damaged package, call the customer, and make it right. This can forge better customer relations in a way that “let me contact my fulfillment center” just can’t.

How You Should Choose Between a 3PL & In-House Fulfillment

Both outsourcing to a 3PL and keeping order fulfillment in-house can work well for your business. But making an informed decision between the two is critical. Here are a few quick guidelines.

First, if you’re shipping less than 100 orders per month, you are probably best off doing so through in-house fulfillment. The cost and time benefits of outsourcing order fulfillment are usually not apparent until you cross that threshold. Plus, many order fulfillment companies require a certain minimum volume, and this almost always hovers somewhere around the 100 order per month mark.

On the flip side, if you’re running into any of the following issues, it’s time to ask for help from a 3PL:

  • Your customer base is growing so fast you can’t keep up.
  • You’re unable to ship orders out on-time or correctly.
  • Your team is overworked.
  • Your business generally feels complicated.
  • Shipping costs are eating you alive.
  • You have no more room for your inventory.

And if you’re somewhere in between, then now is a good time to start requesting order fulfillment quotes. It’s better to know which 3PL you’d like to work with before you need their help.

Start vetting 3PLs today and request their quotes so you can sign up tomorrow if you need to!

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