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Pick and pack fulfillment is a major part of your order processing and inventory management efforts. Improving your picking and packing process means improving your warehouse operations’ speed and accuracy. Better speed and order accuracy, in turn, leads to fewer returns and happier customers.

In this guide, we’ll cover everything about achieving business success with pick and pack fulfillment. Read on to learn more!

Here’s a breakdown of what you can look forward to while reading ShipHero’s Guide to Picking & Packing in an eCommerce Warehouse:

• Pick and Pack Fulfillment: Tips and Guide for Business Success
• Picking in a Warehouse: What is Order Picking?
• Picking List: How to Create and Optimize It
• 7 Warehouse Picking Strategies to Improve Efficiency
• Creating and Managing Kits: What is Kitting?
• Packing Tips To Avoid Damaged Goods And Customer Returns
• The Importance of Packing Stations in Warehouse Management
• Setting Up Efficient Packing Table Workstations in eCommerce
• Innovation at Your Fingertips: Adaptive Packing Stations

3PL Myths and Misconceptions

There are some common myths and misconceptions when it comes to using a 3PL provider. Here are a few you may have heard: ‍

Myth: "It's too expensive to use a 3PL."

‍In reality, using a 3PL can actually save your business money in the long run. A 3PL has economies of scale and can often negotiate better rates for things like warehousing and transportation. And by outsourcing logistics to a 3PL, you'll have more time and resources to focus on growing your business, which can ultimately lead to more revenue.

‍Myth: "A 3PL will take over my business."

‍A 3PL is there to support your business, not take it over. The idea is to work together to create a logistics solution that works for you. You'll still be in control of your inventory and customer relationships.

‍Myth: "I'll lose control of my inventory."

‍When working with a 3PL, you'll have access to real-time inventory data, giving you more control and visibility over your inventory than ever before. Plus, 3PLs often have advanced inventory management systems in place, which can help you keep track of your inventory and reduce the risk of stockouts.

‍Myth: "A 3PL can only handle basic logistics tasks."

‍3PLs have a wide range of capabilities, and many offer a variety of services beyond just storage and transportation. For example, many 3PLs can also handle things like order fulfillment, reverse logistics, and even eCommerce integration.

Why Do Companies Choose to Work With a 3PL Provider?

Companies choose to work with a 3PL provider despite the misconceptions surrounding the use of 3PL because it is often the most cost-effective solution for their needs. Not only can 3PLs negotiate better rates for warehousing and transportation, but they have also put in the money to develop a logistical infrastructure. While companies like Walmart might have the capacity to spend the cash required for such an infrastructure, many other companies do not. In addition to this, they are also logistics experts and can help you strategize the best approach for your business.

What Is a Reason for Using a 3PL Logistics Partner?

Let’s go back to Sarah who runs “Fashion Avenue”. Before using a logistics provider, her business was growing quickly, and she found herself spending more and more time on manual tasks. Despite her best efforts, she was struggling to keep up with the volume of orders and was frequently running out of stock. But her day-to-day changed when she decided to partner with a 3PL logistics provider. The 3PL provider was able to take over the handling of her inventory, packing, and shipping orders, and coordinating with carriers. This freed up Sarah's time and resources, allowing her to focus on growing her business. Ultimately, picking a 3PL logistics provider saved Sarah both time and money. And it can do the same for your business as well.  

What Is the Difference Between a 3PL Logistics Partner and a Broker?

A 3PL logistics partner is a comprehensive and integrated solution for your logistics needs, providing a wide range of services such as warehouse management, inventory control, transportation management, and other logistics services. They are a partner in your business and work closely with you to create a logistics strategy unique to your specific needs. On the other hand, a Broker is a middleman who connects shippers with carriers and other logistics providers. A broker is not responsible for the physical handling or storage of goods and typically provides less visibility and control over the logistics process.

What Industries Use 3PL Logistics Partners the Most?

3PL logistics partners are the go-to solution for many industries that require a full-service logistics provider. They rely on the expertise and resources this logistical partner has to offer. Industries such as e-commerce and retail, manufacturing and production, healthcare and pharmaceuticals, food and beverage, automotive, industrial and heavy machinery, fashion and apparel, and chemical and hazardous materials all extensively use 3PL logistics partners to manage their logistics operations.

How Do You Manage a 3PL Logistics Partner?

Managing a 3PL logistics partner effectively is crucial for a smooth and successful logistics operation. You should clearly communicate your logistics needs, goals, and expectations to the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Performance should be continuously monitored against the agreed-upon metrics and SLAs, and regular data and reports requested to help measure performance, identify trends and make informed decisions.

How Can I Monitor My Third-Party Logistics Partner Performance?

Monitoring the performance of third-party logistics providers is critical to ensure that your logistics operations run smoothly and meet your business needs. So how do you monitor your 3PL partner's performance?

• Service Level Agreements (SLAs): For example, you might set an SLA that requires your 3PL partner to ship 95% of orders within 24 hours of receipt.
• Key Performance Indicators (KPIs): For example, you might set a KPI to track the number of stockouts, the accuracy of orders, or the on-time delivery rate of your 3PL partner.
• Data and reporting: You could request a report that shows the number of orders shipped, the number of orders with errors, or the average time it takes to ship an order.
• Audits and inspections: These will help you identify issues and ensure the 3PL is following your agreed-upon procedures and standards.

Key Takeaways

Your business and your customers deserve the best. They depend on you to get their orders shipped on time and in one piece. Moving to a third-party logistics company for these needs allows you to keep your promises to those who buy your products. With this partnership, your orders can get there faster, with fewer mistakes, at a lower cost than if you were trying to achieve the same on your own. Meaning a 3PL solution is your ticket to keeping up with the competition!

eCommerce Integration With 3PL FAQs

How Do You Integrate With 3PL?

Integrating with a 3PL logistics provider is a process that requires clear communication, collaboration, and planning. Start by reviewing your logistics needs, goals, and expectations with the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Have a plan which outlines the logistics processes and procedures and includes details such as inventory management, shipping, and returns. Finally, monitor the performance of the 3PL logistics partner against the agreed-upon metrics and SLAs, and look for opportunities for improvement.

What is 3PL in eCommerce?

A 3PL will handle the warehousing, shipping, and fulfillment of orders for an eCommerce business. This can include tasks such as receiving and storing inventory, picking and packing orders, and arranging for shipping and delivery. Using a 3PL provider can also help eCommerce businesses focus on their core business, such as product development, marketing, and customer service, instead of worrying about logistics operations.

What Are eCommerce Integrations?

eCommerce integrations refer to the connections and links established between an eCommerce platform and other software systems or tools used to manage and run an online business. These integrations can help automate and streamline business processes. Here are a few examples of eCommerce integrations:

• Payment gateways: PayPal, Stripe, Square
• Shipping and logistics: FedEx, UPS, DHL
• Inventory management: ShipHero, TradeGecko, Stitch Labs, Brightpearl
• Marketing automation: Klaviyo, Constant Contact
• Accounting and finance: QuickBooks, Xero, Zoho Books
• Customer relationship management (CRM): Salesforce, HubSpot, Pipedrive
• Dropshipping integrations: Oberlo, AliExpress, Spocket

As eCommerce needs continue to evolve, choosing the right 3PL consultant has become increasingly important for business owners. A good 3PL consultancy will guide you through selecting the best features and services, understanding pricing structures, managing your inventory, and creating efficient supply chain processes beyond contract negotiations with carriers and fulfillment centers.

When considering potential consultants, keeping these strategic elements in mind can help you land one that makes sense for your specific situation. This blog post will unpack How to Choose the Best 3PL Consultant options to fit your business needs!

What is Third-Party Logistics?

Third-Party Logistics (3PL) is a business outsourcing service in which a company contracts out its logistics and distribution functions to another company. 3PL providers handle many logistics functions, such as transportation, warehousing, and inventory management, allowing the outsourcing company to focus on its core competencies. 3PL providers can also offer value-added services such as packaging, assembly, and reverse logistics.

What are 3PL Consultants?

3PL consultants are professionals who specialize in helping companies optimize their logistics operations by using third-party logistics providers. They work with companies to understand their logistics needs and help them find the right 3PL provider to meet them.

Experienced consultants typically have a deep understanding of the logistics industry and can provide a range of services and resources, such as:

• Assessing a company's current logistics operations to identify areas for improvement.
• Identifying the most appropriate 3PL services for a company's needs.
• Helping a company evaluate and select the best 3PL provider from a group of candidates.
• Negotiating contracts and service-level agreements with 3PL providers.
• Managing the implementation of new logistics processes and systems.
• Monitoring the performance of 3PL providers to ensure they are meeting the company's expectations.

How Do 3PL Consultants Work?

3PL consultants typically work with companies in several key stages:

1. Initial Assessment: The consultant will conduct an initial assessment of the company's current logistics operations, including key questions regarding transportation, warehousing, inventory management, and other logistics-related activities. This assessment will help the consultant understand the company's specific needs and identify areas for improvement while planning.
2. Recommendations: Based on the assessment process, the consultant will recommend how the company can improve its logistics operations using third-party logistics providers. This may include identifying the most appropriate 3PL services for the company, such as transportation management, warehousing, or inventory management.
3. Provider Evaluation: The consultant will then help the company evaluate and select the best 3PL provider from a group of candidates. This may involve reviewing the providers' capabilities, costs,  references, and conducting site visits.
4. Implementation: Once a 3PL provider has been selected, the consultant will help the company implement new logistics processes and systems. This may include negotiating contracts and service-level agreements with the provider and managing the transition.
5. Monitoring: After the implementation, the consultant will monitor the performance of the 3PL provider to ensure they are meeting the company's expectations and that the operation of the new logistics is running smoothly. The consultant may also make additional recommendations for improvements as needed.

Ways to Work with a 3PL Consultant

For those who would like comprehensive logistics operations management, full-service consulting is the way to go. Working with a 3PL consulting service can be tailored to address a client's specific needs and goals. This covers everything from the initial assessment and planning to implementation and ongoing monitoring of the company's operations.

