A 3PL, or Third Party Logistics, is a term for an outsourced logistics provider that offers warehousing and fulfillment services.
Many businesses find that outsourcing fulfillment to a 3PL frees up time and capital to invest in their core competencies to expand their business. In fact a recent merchant survey revealed that 44% of merchants simplified their operations and management scope by outsourcing fulfillment. Outsourcing to a 3PL also cuts back on capital investments in warehouse management, labor, and equipment maintenance.
As a legacy fulfillment model, 3PL’s are often a first thought for merchants looking to outsource their fulfillment. The benefit of increased operational efficiency and reduced capital expenditures are unquestionable advantages for SMB’s, but rigid contracts and seasonal surcharges may cause some merchants to question the viability of a 3PL partnership for their business.
SMB’s who are looking for the advantages of a 3PL but need flexibility and scalability to accommodate seasonal demand and de-risk growth opportunities should consider the quickly growing model of outsourced logistics known as 4PL.
A 4PL, or 3PL network, will offer a variety of services, both as part of day-to-day SOP’s and value added services. The essential services offered by top tier 3PL’s include:
3PL partners will receive inbound shipments, reconcile the shipment to an Advance Shipment Notice (or ASN) to ensure accurate inventory reporting, and perform a basic quality control check before storing. Upon receiving, products will be scanned into the Warehouse Management System (WMS) and stored according to the merchant’s SOP’s and product needs.
Many businesses looking to outsource will start with a regional 3PL close to their headquarters or manufacturer, but these regional 3PL’s are limited in their geographic reach and often in their bandwidth and expertise to strategize with SMB’s for long-term growth. When merchants begin to expand into new geographic markets, they often contract additional 3PL’s to better serve customers in their new markets. This can result in a patchwork fulfillment process, difficult to manage, with multiple lines of communication and inconsistent service levels.
A 4PL acts as a strategic partner, negotiating the best rates and SLA’s across the 3PL network and helping merchants decide where to forward stock inventory in order to best serve their customers. 4PL’s aggregate the inventory and shipping volumes of multiple merchants to negotiate the best SLA’s and eliminate peak season surcharges.
Ware2Go is changing the traditional 3PL model to make 1 to 2-day delivery affordable for all merchants. A nationwide network of certified warehouses supported by technology to streamline fulfillment across all sales channels enables merchants to correctly position inventory to best serve ecommerce customers in key regions. Reaching all of your best customers with 2-day ground eliminates long-zone shipments and overnight air — ultimately lowering your overall cost to serve.
Our 3PL network is fully customizable and scalable to fit your business goals and customer profile. Our team of fulfillment experts use your historical sales and shipping data to build a 3PL network to increase service levels to your best customers and lower your overall cost to serve.
For a custom network analysis reach out to one of our in-house experts.
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