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5 Best 3PL eCommerce Fulfillment Services — and How to Choose Your 3PL Provider
Updated:
11
minutes read
Supply chain management is one of the most crucial parts of eCommerce.
It covers many critical functions throughout the chain that are directly impacting the customer experience — e.g., managing inventory and delivering orders on time.
A third-party logistics (3PL) provider can be your business partner and help manage these functions for you. But before partnering with a 3PL eCommerce fulfillment service, you might have a lot of questions like:
- When should I consider outsourcing to a 3PL company?
- What are the pros and cons of using 3PL services?
- Which are the best 3PL companies?
- How do I choose a 3PL company for my business?
We get it! In this blog, we’ll address all these questions with a detailed guide and things you must consider when choosing a 3PL company.
First, let’s get started with some basics!
Third-Party Logistics vs Fulfillment Services
Although third-party logistics (3PL) and fulfillment companies handle similar types of work, there are some subtle differences between these two.
That said, you may still find these terms used interchangeably.
What is a Third-Party Logistics Service/Company?
Third-party logistics or 3PL covers a broad range of services in supply chain management including transportation, inventory management, warehousing, distribution, shipping, and so on. Apart from regular shipping, they may also offer other services related to freight forwarders, air shipping, courier services, insurance, and so on, for large-scale operations.
What is a Fulfillment Service/Company?
Fulfillment services mainly focus on the order fulfillment process by covering activities related to picking, packing, and shipping of goods to individual customers. Also, they usually offer custom packaging with branding and returns management as well.
Now, there’s another twist:
There are some companies that offer a combination of both services, i.e., third-party logistics and fulfillment services. And that’s why we may call them “3PL eCommerce fulfillment companies”.
In fact, in this article, we’re going to cover some companies that cover both services. The key is to figure out your exact requirements and find a company that covers those services.
Role of Third-Party Logistics in eCommerce
With increasing online shopping and expectations of fast deliveries, the role of 3PL companies has become more crucial than ever before.
A recent McKinsey analysis found that logistics costs represent 12-20% of eCommerce revenues — and this percentage is likely to go up from here.
This shows how eCommerce brands have started heavily relying on 3PL services.
Third-Party Logistics — Advantages and Disadvantages
Just like most things in business, using 3PL has its own pros and cons. So, you may need to evaluate if the benefits of using a 3PL company outweigh its disadvantages.
Pros of Using a 3PL Company:
- Saving Cost of Deliveries:
This is one of the biggest benefits of using a 3PL company. Since 3PL companies solely focus on the logistics part of business, they have built relationships with various partners. It helps them get bulk discounts, and as a result, eCommerce companies also get cost-effective rates.
- Enhance Focus on Your Business:
A 3PL company would take away the stress and hassle of managing logistics. Thus, you can focus on growing and scaling your business by paying attention to more critical tasks such as marketing and sales.
- Streamline Your Operations with Expertise:
3PL companies are experts at what they do, i.e., logistics operations, inventory management, warehousing, and shipping. As a brand, you may not have that level of expertise. So, it helps you improve these processes with more robust handling of operations — and without directly investing in those resources.
- Enhance Customer Experience:
Customers expect fast delivery of their products and 3PL companies play a crucial role in meeting those expectations. According to Statista, nearly 66% of global online shoppers said they expect items to be delivered within 24 hours. 3PL companies can help you elevate the customer experience by meeting such faster delivery expectations.
Cons of Using a 3PL Company:
- Handing Over the Control to 3PL:
While you’re handing over the burden of your logistics operation to a 3PL company, you also hand over the control. Meaning, you won’t be able to completely monitor and control how the processes are being implemented.
- Potential Platform Compatibility Issues:
For eCommerce companies, it’s important to have a smooth integration of any third-party service with their eCommerce platform. You may go through issues in the integration process if you fail to choose the right 3PL partner.
- Dependency & Communication Barriers:
You need to depend heavily on an external company to get things done. Also, you may have to communicate often due to a lack of complete visibility of the progress.
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When Should You Consider a 3PL Company?
Not every business requires outsourcing the logistics operations to a third-party company. Especially if you’re a small business, you might want to evaluate the requirements of 3PL services before making the final decision.
Here are the factors you should consider before going for a 3PL company:
-
Order volume
How many orders are you processing daily? If you’re processing about 20 or more orders daily, it makes sense to consider going for a 3PL company.