For projects that require short-term assistance, project-based consulting works well for quick results. Advisory services give the advantage of having a specialist available when needed throughout an organization's lifetime, while retainer-based consulting locks in a set number of hours per month from the consultant for support and advice. Whatever need arises, there is likely an option to match it!

How to Use a 3PL Consultant to Find a New 3PL Vendor

When evaluating and selecting a new 3PL vendor, a 3PL consultant typically uses a set of objective criteria to ensure that the vendor is a good fit for the company's specific needs.

Objectives

1. Services Offered: The consultant will evaluate the vendor's capabilities and services, such as transportation, warehousing, inventory management, packaging, assembly, and reverse logistics, to ensure that they align with the company's needs.
2. Costs: The consultant will review the vendor's expenses, including transportation rates, warehousing fees, and other charges, to ensure that they are competitive and in line with industry standards.
3. Quality and Reliability: The consultant will evaluate the vendor's reputation for quality and reliability, including the quality of their equipment and facilities, the reliability of their transportation fleet, and their track record for meeting or exceeding service level agreements.
4. Technology: The consultant will assess the vendor's technology capabilities, including their warehouse management systems, transportation management systems, and other logistics-related technologies, to ensure they can provide the level of automation and visibility the company requires.
5. Scalability: The consultant will consider the vendor's ability to scale their services up or down to meet the company's changing logistics needs over time.
6. Compliance: The consultant will check if the vendor complies with industry regulations and standards, such as safety and transportation regulations, customs laws, and environmental standards.
7. Customer Service: The consultant will evaluate the vendor's customer onboarding and service, including their responsiveness, ability to communicate effectively, and willingness to work with the company to resolve any issues that may arise.
8. Location: The consultant will consider the vendor's location, including whether they have multiple warehouses or transportation hubs that are geographically well-suited to the company's needs.

These criteria will help the consultant ensure that the vendor is a good fit for the company's specific needs and can help the company achieve its logistics goals.

Scope

The scope of a 3PL consultant's work is comprehensive, ranging from helping companies assess the pros and cons of outsourcing versus insourcing to evaluating existing 3PL relationships and improving upon them to tendering and negotiating with new potential providers.

With their expertise and market knowledge of logistics, 3PL consultants are equipped to provide insights into various solutions that can help businesses streamline their operational efficiency and reduce warehouse and fulfillment services costs. By assessing and asking the right questions and selecting and using the right contract logistics solutions that match the needs of a specific business, these consultants ensure businesses can remain competitive in the ever-evolving market.

Methodology

A 3PL consultant can be essential in helping a company find the right vendor for their logistics needs. To ensure that the selected vendor is the best fit, the consultant follows a disciplined methodology that begins with defining the company's requirements and researching and identifying potential vendors.

The consultant then evaluates and shortlists them, issuing a Request for Proposal (RFP) to solicit detailed responses from each. Once these are evaluated, the consultant selects the best vendor and helps with the implementation process.

Finally, they review and monitor the performance of the new vendor toward meeting business goals. In this way, companies that use 3PL consultants gain access to an accounting professional who can help them make informed decisions regarding their supply chain strategies, goals, and objectives.

Deliverables

The deliverables for a 3PL consultant when selecting a vendor can vary depending on the specific project and the company's needs. However, in general, a consultant's deliverables may include the following:

1. Initial Assessment Report: This report will summarize the consultant's initial assessment of the company's current distribution operations and identify areas for improvement.
2. Vendor Shortlist A list of potential 3PL vendors that have been researched, evaluated and shortlisted by the consultant as suitable for the company's logistics needs.
3. Request for Proposal (RFP) Document: The shortlisted vendors will send a detailed description of the company's requirements, expected service levels, and other relevant information.
4. Vendor Evaluation Report: A report summarizing the consultant's evaluations of the potential vendors, including an assessment of their services offered, costs, quality and reliability, technology, scalability, compliance, customer service levels, and location.
5. Vendor Selection Report: A report recommending the best vendor from the shortlist, including the rationale for the selection and any negotiations or agreements made with the vendor.
6. Implementation Plan: An implementation assistance plan outlining the steps and timelines for development and implementing the new logistics operation, including transferring data and inventory and coordinating any necessary training or support.
7. Performance Monitoring Report: A report on the ongoing performance of the new 3PL vendor, including a review of the vendor's service level agreements and any recommendations for improvements.
8. Final Report: A final report summarizing the consultant's work, including an overview of the entire process, an assessment of the results achieved, and any recommendations for future improvements.

How to Choose the Best 3PL Consultants

Choosing the best 3PL consultant for your company can be a challenging task, but there are several key factors to consider that can help you make an informed decision.

1. Experience: Look for a consultant with a proven track record of market knowledge and success in logistics. They should have a deep understanding of the industry, including the latest trends and technologies, and a history of helping companies optimize their logistics operations.
2. Industry Knowledge: Look for a consultant who has a thorough understanding of your industry and the specific logistics requirements of your business. This will help ensure that they can provide relevant recommendations and solutions.
3. Technology Expertise: Look for a consultant with experience and expertise in logistics-related technology, such as warehouse and transportation management systems. This will ensure that the consultant can help you select a 3PL vendor to meet your technology needs.
4. Communication and Collaboration: Look for a consultant who can communicate effectively and collaborate with your team. They should be able to understand your needs and provide relevant and actionable recommendations.
5. Flexibility: Look for a consultant who is flexible and willing to adapt their approach to your specific needs. They should be open to feedback and ready to make adjustments as needed.
6. Reputation: Look for a consultant with a good reputation in the industry. They should have a strong network of contacts and good references that speak to their ability to deliver results.

Capability Evaluation During the 3PL Selection Process

Selecting the right 3PL partner for a company's logistics operations is an important task that should not be taken lightly. A consultant must have both IT and Industry IQ to choose the most suitable vendor.

IoT IQ ensures that the selected vendor has all the technical capabilities needed, such as integration with existing systems, security, scalability, support, and maintenance.

Meanwhile, industry knowledge is necessary to recommend suitable vendors that align with the company's goals and evaluate their performance against competitors in the market.

A consultant possessing a strong technical understanding and industry insights can help make sure that the right 3PL partner is chosen and guarantee successful collaboration between both parties.

Key Takeaways

Here are some key takeaways from the information provided about 3PL consultants and the 3PL selection process:

• 3PL consultants help companies optimize their distribution operations by selecting and managing 3PL vendors.
• A 3PL consultant can work with a company in different ways depending on the company's specific needs and goals, such as full-service consulting, project-based consulting, advisory services, and retainer-based consulting.
• When evaluating and selecting a new 3PL vendor, a 3PL consultant typically uses a set of objective criteria such as services offered, costs, quality and reliability, technology, scalability, compliance, customer service, and location.
• The methodology of a 3PL consultant when selecting a new 3PL vendor typically includes several key steps such as defining requirements, researching and identifying potential vendors, evaluating and shortlisting them, issuing a Request for Proposal (RFP), evaluating vendor responses, selecting the best vendor, assisting in the implementation process and monitoring the performance of the new vendor.
• Deliverables can vary depending on the specific project and the company's needs but typically include reports, documents, and plans that help the company evaluate, select, implement, and monitor its new 3PL vendor.
• IT IQ plays a crucial role in the 3PL selection process by ensuring that the selected vendor has the necessary technical capabilities to meet the company's needs, including integrating existing systems, security, scalability, and support and maintenance.
• Industry IQ plays a critical role in the 3PL selection process by ensuring that the consultant understands the logistics industry and the company's specific requirements and can provide valuable insights and recommendations throughout the selection process.
• When choosing the best 3PL consultant, consider factors such as experience, industry knowledge, technology expertise, communication and collaboration, flexibility, and reputation.

3PL Consulting Efficiency

Businesses need to look for a 3PL consulting firm that can provide them with an integrated eCommerce logistics solution. This will allow the company to manage its inventory better, understand pricing structures, and create efficient supply chain processes. Choosing the best 3PL consultant can be overwhelming, with so many options available. But by considering these strategic elements, you can find a consultancy that fits your business needs perfectly!

3PL Consultants FAQs

What Does 3PL Stand For?

A 3PL (third-party logistics) provider offers outsourced logistics services, which involve the management of one or more facets of procurement and fulfillment activities.

What is 3PL Consulting?

3PL consulting evaluates the economics of outsourcing some or all of the business's warehouse operations to a third-party logistics provider.

What is the Best Third-Party Logistics 3PL Software?

ShipHero is the best third-party logistics (3PL) software for businesses looking to be maximally efficient, cut costs, and offer complete customer visibility. ShipHero’s WMS solution can dramatically amp up your warehouse output by 30% while substantially reducing mis-ships and smoothing task optimization, simplifying your shipping processes. With ShipHero, you’ll have the tools to navigate an increasingly competitive industry successfully while being equipped with reliable insight into every action to improve operations, build customer satisfaction, and ensure your business reaches its full potential.

How Do You Evaluate the ROI of 3PL Consultants?

To evaluate the ROI of 3PL consultants, assess the cost savings and operational efficiencies they bring to your business. This includes improvements in supply chain processes, reductions in shipping costs, better inventory management, and increased customer satisfaction.

A successful 3PL consultant should help streamline your logistics to result in long-term savings and growth.

What is a 3PL Specialist?

A 3PL specialist is an expert in third-party logistics, focusing on optimizing the supply chain by selecting, managing, and overseeing relationships with 3PL providers. They help businesses improve their logistics operations to ensure efficient inventory management, transportation, and fulfillment, all while minimizing costs and enhancing service quality.

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Your business deserves the best. And you can’t get that unless you utilize business processes that work for you. Software is the top resource for “shortcuts” in our world today. When many of us encounter a problem or a task which is terribly manual, what's the first thing we do? Find an app or software to fix that problem. Your warehouse management processes can be handled the same way whether you are a third-party logistics provider, or looking for a third-party logistics provider. Here we’ve included insight into the top 3PL WMS softwares available to enhance your business and how to maximize the benefits they offer. Enjoy!

What is 3PL in WMS?

