Insights

What is 3PL logistics?

In the fast-paced world of e-commerce, managing logistics can be daunting for small and medium-sized businesses. Processing and shipping orders and tracking inventory demands expertise and resources that not every business owner possesses. That's where 3PL logistics can come into play, offering a lifeline to brands looking to scale without the hassle of managing their own warehousing and fulfillment.

Are you interested in scalable fulfillment? Then let’s get to business.

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What does 3PL cover?

3PL stands for ‘third-party logistics’: the process of outsourcing logistics operations to a third party. Providers offer a broad spectrum of services: from basic warehousing, through to offering fulfillment, transport, distribution across multiple countries, full end-to-end visibility and cutting-edge analytics.

With thousands of 3PL providers out there, how do you choose who to work with? Here are four key ways in which you can compare third-party logistics providers (or in short ‘3PLs’).

Traditional warehousing

- Typically full pallet movements only: pallet in, storage, pallet out

- Service levels do not take end-consumer expectations into account, e.g. no same-day dispatch

- Limited ability for value-added services to enhance the end-consumer experience, e.g. packaging options, gift cards etc.

- Traditionally connected to trucking networks; may not have connections with last-mile delivery carriers

e-Commerce and fulfillment specialist

- Focused on individual order and item-level picking and packing

- Service levels designed to serve end-consumer expectations of delivery times and reliability

- Broader spectrum of value-added services, particularly relevant for e-commerce, e.g. returns, packaging, gift cards etc.

- Integrated with relevant last-mile carriers for consumer (B2C) delivery

Why does this matter to you?

What sort of consumer experience do you want to offer? Your choice of third-party logistics provider can significantly determine the quality of your consumer experience.

Local hero

A 3PL logistics company with a small number of warehouses (or perhaps just one) in one location

Multi-national player

A 3PL provider with an extensive portfolio of warehouses in many locations, spanning multiple markets

Why does this matter to you?

Does the 3PL you’re considering provide you with enough scale to grow? Think about your short-term needs, and also think longer term about new markets you plan to enter.

Physical

This type of 3PL company looks after the physical movement and storage of goods:

- Inbound, receiving goods

- Storage capacity for goods

- Pick and pack process

- Handover to last-mile carriers

- Returns

Digital

This type of Thirdy Party Logistics provider looks after everything the ‘physical’ 3PL looks after… and a whole lot more:
- Easy onboarding with the 3PL’s systems
- Easy integration of all stock with customer webshops (e.g. Shopify)
- Pre-integration with last-mile carriers, with track and trace
- Visibility of all orders in the warehouse and on the way to the consumer (truly end-to-end)
- Visibility of stock
- Data-driven analytics that customers can use to improve their e-commerce operations, e.g. purchasing planning, distribution of inventory around a network, scaling up for peak season
- Analytics to guide a company on when to move stock to markets with high sales

Why does this matter to you?

Think more widely than just the physical, operational processes. Check out a 3PL’s digital capabilities, as a good provider can help you optimize your activities. If they can get access to the right data, this can help you drive your growth, by reaching the right consumers at the right time, with the right experience.

High levels of outsourcing/subcontracting

A 3PL company that acts as an intermediary, subcontracting some or all operations to other providers

Own teams and assets

A Third Party Logistics provider that works strictly with their own team and operates their own warehouses

Why does this matter to you?

When your 3PL has its own team and warehouses, they are directly accountable for all stages in the process, and for ensuring service quality. It also means you can build a relationship together, leading to strategic collaboration to help you grow.

At the DHL Fulfillment Network, we know from our experience that when brands are growing the time may come when it’s no longer viable for them to carry out their own order fulfillment, or that using a small, traditional 3PL no longer fits their needs.

The next step is a huge decision, so make sure it’s the right one for your business.

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What to do next

Come on board with us!

Our third-party logistics services are highly attuned to the needs of all our customers, be they start-ups or scale-ups:

We are an e-commerce and fulfillment specialist.
We are a multi-national player.
We offer every customer a suite of digital tools.
And we have our own extensive teams and assets across multiple countries, globally.

Our new customers – after just a simple set-up phase – remark how quickly their logistics is streamlined. We integrate easily with their webshop, if they use one. They can scale up and down flexibly across varied SKUs and multiple geographies, and they can analyze the data from our advanced inventory insights tool to direct their decisions.

And all the while, they are served by a dedicated team – of our own – who become their partners. We bring with us our experience of working with a growing list of brands in industries as varied as food and beverage, clothing, household hardware, beauty or technology.

Start your 3PL growth journey with the DHL Fulfillment Network today. Get in touch!