-
Cost of self-management
If you’re managing all the logistics and inventory on your own, evaluate how much you’re spending monthly/yearly to manage all fixed and variable expenses. Is your current cost exceeding way too much than a third-party provider? If yes, you can switch to a 3PL.
-
Feasibility to manage it in-house
Consider the space and resources occupied in managing your entire logistics operations. If you’re running out of space due to the scale of your business, you might want to consider hiring a 3PL company.
-
Current logistics challenges
Are there challenges in your ongoing operations? If not, why fix something that isn’t broken? But if there are challenges, it’s wise to consider the expert who could do a better job at managing it all.
For example, if you’ve started noticing a trend of negative reviews due to delays in order deliveries, you should consider outsourcing the fulfillment and shipping to a 3PL company.
How to Choose Your 3PL Company
Finding the right 3PL company may consume your time and effort in research and communications. However, keep in mind, it’s better to put the required effort upfront so that you don’t have to face issues in the coming months.
Here are the important factors you must consider when choosing your 3PL company:
-
Industry Experience & Track Record
Check the experience and how the company has been performing over the years. You can find online reviews on platforms like Shopify App Store, Trustpilot, Capterra, etc.
-
Warehouse or Fulfillment Locations
Depending on where you’re operating your business and where you’re looking to distribute or ship products, this could be a decision-making factor. Having fulfillment centers near your target market can speed up order deliveries.
-
Technology
Consider what technology is used by the 3PL company and make sure it’s compatible with your tech stack and business requirements. For example, some 3PL companies use technology for the smart distribution of inventory.
-
Safety & Security
Review and research what safety and security measures are taken care of by the 3PL provider. After all, you want to ensure that quality is not compromised due to outsourcing the processes.
7 Red Flags to Watch Out For When Choosing Your 3PL — Shared by Davie Fogarty:
Davie Fogarty is the founder of a popular eCommerce brand — The Oodie — and has had experience outsourcing the fulfillment process of his brand to a 3PL company.
Based on his research and experience, Davie has shared some red flag indicators you should be careful about when choosing a 3PL company.
So, a 3PL company might be a red flag if they —
- Cannot integrate with your eCommerce platform
- Do not have clear standard operating procedures
- Do not have a barcoding system
- Do not give accurate real-time data
- Do not give access to clear stats and reports
- Do not adhere to a FIFO (First In, First Out) system
- Do not provide clear communication
You may check out his YouTube video on this topic to learn more:
5 Best Shopify 3PL Companies
If you need to integrate a third-party logistic (3PL) on Shopify, you have multiple options in the Shopify App Store.
Here are some of the best Shopify third-party logistic apps:
1. ShipBob Fulfillment
ShipBob is one of the popular logistic providers for Shopify stores to manage international operations.
Key Highlights of ShipBob:
- Automated Order Fulfillment: Move orders automatically from Shopify to ShipBob — and it’ll let you track orders throughout the order fulfillment process.
- Fast Shipping Options: Same-day shipping as well as 2-day shipping.
- B2B/Wholesale: Handle B2B or wholesale orders with retailer compliance and EDI (Electronic Data Interchange).
- Branding: Customized packaging with inserts to deliver orders with your custom branding.
- Integrations: Offers REST APIs for other ERPs like NetSuite.
Ratings & Reviews:
Shopify App Store: 4.3 Out of 5 Stars (243 Reviews)
Pricing:
ShipBob does not have fixed pricing plans listed on the Shopify App Store or its website. You need to submit contact details along with the eCommerce platform and the number of shipments per month to get pricing.
2. Shopify Fulfillment Network
Shopify Fulfillment Network (also known as SFN) is Shopify’s official app in partnership with Flexport — the supply chain logistics platform.
Flexport has warehouses and fulfillment centers located in the United States and it can help you with 2 and 3-day delivery across the nation.
Key Highlights of SFN:
- Inventory management: You just need to send all your inventory to one Flexport location, and then, they will take care of the distribution of products across different fulfillment centers.
- Data-driven network planning: Flexport uses large data to make strategic decisions and moves products to the nearest centers which can help you with faster deliveries.
- Competitive rates: Helps with affordable rates for inventory storage, packaging, shipping, and returns management as well.
- Flexible terms: There are no order minimums, no contract requirements, and no upfront fees.