As you likely know, 3PL stands for Third-Party Logistics. In the context of warehouse management systems (WMS), 3PL refers to a service provider that manages the storage and distribution of goods on behalf of a company. When it comes to WMS, a 3PL provider can use the software to manage their client's inventory, track and trace goods and shipments, and optimize warehouse operations for their clients. This can include receiving, storing, picking, packing, and shipping of goods, as well as providing real-time visibility into inventory levels and order status. The 3PL provider takes care of the physical handling of goods, while the WMS software helps them to manage the inventory, orders, and logistics operations, such as tracking and reporting.

What is 3PL WMS Software?

3PL WMS software is a comprehensive and sophisticated warehouse management system designed to streamline and optimize the operations of third-party logistics companies. It encompasses a wide range of functionalities, such as inventory management, order fulfillment, transportation management, and analytics, all aimed at increasing efficiency, reducing costs, and improving the overall performance of the warehouse.

Benefits of Third-Party Logistics Software

With its advanced features and intuitive interface, 3PL software empowers logistics providers to effectively manage their warehouse operations, from receiving and storing goods, to picking and shipping orders, to tracking and reporting on inventory levels. This technology is an essential tool for companies that rely on third-party logistics providers to manage their warehouse and supply chain operations, as it enables them to gain real-time visibility into their inventory, improve their operational efficiency, and enhance customer satisfaction.

How to Maximize the Benefits of 3PL WMS Software

Implementing 3PL software is just the first step in maximizing the benefits it can bring to your warehouse operations. To truly get the most out of your software, it's essential to customize it to your specific needs. This means configuring the system to optimize it for your warehouse operations, such as automating repetitive tasks, creating custom reports, or integrating with other software. By customizing the software to your specific needs, you'll increase efficiency and get the most out of the software.

Another key tactic to keep in mind is continuously monitoring and analyzing data. By regularly monitoring the system's performance and analyzing the data it generates, you'll identify areas for improvement and make adjustments as needed. Additionally, you can use the data to make informed decisions and optimize your operations. By doing this, you'll keep your warehouse operations running smoothly and efficiently.

Much 3PL software also has mobile apps that allow you to access and manage your warehouse operations from anywhere, at any time. This can be especially useful for warehouse managers and supervisors who are always on the go. Utilizing this mobile capability can help you stay on top of your warehouse operations even when you're away from the office.

Another benefit of 3PL software is the ability to plan and optimize your inventory. The software can provide real-time data and analytics, which will help you keep track of what products sell well and what products don’t. This will allow you to make informed decisions about what products to order and how much of each product to stock. By doing this, you can optimize your inventory and reduce the costs associated with overstocking or stockouts.

Finally, good 3PL software can also help you improve customer service. By providing real-time data on inventory levels and order fulfillment, you'll provide accurate and up-to-date information to customers. This will allow you to resolve any issues quickly and improve customer satisfaction.

ShipHero’s WMS can do all this and more, check us out!

How to Get Started with 3PL WMS Software

Whenever you start with new software you must define what you need the software to do for your business. That way, once you have identified software that fits your needs, you can set it up to improve your business processes based on the KPIs you need to see improvement from. This software is often used for automating repetitive tasks, creating custom reports, or integrating with other software. And don’t forget your team. Training your team on how to use the software is crucial to ensure the smooth implementation and operation of the system. Once implemented, monitoring and analyzing the data generated by the system will help you identify areas needing adjustment and a regular maintenance cycle will ensure continuous uptime.

What Features Should You Look For in a 3PL WMS Software?

When purchasing a 3PL WMS software, it's essential to look for specific features which will enable you to optimize your warehouse operations and gain a competitive edge in the market. Here are a few lesser-known tips and tricks to keep in mind:

1. Scalability: Look for a solution that can scale your business as it grows. This will ensure the system can handle an increase in volume and complexity without any disruptions.
2. Automation: Automation is key to increasing efficiency and reducing errors. Look for a solution that offers automation capabilities for tasks such as inventory management, order fulfillment, and transportation management.
3. Integration: The ability to integrate with other systems and software is crucial to achieving a seamless and efficient warehouse operation. Look for a solution that can integrate with your existing systems, such as your ERP or accounting software.
4. Real-time data and analytics: Real-time data and analytics is crucial for making informed decisions. Look for a solution that offers real-time data and analytics capabilities, allowing you to monitor inventory levels, track orders, and gain insights into your operations.
5. Mobile compatibility: With an increasing number of warehouse workers using mobile devices, look for a solution that is mobile-compatible, allowing you to access and manage your warehouse operations from anywhere, at any time.
6. Cloud-based: Cloud-based systems are increasingly popular as they can be accessed from anywhere with an internet connection, which can be more cost-effective than on-premises solutions.

How Much Does a 3PL WMS Software Cost

The cost of 3PL WMS software can vary widely depending on the vendor, features, functionalities, warehouse size, and number of users, and it can range from a few thousand dollars for a basic system to tens of thousands of dollars for a more advanced solution, you should also consider the ongoing costs such as maintenance, support, updates, and additional modules. Do your research, compare different options, consider the benefits the software will bring to your operations, and find the one which best fits your needs and budget, considering also that some vendors may offer lower upfront costs but have higher ongoing costs, while others may have a higher initial price but offer more features and support.

Best 3PL WMS Software

1. Shiphero

ShipHero's WMS (Warehouse Management System) software streamlines and automates the process of managing warehouse operations with its advanced features and intuitive interface. You can easily track and manage inventory, fulfill orders, and optimize operations for maximum efficiency and productivity. Using ShipHero's WMS software saves you time and money because you can customize ShipHero's WMS software to meet the specific needs of your business whether managing a small stockroom or a large distribution center. The software also provides real-time visibility into inventory and operations, allowing you to quickly identify and address any issues that may arise. This avoids stockouts, reduces errors, and improves customer satisfaction.

2. WithoutWire

WithoutWire's WMS software is a cloud-based solution that helps companies manage and optimize their warehouse operations. It offers a range of features such as inventory management, order fulfillment, and real-time tracking to help businesses increase efficiency and productivity in their warehouse operations. WithoutWire software has a focus on the fashion and apparel industry, offering specific features tailored to this market such as style and size matrix management, and pre-pack functionalities. They also utilize RFID tracking and automated warehouse robots to enhance their speed.

3. Logiwa WMS

Logiwa provides a range of features such as inventory management, order fulfillment, real-time tracking, and advanced reporting to help businesses increase efficiency and productivity in their warehouse operations. This software offers advanced features such as multi-client and multi-warehouse management, and integration with multiple sales channels and shipping carriers, which can help companies to streamline their order fulfillment operations, and manage more complex logistics operations. Additionally, Logiwa WMS also offers an advanced barcode scanning functionality and mobile device compatibility, which allows for real-time inventory tracking and warehouse operations management.

4. Synapse WMS

Synapse WMS provides a range of features such as inventory management, order fulfillment, real-time tracking, and advanced reporting to help businesses increase efficiency and productivity in their warehouse operations. Synapse software offers advanced features such as multi-channel integration, EDI integration, and RFID scanning, which can help companies to streamline their order fulfillment process, and manage more complex logistics operations. Synapse also offers a more robust analytics and reporting functionality, which can help businesses make data-driven decisions about their warehouse operations.

5. 2Ship

This company focuses on leveling the playing field within shipping. Their software will search all carrier rates so you can select the best service for the best price. It is a multi-carrier shipping platform built for eCommerce businesses that help business owners know their products will be shipped in good hands. Plus through their software, you can track shipping from any carrier and you have access to performance indicators to measure their efficiency. Please note, while this is not a WMS software, it is focused on relieving your stress when it comes to your shipments so it’s a worthwhile platform to consider.

What 3PL WMS Software Does Your Business Need

Choosing the right 3PL WMS software requires a strategic approach that involves defining your business objectives, researching different software options, considering scalability, and looking for automation capabilities and integration options. By taking the time to carefully evaluate different options and considering the key factors that are essential to your business, you can ensure that you select a 3PL WMS software that is tailored to your specific needs and will help you achieve desired outcomes such as increased efficiency, reducing costs, and improved performance of your warehouse.

Key Takeaways

The WMS you choose for your company should not only fit your needs but also be easy to use. The goal here is to find software that gives you more power and time back in your day. While the initial setup of any software can be painful, the WMS you choose will likely have a consultant to help walk you through every step of the setup. If you want to speak to an eCommerce WMS expert, come chat with us at ShipHero!

3PL WMS Software FAQs

What is a Tier 1 WMS?

A Tier 1 WMS, or Warehouse Management System, is a type of software that is typically used by larger organizations or those with more complex warehouse operations. These systems tend to have a wide range of functionalities and capabilities and are typically more expensive than other types of WMS software. They are often used by companies that operate multiple warehouses, have a high volume of SKUs or require advanced features like RFID and real-time tracking. They also tend to integrate with other enterprise systems such as ERP, CRM and eCommerce platforms. Tier 1 WMS solutions are often provided by large, well-established software vendors, and are known for their robustness and scalability. They are designed for large companies with a significant investment in warehouse operations and logistics.

What are the Four Types of 3PL?

There are several different types of third-party logistics companies (3PL), but the four main types are:

1. Traditional 3PL: These providers offer a wide range of logistics services, including transportation, warehousing, and distribution. They typically handle the entire logistics process from start to finish, taking on the role of a full logistics provider.
2. Dedicated contract carriage: These providers focus on transportation services, such as trucking and rail, and manage a dedicated fleet of vehicles for a specific customer. They typically handle all aspects of transportation, including scheduling, routing, and compliance.
3. Lead logistics provider: These providers act as a coordinator and managers of logistics services, working with multiple service providers to create a comprehensive logistics solution for a specific customer. They are typically responsible for managing the overall logistics process and coordinating with other service providers.
4. Value-added logistics: These providers focus on providing specialized logistics services, such as packaging, assembly, kitting, and labeling. They typically handle only a specific aspect of the logistics process, but they add value to the overall logistics solution by providing specialized services that the customer may not have in-house.

It's worth noting that some providers may offer a combination of these services and that the line between these categories can sometimes be blurred, depending on the specific 3PL provider and the services they offer.

What Are the Latest Trends in WMS?

The integration of artificial intelligence (AI) and robotics, IoT devices, and cloud technology is revolutionizing the warehouse management system (WMS) industry. AI and machine learning algorithms are used to optimize warehouse operations and provide real-time data and analytics. Robotics are used to automate tasks such as picking, packing, and transportation. And IoT devices allow for real-time monitoring and tracking of inventory and equipment, and cloud-based WMS allows warehouse managers to access their data and control their operations from anywhere at any time and also allows for easy scalability. These trends enable warehouse managers to optimize their operations, improve efficiency, and reduce costs.

Whether you’re an established eCommerce brand or have just started, you know that the tools you use are important to making your business run. And one of the most important tools you can have is software that works.

The right Warehouse Management System (WMS) will handle automation rules, receiving, picking, packing and rate shopping in just a few simple steps. ShipHero does this by making the complicated, easy - not simple, just easy.

We’ve been working to provide our clients and prospects with more than just awesome software - we want to share our best practices and the lessons our clients have learned as they use our WMS to grow their own brands. If you want to learn more about warehouse management systems, you’ve come to the right place. Read on for a complete guide on warehouse management systems in 2023.

What is Warehouse Management?

Warehouse management is the process of overseeing all operations and activities in a warehouse. This generally includes receiving, picking, packing and shipping goods, planning workloads, training staff and handling customer returns.

While warehouse management is barely visible to customers, it’s integral to ensure goods are delivered on time. Good warehouse management ensures every activity is run as efficiently as possible, from maximizing inventory storage to organizing goods for easy picking to ensuring returns are handled professionally.

However, running a warehouse can be costly, especially for smaller eCommerce businesses. Instead of managing their own warehouses, they sometimes hire third-party logistics (3PL) companies. Outsourcing warehouse operations helps eCommerce businesses focus on expansion and sales instead of spending considerable time and resources to manage inventory and take customer orders.

What is a Warehouse Management System?

A warehouse management system (WMS) is software that assists you in the warehouse management process. A warehouse management system gives you real-time updates on your inventory levels, warehouse team productivity and order fulfillment progress.

Warehouse management systems are essential for managers because they can use them to gauge work performance and spot improvement areas. They also provide managers with the data and reports to make informed business decisions.

The best warehouse management systems assist your company with five key processes:

Inventory Receiving and Storing

One of the primary purposes of a warehouse is to receive and store inventory items from a manufacturer or distributor. Warehouse management systems let you scan and organize each new item upon arrival and storage, so you’ll know which items have arrived and where they're stored.

Inventory Tracking

Inventory tracking ensures you get real-time updates on your stock levels. This helps in determining how many items you can sell and whether you should order more items based on accurate forecasts of consumer demand.

As your eCommerce business grows, inventory tracking will become even more important because you may handle hundreds of goods and dozens of different product types simultaneously. Manual inventory tracking is more prone to human error and may result in costly mistakes.

Picking and Packing

When employees pick and pack items, they take the goods from warehouse shelves and pack them for shipping. Warehouse management systems can generate picking lists that instruct your warehouse team to pick items as efficiently as possible.

Your warehouse management system also automatically generates shipping labels, which packers attach to products after packing them.

Shipping

Warehouse management solutions let you track the shipping progress in real time. You can also show the shipping progress to customers so they know where their items are at any time.

Reporting

Your warehouse management system should provide advanced reporting features that cover order fulfillment accuracy, staff inventory forecasting and warehouse expenses.

Automating report creation means you don’t have to spend much time gathering data. Instead, you can immediately use the insights from these reports to improve your warehouse operations.

Who Are Warehouse Management Systems For?

Warehouse management systems are useful for any company that operates a warehouse, regardless of industry. Here are examples of industries that can benefit greatly from WMS:

Manufacturing

Manufacturers need to have good warehouse management systems because they have complicated warehouse operations that may involve combining multiple materials into new goods.

A WMS can help manufacturers track each material as they’re sent in for processing and alert the staff to reorder when stocks are running low to keep production running. The system can also regulate production line speed based on consumer demand forecasts, preventing overstock or understock.

Retail and Consumer Goods Chains

Managing a retail chain is challenging because you operate multiple stock rooms in each store. A warehouse management system helps retail business managers by tracking items as they move from your main warehouse to individual stores. It also monitors stock levels in each store and puts orders in whenever an item is running low in stock.

Food and Beverage

Food and beverage warehousing is trickier than most because products often need to be stored at specific temperatures and have expiration dates. A WMS for F&B manages shelf placement to ensure everything is stored in its appropriate places. It also regulates picking and packing to guarantee all items shipped don’t expire before they reach store shelves.

Third-Party Logistics (3PL)

Warehouse management is at the core of every third-party logistics company, and they need a warehouse management system to excel in their job. Many 3PLs use adaptable warehouse management software to meet the various demands of their clients and juggle multiple warehouse operations simultaneously.

Some third-party logistics companies even choose a baseline warehouse management system and develop their own modules according to their needs, creating client-specific dashboards tailored to every job.

Why Should I Use a WMS?

You should use a WMS because manual warehouse management is prone to human error, especially if you run a large eCommerce business.

Here are five other reasons why you should use a WMS:

1. Enhance Inventory Management EfficiencyWarehouse management systems improve your inventory management by monitoring its levels, increasing pick and pack efficiency and improving order fulfillment processes. By automating these various inventory management processes, you’ll get all the information needed to run your warehouse smoothly without spending precious time asking around or looking for data.
2. Improve Customer HappinessWhile customers don’t directly interact with your warehouse, it plays a big part in their satisfaction. Smooth warehouse operations with the help of a WMS means customers receive orders quickly and accurately. Even if their item is defective, a good WMS can help you handle product returns to ensure customers get their replacement goods quickly.
3. Get Larger Profit MarginsThe right warehouse management software improves your sales and order processing speed without adding new warehouse staff. This means you can process more items and sell more products without a considerable increase in cost, ultimately improving your profit margins.
4. Gain Insights for Future ImprovementWarehouse inventory management systems generate reports on essential warehouse performance parameters like order accuracy, orders fulfilled and staff efficiency. By analyzing these reports, your management team can develop plans to improve your eCommerce business further down the road.
5. Stay Updated With Local RegulationsIn addition to keeping up with customer demand, businesses must also follow local regulations and rules. A good WMS should give you the tools necessary to stay compliant with these regulations by recording real-time data, making your company easier to audit.

How Do Warehouse Management Systems Work?

Warehouse management systems work by monitoring and automating key warehousing processes. Here’s a look at how warehouse management systems help you in those areas:

Inventory Receiving and Shipping

Tracking the goods that enter and exit your warehouse is one of the primary functions of a WMS. For incoming items, the WMS will register them in the system and send the products to the appropriate shelf or container for storage.

For outgoing items, the WMS will show you which shipping service is delivering the products and provide real-time tracking information. The WMS can also show the tracking information to the customer, so they know when their products will arrive.

Inventory Management

A WMS helps you track and manage physical inventory levels in the warehouse. When inventory stock starts to get low, the WMS can notify you to order more from the distributor or supplier before stock runs out.

Picking and Packing Orders

When a customer order comes in, your warehouse crew picks and packs the items to get them ready for shipping. Warehouse management systems create picklists to help your team pick items faster. The WMS also creates shipping labels, so the items can be ready for shipping as soon as they’re packed.

Warehouse Performance Reporting

Real-time warehouse reporting is one of the greatest strengths of a WMS. You can easily get insights into your warehouse's operation by generating real-time reports. Instead of spending hours gathering data, you can immediately use this information to make informed decisions and improve your warehouse team’s performance.

Advantages of Using a Warehouse Management System

While it may be a considerable investment, a warehouse management system pays for itself in many ways. Here are eight great benefits you’ll get by implementing a WMS:

Inventory Control

Inventory control involves managing your warehouse’s inventory levels to prevent understock and overstock. Automating inventory control through a warehouse management system means you don’t have to spend time checking inventory levels regularly. Instead, your system will notify you when it’s time to order new products.

Traceability

Transparency and traceability are essential for both businesses and customers. Tracking where products are in real-time allows you to identify bottlenecks and delays in the supply chain. On the customer side, real-time product tracking ensures they know when their items are arriving.

Some product safety regulations also require your goods to be easily traceable to prevent fraud and counterfeiting. From a safety standpoint, knowing where a product comes from and where it’s going also makes product recalls easier when necessary.

Improved Customer Service

The relationship might not be immediately clear, but a warehouse management system contributes to customer service. Your WMS gives you real-time updates on how many items are in stock and which ones are out of stock, which means customers likely won’t order something that’s out of stock.

Warehouse management improvements help you ship products quicker, satisfying your customers’ demands for fast deliveries.

Task Management

There are many tasks in your warehouses or distribution centers, like picking and packing orders, loading trucks and handling returns. Your WMS can create these tasks and assign them to the relevant employees immediately based on where they are in the warehouse.

Your software’s task management features also prevent workers from walking from one end of the warehouse to another when completing their work by assigning them to well-defined work zones, increasing overall warehouse efficiency.

Containerization

Containerization is when you merge multiple individual shipments into a single container to ship together. You can save on shipping costs by sending multiple items in one big batch.

Your WMS assists in containerization by choosing which items go into which container, ensuring they stack well and nothing gets crushed or damaged in transit.

Increased Speed of Orders

A warehouse management system increases the overall order processing and fulfillment speed by making product picking, packing and shipping more efficient. You can deliver more items to more people by increasing order speed, increasing total revenue and customer satisfaction.

Labeling

Without a WMS, you may need to create shipping labels manually, which takes a lot of time and effort. A warehouse management system can automatically generate shipping labels, so your warehouse team only needs to attach them to packages before sending them to the carrier.

Labor Tracking

Labor management features provided by a WMS track your warehouse staff performance in real time, giving you insights into how your team works. Tracking labor lets you identify possible logistics bottlenecks, pinpoint improvement areas and learn which employees may need extra training to succeed.

Types of Warehouse Management Systems

There are four warehouse management system types, each with unique benefits and drawbacks. Here’s a look at each WMS type:

Standalone System

A standalone warehouse management system is the most basic WMS in this list because it only offers warehouse management features and nothing else. A standalone WMS is usually installed on-premise, meaning the vendor will come to your warehouse and install a physical server for the WMS.