- Sales channels synchronization: Lets you have your orders fulfilled through multiple sales channels by connecting them with Shopify Marketplace Connect.
Ratings & Reviews:
Surprisingly, the app doesn’t have any reviews on the Shopify App Store as of writing this article.
Pricing:
Shopify Fulfillment Network helps you estimate the fulfillment and storage costs using this cost calculator.
3. Order Fulfillment Guru
Order Fulfillment Guru is a great option if you're looking to manage multi-vendor and multi-warehouse orders.
Key Highlights of Order Fulfillment Guru:
- Process automation: Enables you to assign locations, partners, and 3PLs automatically based on routing rules.
- Real-time inventory tracking: Syncs your orders and inventory statistics in Shopify admin on a real-time basis.
- Admin tasks: Offers prepaid shipping labels and auto-invoicing features.
Ratings & Reviews:
Shopify App Store: 5 Out of 5 Stars (107 Reviews)
Pricing:
4. Printful: Print on Demand
Printful is mostly known as a print-on-demand dropshipping provider in the eCommerce space. However, it helps merchants with a large part of logistics operations as well.
Printful takes care of a wide range of operations including product sourcing, product printing, warehousing, fulfillment, quality assurance, shipping, and even returns management.
Key Highlights of Printful:
- Product catalogs: You can source a wide range of products (clothing, accessories, home & living, etc.) along with custom printing and embroidery services.
- Design tools: Lets you create product designs with an easy-to-use visual editor and upload mockups directly to Shopify.
- Custom branding features: Helps you with branding and marketing elements such as packaging, pack-ins (product inserts), and packing slips too.
- Immediate Production: Printful takes care of production within 1-3 business days, and then the orders are sent to shipping partners.
Ratings & Reviews:
Shopify App Store: 4.6 Out of 5 Stars (6,991 Reviews)
Pricing:
5. ShipMonk | Order Fulfillment
ShipMonk is a 3PL solution for eCommerce businesses of all sizes.
Key Highlights:
- Cloud-Based Software: The 4-in-1 cloud-based software covers the order management portal, inventory portal, shipping management system, and warehouse management.
- Dedicated Support: Offers merchant support through dedicated "Happiness Engineers" directly from warehouses to resolve any urgent issues.
- US & International Order Fulfillment Centers: Apart from 7 different fulfillment centers in the US, ShipMonk has global centers in the Czech Republic, United Kingdom, Mexico, and Canada as well.
Ratings & Reviews:
Shopify App Store: 4.4 Out of 5 Stars (129 Reviews)
Pricing:
The ShipMonk’s pricing page has the steps to calculate the estimated pricing based on your requirements. Also, you can request a personalized quote through the same page.
Final Thoughts on Shopify Third-Party Logistics
When scaling your business, you need to take care of multiple critical functions. At the same time, with growing customer demand and expectations, you need to ensure customers are satisfied too.
By outsourcing your supply chain or logistic functions to a specialized third-party provider, you can continue delivering the best customer experience while focusing on your business growth.
Start with collecting quotes and details from multiple 3PL providers, compare what fits your budget and requirements, and then proceed accordingly.
For eCommerce marketing strategies and best practices, check out more resources from our Blog — and join the GemPages Facebook community to network and learn from like-minded entrepreneurs and experts.
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FAQs on Third-Party Logistics
What logistics does Shopify use?
Shopify is primarily an eCommerce platform and doesn’t offer logistics by default. However, you can use Shopify Fulfillment Network — a Shopify app powered by Flexport — to use logistics and fulfillment networks across the United States.
Does Shopify integrate with 3PL?
Yes. Being one of the most popular eCommerce platforms in the world, Shopify can be easily integrated with many large 3PL providers. Also, Shopify has its own app, Shopify Fulfillment Network, which helps merchants leverage logistics services from Flexport.
What is a third-party logistics company?
A third-party logistics (3PL) company offers services related to supply chain management including transportation, inventory management, warehousing, shipping, and so on. Some 3PL companies also cover other services related to fulfillment, custom brand packaging, insurance, etc.
What are the disadvantages of 3PL?
Here are some potential drawbacks of using a 3PL provider: 1. Handing over the process control to a third-party company 2. Potential issues related to eCommerce platform compatibility 3. High level of dependency on a third-party provider and 4. Communication barriers.
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