Standalone warehouse inventory management software is typically the most affordable due to its limited features, but it may not be enough if you need extra functionality from your WMS. Standalone warehouse management systems are best for businesses without a large software budget and limited warehousing needs.

Cloud-Based System

A cloud-based warehouse management system means the vendor provides its services through the Internet without any physical on-premise installations. Cloud WMS users usually pay a subscription fee to use these services instead of an upfront expense, making them more affordable for new businesses without large premises.

Cloud-based WMS is scalable, meaning you can pay for extra accounts and features if necessary. It’s also easier to update since the vendor can do it online. However, as with most cloud-based services, you need a strong and stable Internet connection to make the most out of a cloud-based WMS.

ERP Module

ERP (enterprise resource planning) is a software bundle that merges numerous business functions like accounting, inventory and human resources in one package. It’s a good choice if you want to merge all your company information into one dashboard that’s accessible by all employees.

While ERP systems often have a warehousing or inventory management module, it’s not the system’s core functionality. Additionally, implementing ERP is often expensive and time-consuming, so you may be better off implementing dedicated warehouse management software if you can’t commit to full ERP implementation.

Supply Chain Modules

Supply chain management systems work at a much broader scope than a WMS but generally still provide warehousing features. These modules work best for companies that work with numerous supply chains, like manufacturers and retail businesses.

How to Choose the Best WMS

Choosing the best WMS means picking the one that caters to all of your warehousing needs at a reasonable price. Here are five tips to help you pick the right WMS for your business.

Identify Your Needs

You should first identify what you need out of warehouse inventory management software. Create a list of feature priorities based on your requirements as a guide when shopping for warehouse management systems. Don’t blindly follow the latest warehouse technology trends because what other companies need may not be what your company needs.

Define Your Budget

Ensure you have a budget before shopping for a warehouse management system. Search for popular WMS providers online, and estimate how much you’re willing to spend on the features you need.

Consider Your Company’s Product Demand

These days, manual demand forecasting can be unreliable, and you may find yourself out of stock in periods of high demand or overstocked in periods of low demand.

If your product demand fluctuates according to the seasons, it might pay to choose a WMS with demand forecasting. A warehouse management system’s demand forecasting can use historical sales to predict popular product demands, letting you increase or reduce orders based on the forecasts.

Research the Vendor

Purchasing a warehouse management system isn’t a one-and-done deal. You need to build a relationship with the vendor because they’ll provide technical support and apply updates regularly. To pick the right vendor, note how helpful their representatives are and how in tune they are with your needs and requirements.

Plan for Scalability

When shopping for warehousing software solutions, make sure they provide you with room to grow. Ask your vendor representative about how much scalability and customizability their software has – this ensures it can meet your business needs even when your company grows.

Key Takeaways

A warehouse management system makes your warehouse processes more efficient through various features like automated reports, pick list generation and shipment tracking.

While a good WMS offers many benefits, it’s often a major financial commitment, so you need to choose the right one before implementing it. To do so, you need to identify your company’s needs, define a budget and pick the right WMS provider that can scale with your business.

Warehouse Management System FAQs

How do you improve warehouse management?

You can improve warehouse management by measuring your current performance and identifying areas for development. From there, you enhance your warehouse management by:

• Automating time-consuming warehouse processes
• Implementing a WMS
• Training your warehouse staff

What does a WMS do?

A WMS (warehouse management system) assists you in the warehouse management process by giving you real-time inventory updates, automatic report creation and demand forecasting, among other features.

What's the cost of a warehouse management system?

The cost of a warehouse management system varies depending on the vendor and the features you choose. Expect to pay at least $1,500/month for an entry-level cloud warehousing system.

The secret to success with any eCommerce business is to keep your customers happy. Rapid order fulfillment, free shipping, and excellent customer service are some of the best ways to do that. When determining an eCommerce business plan, many fail to factor in (or underestimate) product returns.

Returns are a necessary evil for any eCommerce business, and if you don’t handle them properly, they could swiftly break you. Frequent returns negatively impact your profit margins but also destroy conversion rates, bring down customer loyalty, and threaten the survival of your business as a whole. Developing and enforcing a strong returns policy is a must if you want your business to be successful. Counteracting return fraud should also be a focus to further prevent lost profits.

In this article, we’ll cover the ways in which your return policy impacts sales and how to change your policy to benefit your business. We’ll also cover some of the best eCommerce return practices to make sure that returns don’t ruin your business.

How Do eCommerce Returns Affect Your Profitability?

To a certain degree, keeping your customers happy is about transparency. Customer expectations in the world of online shopping are high considering they can switch to a competitor’s site or Amazon in just a few seconds.

The customer experience in today’s world is critical to success. Your customers want to know that the products they are purchasing are of the highest quality and they are getting the best value for their money. Customers want to know their order will be processed quickly and efficiently and that they can contact customer service with questions or concerns, which will be resolved in a timely manner. They also want to know what your return policy is upfront, before clicking “buy”.

Your eCommerce return policy affects your business more than you may realize. According to research, about 67% of online shoppers will check a company’s return policy before buying. What do customers like and dislike about return policies? Let’s take a look:

• About 80% of consumers surveyed expect free returns.
• Only 25% of online merchants offer free returns.
• Over 83% of consumers read a company’s return policy before buying.
• About 71% of customers decide not to purchase when restocking fees are charged for returns.

As an eCommerce business owner, you need to account for all variables when it comes to profitability. While it might cost your company money to offer free returns, doing so could, in turn, boost your sales. In fact, customers are twice as likely to make a large purchase (over $1,000) online if free returns are offered.

To give you an example of what a good return policy can do for your business, consider the Zappos model. They were the first eCommerce retailer to offer a 365-day, free two-way shipping, and returns policy. What’s more, the free return shipping policy allowed customers to return their shoes for any reason. This was absolutely unheard of in 1999.

According to Zappos’ VP of Services and Operations, the company’s best customers have the highest return rates (up to 50% of everything they purchase) but they also spend the most money which makes them the company’s most profitable customers. At first glance, it may sound like their return policy is hurting business but, over time, those loyal customers end up spending more, which offsets their returns.

Simply put, a lenient return policy (when properly executed) can make a huge difference for your business and for your profit margins by creating a more loyal customer base.

What Really Drives Returns?

In order to improve your returns policy, you first need to gain a better understanding of who is returning your goods and why. Here are some of the most common reasons for returns:

• Damaged Goods – Items arrive at the customer’s door having been damaged prior to or during the shipping process.
• Mis-Delivered or Undelivered Goods – Items fail to arrive at the desired destination.
• Malfunctioning Goods – Items arrive at the desired location but do not work properly.
• Gift Returns - Items are received as gifts and returned by the giftee if they don’t want the product.
• Exchanges – Items are exchanged for another item.
• Inaccurate Description – Items received are not as described, either in terms of size or style.
• Changed Mind – The customer simply changed their mind about the product.

In addition to identifying why certain items are being returned, it is also helpful to develop customer profiles to determine who is making the most returns and how to prevent it from damaging your business. For example, some customers intentionally take advantage of lenient return policies by purchasing items to wear once and have no intention of keeping them after. There are also others who order multiple sizes and options for the sole purpose of trying them on at home.

Having developed a better understanding of your customer base and the most common reasons for returns, you can now work on developing a stronger return policy.

Tips for Developing a  Hassle-free Returns Policy

Now you understand that the majority of customers will check a company’s return policy before making a purchase. It is also important to note that nearly 50% of customers will continue buying from a company if they have a hassle-free return policy. So, how do you create a return policy that improves your profit margins while also retaining your customers?

Here are some simple tips to help you develop a strong return policy that wins over customers while keeping return rates low:

Offer Returns in a Specific Time Window

Your customers want to know that if they aren’t satisfied, they’ll be able to return the item easily. For example, if you sell footwear, your return policy can state that all shoes can be returned within 30 days if they’re still in good condition.

Keep your Return Policy Clear and Concise

A clear return policy makes it easy for customers to understand which products can be returned and which can’t. If you have products that have a separate return policy, be sure to list them on the product page so customers are aware of any special return policies.

Make your Policy Easy to Find

Your customer shouldn’t have to search for it. A strong return policy should show that you stand behind your product to instill confidence in your business to build trust with the consumer.

Never Copy a Return Policy from Another Company

You should personalize your return policy to your business and products. While there are templates available to help you craft a return policy, they’re meant to be customized to your brand’s unique return policy.

Try to Keep the Language Light

Avoid phrases like “you must” and “you are required to.” You want your returns process to be easy, not scary.

Set Clear Expectations

Some customers expect immediate refunds or a gift card when returning a product. Your return policy should list out the steps involved during the return process so they know how it all works. Make it clear whether you offer an exchange for returned products or if you provide store credit or a full refund.

The bane of any online retailer’s return policy is deciding between full refunds or store credit. While there is no one clear answer as to which one to choose, we recommend surveying your customers to see what they’d prefer.

Provide Specific Return & Exchange Instructions

Tell the customer whether they need to use the original packaging or if they can use their own. Tell them if they need to include the order slip and if they can print a return label online.

Educate your Staff

If they understand the return policy, they can communicate it to your customers quickly and efficiently. If your staff is confused about the returns policy, it could lead to negative interactions with customers when they try to return products.

No company is perfect but having a strong returns policy will prevent returns from destroying your business. Even with a strong policy, however, you should be prepared to take a hit now and again. If you make a mistake with shipping or packaging, you may be forced to eat the cost yourself for the sake of keeping your customer happy. Unlike physical stores, customers can’t just walk in and return a product at no cost to you. Always keep the customer and your long-term bottom line in mind.

What About Reverse Logistics?

The term reverse logistics is sometimes used interchangeably with returns, but they are not quite the same. Technically speaking, reverse logistics refers to monitoring the life-cycle of a product after it arrives at the customer’s door. This includes the ways the product can be reused, how it should be disposed of, and other ways to create value with an expired product – it also involves the return of products from the end consumer back to the manufacturer.

In order to develop a reverse logistics procedure, you need to first think about the different stages a product goes through during a return. First, you’ll need to consider the physical shipping of the returned product – how you will get it from the customer back to the warehouse. Next, you may need to test the returned item to identify existing flaws and document any problems. Then, you’ll need to repair, recycle, or restock the item.

To help you get a better understanding of the reverse logistics portion of your company’s supply chain, there are four key analytics to consider:

• Volume – Take a look at which products are being returned most often – if it’s a large volume of the same products, you may need to consider a recall or making changes to your production.
• Percent of Sales – What percent of your net sales is lost to returns and how many of the returned items can be reincorporated back into your inventory?
• Product Condition – See if you can identify a pattern of failure or malfunction to determine what is going wrong with the product and what condition it is in when it is returned.
• Financial Value – Are the returned products able to be recycled or resold? Think about ways to use returned items to minimize the blow to your profit margins.

Once you’ve gathered this information, you can gain a deeper understanding of your company’s reverse logistics and use that information to optimize your workflow. Improving the efficiency of your reverse logistics system provides numerous benefits, including the following:

Reduction in related costs

When you plan ahead for returns and implement a system to ensure that orders are fulfilled correctly, you can minimize related costs for administration, shipping, quality assurance, tech support, etc.

Faster processing

By implementing a reverse logistics system, you can increase the speed with which orders and returns are processed which keeps your customers happy.

Improved customer retention

A poor return policy can prevent a customer from coming back, but a strong policy instills confidence in the brand and makes customers more likely to purchase again, even after you’ve made a mistake.

Recoup your losses

By using a reverse logistics system to gather data on returns, sellers can decide how best to use returned products to reduce losses. You could fix and restock the product, scrap it for parts, or repurpose it in another market.

Final Thoughts

Handling returns in a quick and efficient manner is the key to keeping your customers happy. With a strong returns policy, you can minimize the damage caused by shipping errors, manufacturing defects, and other issues that necessitate a customer return. When your customers feel like they can trust your company to correct errors in a timely manner, they will be more likely to become repeat customers.

What is eCommerce Shipping?

Fulfillment starts as soon as your customer hits the checkout button on the eCommerce platforms and purchases the products in their shopping cart. Once the site confirms the order, the chain moves forward. Small-scale eCommerce stores often store their inventory in their garages. At the same time, as you go up the scale, vendors usually employ the services of inventory storage facilities and warehouses. Upon confirming the purchase, service providers package, label, and ship the products to the destination address.

Shipping can be pretty challenging to handle on your own, especially if you have a growing business. This is the point where third-party logistics (3PL) companies can be a big help. They optimize the fulfillment process and cater to your needs, and even help you minimize logistics costs. Various companies have different shipping policies and shipping rates, such as Amazon Prime, which offers overnight shipping.

But not every business can pull this off. This is why your company’s shipping policy should be based on a combination of your budget and your customers’ needs.

What to Keep in Mind when Shipping

There are many factors that eCommerce merchants have to account for when it comes to shipping. All the seemingly small details contribute to your overall shipping costs and total transit times. These factors ultimately determine customer satisfaction and directly impact your business’s reputation and future growth. Since your company’s eCommerce shipping strategy is so important, it's worth investing time and resources to conduct proper research. Here are some of the best practices that online stores employ for shipping, to help you decide which one may suit your business best.

Offer Free Shipping

An effective way to reduce shopping cart abandonment is to provide some incentive to your customers. Companies usually use discounts and coupons to their customers for this purpose. Offering free shipping to your customers makes them feel more comfortable about placing an order.

Contrary to what the name might suggest, free shipping isn’t actually free. Either you take the hit and pay for the fees outright, or the fee is absorbed in a way that customers pay for it. You can do this by incorporating shipping costs into the sale price of your products. This way, you can offer free shipping without compromising your own profits.

Charge Real-Time Carrier Rates

Another popular shipping strategy among online vendors is charging real-time carrier rates. This process is transparent and gives your customers a little wiggle room. How? Well, let's say you partner up with multiple carriers. You can now let customers pick and choose the shipping option that best suits their need.

Shipping labels like FedEx, USPS and DHL have different shipping costs, and no one carrier offers lower rates across the board - the pricing depends on numerous factors. eCommerce platforms such as Shopify integrate real-time shipping rates of these carriers into their dashboard so that they are easy to handle. Customers can then choose what works for them, whether it is overnight shipping, two-day shipping, or flat-rate mail.

Charge a Flat Rate

If you don’t want the hassle of calculating shipping prices for each package, then flat-rate shipping is another reliable option. As the name suggests, this shipping option charges a single rate for each shipping order, regardless of the size or nature of the product.

This option is most suitable for businesses that sell a small variety of products with similar dimensions and weights. However, be sure not to set a very high flat rate for the items - it might scare away the customers. Postal services like USPS usually have several flat-rate shipping options.

Offer Local Delivery

If your customer base is near to your inventory storage facility, then offering local delivery is one way to go. Keep in mind, though, that this only works for local customers. You can set up the local delivery zone through the use of zip codes - customers within this area qualify as local customers.

Suppose you are catering to a large customer base outside your local area. In that case, you can still offer the local customers this option by putting an appropriate button at the checkout. The local delivery option can be set to be free of charge or at a low flat rate, depending on your budget. This option is best for strengthening your local customer base.

How to Calculate Shipping Costs

An essential part of devising your shipping strategy is determining your shipping costs. If you partner up with a shipping label, couriers base their shipping rates on a number of factors. These factors range from the package weight and size to the origin and destination address. The bigger the product is and the farther away you have to send it, the more you'll typically end up paying for shipping.

Before settling on your company’s shipping rates, be sure to assess the following factors:

Consider your Margins

One thing eCommerce merchants should focus on is their profit margins - they determine the success of your business. Shipping fees are a significant part of the total fulfillment expenses - deal with them improperly, and you could end up losing money. Before you set up the total price of a product, consider all the little expenses like shipping costs, credit card fees, and packaging, in addition to the cost of the product. Your sale price should leave room for profit after taking care of all of these expenses.

Packaging and Marketing

From a historical perspective, packaging and shipping were just ways to get the products to the customer. The up-gradation of technology and the evolution of business strategies have now transformed packaging and shipping into a marketing opportunity. And why not - telling your brands’ story with your product packaging and creating a memorable unboxing experience is a brilliant opportunity.

Packaging inserts and other items could take the whole experience up a notch when the customer unpacks their order - think of unboxing videos online and the publicity they gather! Of course, this type of marketing is another shipping expense and would add to the total costs.

Packaging Options

While you can utilize packaging for marketing purposes, don’t lose sight of its original purpose - the package still has to securely hold all the goods. Of course, the safety level for each product depends on its nature. For example, you can ship sweaters and other clothing items in poly mailers, and they would be secure. But for fragile items with higher value, you might need to invest in sturdy boxes and maybe even packing peanuts.

While the nature and size of the product help determine your packaging needs, your customers’ values and preferences also need to be accounted for. Eco-friendly packaging options are often pricier than the standard options, but they appeal to the growing number of eco-conscious consumers. This is why it pays to at least provide eco-friendly packaging as an option to customers.

Insurance and Tracking

Insurance and tracking help increase customer loyalty among online shoppers. They help secure your products and provide you with a safety net in case of any mishap. Shipping labels often provide relatively inexpensive or even free options for insurance and tracking. Like UPS and USPS Priority Mail, some carriers offer free coverage for mail orders above a specific amount.

Customs Declaration and Forms

International shipping requires proper customs documentation that details the nature and the size of the shipment. More often than not, international shipping also comes with specific regulations and tariffs. Of course, these fees add up to the total shipping cost. Suppose you are catering to a global customer base. In that case, it’s wise to set your shipping policy so that it includes these costs. If you let the customer know of the customs fee beforehand, they won’t be surprised at the unexpected charges once they receive the parcel.

Should you Offer Free Shipping?

Now that you have an idea of what constitutes the shipping expenditures, the next step is to determine whether to offer free shipping or not. Free shipping options are attractive to customers and directly impact conversion rates, but can your business afford to eat the costs and offer them? Well, several factors determine the feasibility of this decision.

The most important factor to consider is your company's available budget and revenue. If your profit margins are high, offering free shipping probably won’t hurt you. Moreover, package dimensions, and the destination’s zonal distance are also factors to consider. Don't forget to further account for the shipping rates of the shipping company you have partnered up with.

So far, we have discussed costs on the business owner’s end. Your customers are another critical determinant of your decision to offer free shipping. For example, if your target audience isn't really interested in free shipping, then you won't have to offer it in the first place. Of course, you can only determine how important free shipping is to them after doing some A/B testing. To sum things up, every company’s needs are different. As such, their decision to offer free shipping may vary.

How to Offer Free Shipping Without Reducing Profits

Offering free shipping to your customers might not be feasible for every business. Sometimes, you end up losing more money than you make by taking this route. So, how can you realistically offer free shipping without breaking the bank?

‍Here are some pointers:

Decide if Shipping is a Marketing Expense or COGS

If you want to offer free shipping, first determine how it affects your business. As stated earlier, you can utilize shipping as a marketing opportunity. If so, then free shipping expenses can be considered as marketing expenses. This is a profitable investment if it drives your sales up.

If free shipping isn't doing much for your sales though, then the shipping costs might be an addition to the Cost of Goods Sold (COGS), and you may need to adjust your sale prices accordingly. Of course, new businesses might need to experiment a bit with free shipping to truly understand its impact. Test it first to determine whether the shipping expenses are a marketing expense or COGS.

Offer Free Shipping to Limited Shipping Zones

One way to realistically offer free shipping is to limit the free shipping to specific zip codes and areas. For example, a US-based business might offer domestic free shipping. Still, since shipping to other countries like Canada and Australia comes with tariffs and customs fees, the free shipping offer might not extend to those countries. Shipping carriers base their rates on the zonal distance of the shipment, so it might be expensive to offer free shipping to far-flung areas. The point is to establish your free shipping policy on your carrier’s shipping rates and limit free shipping to nearby areas.

Surcharge your Expedited Rates

To offset your free shipping expenses, you can increase the rates of expedited shipping. This only works if your expedited shipping option is attractive enough. As an example, between free shipping with 10-day transit time and expedited shipping with 2-day transit time, chances are both options will attract a fair share of customers. So, you’ll be able to offer free shipping to the customers by surcharging the expedited shipping rates.

Offer Free Shipping with a Minimum Purchase Amount

Setting a shopping threshold for free shipping is among the best practices employed by eCommerce platforms that offer free shipping. Amazon Prime is such an example. The logic behind it is simple enough. Customers must have a fair number of products in their carts before they can take advantage of free shipping. The profit margin from the sold goods covers the free shipping expenses.

eCommerce shipping FAQs

How do eCommerce Sites Calculate Shipping?

eCommerce sites like Shopify have integrations or built-in shipping cost calculators that determine the total shipping costs based on several factors. These include the shipping partner, package dimensions and weight, the zonal distance between the point of origin and the destination, and the transit time.

How is Shipping Calculated?

You can calculate the total cost of shipping through several determinants - some companies use shipping software for these calculations. These shipping costs include packaging fees, transit fees, and in the case of international shipment, tariffs and customs fees. The transit fees depend on the carrier rates that differ for normal, flat-rate, and expedited shipping options.

How does eCommerce Delivery Work?

eCommerce stores either go for self-fulfillment or employ the services of a third-party logistics (3PL) company. In the latter case, the fulfillment partner handles shipping by teaming up with different couriers. Once the eCommerce store confirms the order, the fulfillment partner sources the product from an inventory storage facility, packs it, and sends it out for shipping. The courier then ships the product to the destination.

What is the Cheapest Way to Ship for a Small Business?

The cheapest shipping option for a small business is the mail service. USPS is a great shipping carrier with affordable rates. If you want to cut down on the transit time, you could partner up with a third-party logistics company - they also sometimes offer discounts.

eCommerce shipping is a vital part of the supply chain, and one of the most expensive stages too. To avoid hefty transit costs, delayed orders, and unhappy customers, optimizing the shipping process is vital. A powerful eCommerce shipping solution like ShipHero can help you meet your business goals and optimize your shipping process.

Warehouse picking is an important part of any eCommerce business that is big enough that you have to store products in a fulfillment facility. Your goal is to choose the most efficient method for your warehouse picking process. Factors to consider include optimization of safety for warehouse workers and warehouse managers and increasing warehouse efficiency to reduce operating costs.

Warehouse Picking Strategies

There is not one single best warehouse picking strategy for every business or every warehouse. For some types of products, such as perishable or nonperishable foods, it makes sense to use a first in, first out (FIFO) strategy to reduce waste, with the caveat that the warehouse pickers check the expiration dates on the food packages and ensure that the product will reach the customer before the expiration date. Last in, first out (LIFO) could be a better strategy if the products are not food and if the product line changes quickly, with new products being the most popular.

What Is Warehouse Order Picking?

Warehouse order picking is the same thing as order fulfillment or product fulfillment. It is where warehouse workers, with the help of technology, find the items requested in a customer’s order in the warehouse and prepare them for their trip to the customer.

Why Is a Warehouse Order Picking System Important?

Choosing the best picking methods has a major impact on supply chain logistics. When you organize your warehouse so that warehouse workers do not have to travel to different areas and zones to find the pallets they need, the order fulfillment process goes much more quickly.

Makes Pickers’ Jobs Easier

A well-thought-out order picking system makes warehouse workers more productive and improves worker morale. It is also safer. When workers are not going back and forth between different areas in the warehouse, there are fewer possibilities for accidents and injuries.

Improves Customer Satisfaction

The less time it takes warehouse pickers to find the pallets they need, the sooner the products can leave the warehouse and continue their journey to the customer. The fewer steps the warehouse has to go through to ship the products, the less expensive the shipping is for the customer. Competitive shipping costs are important to the success of any eCommerce business.

Reduces Warehouse Costs

The benefits of an efficient warehouse picking system are obvious for businesses that have their own warehouses. If you use efficient picking methods, you will be able to fulfill orders quickly with fewer errors.

The 7 Top Warehouse Picking Strategies

These are the seven most popular picking methods in the order fulfillment process. Which method you should choose varies according to the layout of your warehouse and the types of products you ship.

1. Zone Picking

Zone picking is a popular picking strategy. To implement this picking method, you must divide the warehouse into zones and dedicate each zone to a certain category of products. Items that customers often order together should be near each other in the same zone. For example, mouthwash should go in the oral care zone, because customers often order it with toothpaste and dental floss. It should not be in the “liquids in plastic bottles” zone, because customers do not typically order mouthwash in combination with pancake syrup and salad dressing.

2. Batch Picking

Batch picking is a practical picking strategy for large warehouses. The warehouse managers assign a group of similar orders to a given employee for a given day. The effect is that each employee spends most of the day within one zone or within several adjacent zones.

3. Discrete Picking

Discrete picking is a great way to reduce errors if you have a small warehouse with a limited number of SKUs. A warehouse employee just goes through the list of items in the order and picks them one by one, even if it means traveling among different areas of the warehouse in a non-linear way. It is efficient and error-proof because human workers find it intuitive, like following a grocery shopping list.

4. Wave Picking

In the wave picking method, an employee might be assigned to pick items from many different zones to fulfill all of his or her orders for the day. In wave picking, however, the management divides the day into “waves,” which are time slots during which certain employees are in certain zones. If Brenda is assigned to zone A from 9:00 until 10:30, she picks all of her zone A items for all of her assigned orders for the day during that time slot. Then she goes to zone B during the next wave and gets all of the day’s zone B items. This method is efficient because it reduces travel and errors. At the end of a wave, warehouse workers can double-check their lists to ensure they have picked all the necessary items from the relevant zone.

5. Zone-Batch Picking

This order picking process is a combination of zone picking and batch picking. The warehouse managers divide the warehouse into zones. They also base each employee’s daily assignments on limiting that employee’s movement among zones during his or her shift.

6. Zone-Wave Picking

This fulfillment method is a combination of zone picking and wave picking. The management divides the warehouse into zones. They also assign each worker to spend certain time blocks throughout the day in certain zones.

7. Zone-Batch-Wave Picking

This warehouse picking strategy combines the zone method, the batch method, and the wave method. The warehouse has different zones for different items. The workers can go to different zones at different times of the day if their orders require this. Meanwhile, in any given shift, some workers are assigned to fulfill orders where all the items are in the same zone.

Warehouse Picking Efficiency Best Practices

Choosing an efficient picking strategy is just one of the ways that you can improve the efficiency of your warehouse and your entire supply chain. Your choice of technology and the instructions you give to workers for implementing your chosen strategy also make a difference. Efficient management of a warehouse comes down to choosing the best strategies for managing time, space, and resources.

Use the Right Tools

Using the right technology makes the order fulfillment process more effective. For example, devices that respond to voice commands can help employees find their items quickly and keep their eyes focused on one piece of equipment at a time. You should also provide multiple ways for employees to enter SKU numbers, in case one method experiences a glitch.Did you know that faulty equipment contributes to a large share of workplace accidents? Proper maintenance of pallets, forklifts and other pieces of equipment in the warehouse can prevent injuries that lead to costly workers’ compensation claims and, in severe cases, to OSHA fines. When you revisit your picking strategy, also be sure to inspect your warehouse equipment.

Set Productivity Goals

Goal setting has clear advantages in every industry, including warehouse fulfillment. Setting productivity goals for individual employees can help the entire warehouse perform more efficiently. Setting unattainable goals makes worker morale worse. Collect data to see how many items, on average, one employee can retrieve from one zone during one wave. If it is less than you had hoped, the solution could be to change the layout of the zone or even the length of the waves. Productivity should not just be a buzzword; managers should facilitate worker productivity instead of just bossing their employees around.

Minimize Walking Time by Optimizing Warehouse Layout

The warehouse layout is one of the factors that can reduce travel time and increase fulfillment speed. Another factor is the picking strategy you use, such as zone picking or batch picking.

Strategically Place Frequently Picked SKUs

The most frequently picked SKUs should be in easily accessible locations. This way, workers can reach them quickly, and the workers who replace the empty pallets of these products will not have to get past a lot of other pallets to replace them.

Key Takeaways

Warehouse logistics requires a lot of planning. Choosing the right layout for your warehouse and the right picking method can help you fulfill the greatest possible number of orders accurately and safely.

Warehouse Picking Strategies FAQs

These are some common questions that warehouse managers ask about warehouse picking methods and the benefits of each method.

How Can I Improve My Pick Rate?

You can improve your pick rate by setting up an error-proof layout in each zone. This way, employees in that zone can quickly learn which items are where.

What is the Most Efficient Order Picking?

Discrete picking is most practical for small warehouses with a limited inventory. Larger warehouses should use zone picking, batch picking, wave picking, or some combination of these.

How Do You Pick and Pack Faster?

Picking and packing quickly takes practice. It also helps to have the most efficient warehouse picking method for your fulfillment center.

What is a third-party logistics provider (3PL) and how could it improve your business? In a world of continual shipping restraints and high customer expectations, a 3PL could be your solution. Below we will detail exactly what you can expect from using a 3PL and the benefits you’ll gain when using one for your business. Let’s dive in!

What is a 3PL?

A 3PL is a company that offers outsourced logistics and supply chain management services to businesses. These services can include transportation, warehousing, inventory management, and other related functions. When contracting with 3PLs you are provided a cost-effective solution for companies that do not want to invest in their own logistics infrastructure, allowing them to focus on their core competencies. Have you ever felt unsure of what to do next when you encounter a logistical problem? That’s another area 3PLs can help. They often have specialized expertise and technology so you can optimize your supply chain operations and improve efficiency.

Third-Party Logistics Definition, Process, & Resources

The infrastructure within a 3PL is rather impressive. They have poured their revenue into streamlining logistical operations with technology many others couldn’t afford to utilize if they tried to create their own logistics infrastructure.

With this infrastructure, they utilize a wide range of processes and resources to manage logistics and supply chain operations for their clients. These processes can include:

• Transportation management involves coordinating the movement of goods by road, rail, air, or sea.
• Warehousing and distribution, which involves storing and distributing goods in an efficient and cost-effective manner.
• Inventory management involves tracking and managing stock levels to ensure that products are available when customers need them.

To support these processes, 3PLs often invest in sophisticated technology. These technologies allow them to automate and streamline logistics operations, so they can provide real-time visibility into inventory levels, delivery schedules, and other key metrics to their clients. Often, they will also utilize a wide range of resources, such as a fleet of vehicles, warehouses, and equipment, to support their logistical processes. These technologies and resources work in tandem with a skilled workforce that includes logistics experts, transportation planners, warehouse managers, and inventory analysts who work to optimize their client's supply chain operations.

Lastly, a main part of most 3PL processes includes working closely with their clients to understand their specific logistical needs and to develop customized solutions that align with their business goals. They also continuously monitor and analyze logistics trends and market conditions to identify opportunities for cost savings and process improvements. Basically, they are like a logistics superhero your business can call upon to make their logistical operations as efficient as possible!

Third-Party Logistics (3PL) Basics

When you're setting up your business with a 3PL provider, they'll need some basic information from you in order to get things moving. They'll need to know all about the products you're shipping, like their dimensions, weights, and any special handling requirements. They'll also want to know your current and projected shipping volume, so they can plan accordingly. Additionally, they'll need to know your preferred shipping methods and carrier preferences, and any specific delivery requirements, restrictions, or compliance requirements you might have.

Are 3rd-Party Logistics the Same as Order Fulfillment?

Third-party logistics is a service in which a company outsources its logistics and distribution functions to a third-party provider. This provider takes on the responsibility for all or some of the company's logistics operations, such as transportation, warehousing, and distribution.

Order fulfillment, on the other hand, refers to the process of receiving, processing, and delivering customer orders. This process includes tasks such as receiving the order, picking and packing the items, and shipping the order to the customer. Order fulfillment can be handled by a company's own logistics and distribution team or by a third-party provider.

In summary, 3PL is a broader term that encompasses all logistics and distribution functions, while order fulfillment is a specific aspect of logistics that refers to the process of fulfilling customer orders. A company may use a 3PL provider for both logistics and order fulfillment, or it may handle logistics in-house and use a separate 3PL provider for order fulfillment.

3PL Services vs. Drop Shipping

Third-party logistics companies offer a wide range of benefits over traditional drop shipping methods. One of the biggest benefits of 3PL services is the level of control and visibility they provide. With a 3PL provider, businesses have real-time access to inventory levels, shipping costs and information, and other logistics data, allowing them to make informed decisions about their entire supply chain. This level of control and visibility is often not possible with drop shipping, where businesses may have limited visibility into the logistics process. 3PL providers also bring specialized knowledge and expertise in logistics and supply chain management. They have the resources, technology and experience to optimize the entire logistics process, which can result in cost savings, improved efficiency, and increased competitiveness in the market.

Benefits of Third-Party Logistics

Are you tired of spending countless hours and resources managing logistics and supply chain operations for your business? Are you looking for a way to streamline your logistics processes and improve efficiency? Then look no further than third-party logistics.

By outsourcing logistics and supply chain management to a 3PL, you can free up valuable time and resources to focus on your business's core competencies. A 3PL can handle the transportation, warehousing, and inventory management on your behalf, allowing you to focus on growing your business.

They can also help you save money by finding more cost-effective solutions for logistics and supply chain management. They have the expertise and technology to optimize logistics operations and improve efficiency, which can result in significant cost savings for your business.

Moreover, a 3PL can help you improve delivery times and increase customer satisfaction by optimizing logistics operations to meet customer demands. They can also help you improve inventory management by implementing inventory management systems that provide real-time visibility into inventory levels and stock management.

By outsourcing logistics and supply chain management, you can also take advantage of their networks of resources, such as transportation and warehousing facilities, and their skilled workforce, which includes logistics experts, transportation planners, and inventory analysts. Partnering with a 3PL will help your business grow. Instead of spending precious time and revenue packing orders, you can get those same orders to your clients faster and cheaper!

Will Your Business Benefit From Third-Party Logistics?

Here are several signs that indicate a business could benefit from using a third-party logistics provider:

1. Lack of logistics expertise: If your business does not have the necessary expertise in logistics and supply chain management, it may be beneficial to outsource these functions to a 3PL.
2. Capacity constraints: If your business is experiencing growth and is struggling to keep up with the demand for logistics services, a 3PL can provide additional capacity and support.
3. High logistics costs: If your business is spending a significant amount of money on logistics and supply chain management, a 3PL may help you reduce costs by finding more efficient solutions.
4. Difficulty in meeting customer demands: If your business is struggling to meet customer demands for delivery, a 3PL can help you optimize your logistics operations to improve delivery times and increase customer satisfaction.
5. Difficulty in tracking and managing inventory: If your business is struggling to keep track of inventory levels and manage stock, a 3PL can help you implement inventory management systems to improve visibility and control.
6. Difficulty in managing returns: If your business is struggling to manage returns and reverse logistics, a 3PL can help you handle these processes more efficiently.

If any of these sound familiar, your business will absolutely benefit from a third-party logistics solution!

The Third-Party Logistics Process

Are you curious about the inner workings of a 3PL fulfillment center? It can be difficult to understand the process if you're new to outsourcing shipping. But the truth is, the 3PL fulfillment process is not as mysterious as it may seem. Let’s dive into the ins and outs of what happens in a 3PL eCommerce warehouse from the moment a customer clicks “submit order” on your online store to the final delivery.

eCommerce Platform Integration

An eCommerce platform is the software that powers your online store. Many 3PL companies have an eCommerce platform integration that will connect seamlessly with your store. This means when a customer is ready to check out and provides their billing and shipping information, this information is then processed by your 3PL partner. It goes to the fulfillment center where it is received and the order begins its journey.

Inventory Management

As the 3PL provider begins to check the inventory for the order they will often consult inventory management software which is usually connected to both your eCommerce platform and your overall inventory. That way the 3PL provider can know right away if the product is available, and can update stocking levels for you both to view.  

Picking, Packing, and Shipping

Once the inventory is confirmed, the 3PL provider's team will pick the items from the warehouse shelves. They use barcode scanning or other identification methods to ensure that they are picking the correct items and quantities. After the items are picked, they are packed and prepared for shipment. This may include packaging the items in protective material, creating shipping labels and invoices, and any other necessary preparation for shipping. After the order is packed, the 3PL provider will ship the order to the customer using the shipping method specified on the order. The 3PL provider may also provide tracking information to the customer so they can track their order during transit.

Same-Day Shipping

To achieve same-day shipping, a 3PL company requires a combination of strategic warehouse locations, fast and efficient order processing, real-time inventory management, expedited shipping options, and effective communication with the customer. Having strategically located warehouses that are close to major population centers allows the 3PL provider to quickly and efficiently ship items to customers within a certain radius. To achieve same-day shipping, the 3PL provider typically offers expedited shipping options such as overnight delivery or express shipping.

Reverse Logistics

When a customer initiates a return, the 3PL provider will typically receive the returned product and inspect it to make sure it's in good condition. If there's an issue with the product, the 3PL provider will contact the customer to resolve it. Once the return is approved, the 3PL provider will then process the return by updating the inventory, and if necessary, restocking the product.

Key Takeaways

Convinced yet? We know now that 3PLs stand out from other logistical solutions because they offer tailored solutions, specialized expertise, scalability, sophisticated technology, access to resources and handle reverse logistics processes. Plus they work closely with their clients to understand their specific logistics needs and develop customized solutions that align with their business goals. Which means you have more time to become the next big thing!

What Is a 3PL System FAQs

What is the Role of 3PL in a Company?

The main role of a 3PL is to handle the logistics functions that a company does not want to handle or cannot handle in-house. This can include transportation, warehousing, and distribution, as well as other logistics-related services such as inventory management, order fulfillment, and reverse logistics. By outsourcing logistics and distribution to a 3PL provider, a company can focus on its core competencies and business operations. This can help the company to save costs, improve efficiency, and increase its competitiveness in the market.

How Many Types of 3PLs Are There?

There are four types of 3PLs. First-party logistics (1PL) refers to in-house transportation services where a company handles its own logistics and distribution functions without the involvement of any additional parties, such as a florist using their own delivery van to drop off purchases to local buyers. Second-party logistics (2PL) involves the use of outside logistics providers, such as courier services like USPS, FedEx, or UPS, which are not integrated with the company when contracted. Third-party logistics companies create an integrated system that allows for real-time data sharing between the company and the 3PL, resulting in a streamlined, efficient, and reliable long-term solution in complete synchronicity with the business. Fourth-party logistics (4PL) is much like a 3PL, but logistically the company's relationship with the consumer is often brokered by a middleman.

The third-party logistics (3PL) environment refers to everything in a 3PL company, from its activities and manpower to its software. Business owners who work with third-party logistics providers should know what goes on in the 3PL environment because it helps them decide whether a 3PL company is right for them.

Read on to learn more about the 3PL environment and what third-party logistics operations providers do.

What Is a 3PL Environment?

A 3PL environment is everything that makes up a 3PL company’s business and activities. The 3PL environment encompasses logistics activities, warehouse and other logistics personnel as well as software. Third-party logistics operations providers can improve their 3PL environment by upgrading their tools, manpower and business processes.

What Do Third-Party Logistics Companies Do?

Third-party logistics companies offer various storage and order fulfillment services to their clients. Most of the time, they take over the client’s entire logistics operations from receiving to shipping. Some even handle customer returns on behalf of the client.

Who Should Consider Outsourcing Their Fulfillment Logistics to a 3PL?

Business owners who don’t have the manpower or budget to handle their own warehousing operations should consider outsourcing logistics functions to a 3PL.

By outsourcing order fulfillment to a 3PL, you won't have to spend lots of time and money to fund warehouse operations or hire a logistics team to run an in-house fulfillment division. Instead, you can have a vendor send finished products to the 3PL company’s fulfillment centers, and the team there will handle everything.

Another reason to outsource your fulfillment logistics to a 3PL service provider is sustainability. Current sustainability trends in third-party logistics and the market at large mean you may need to minimize the environmental impact of your business to attract customers. Many 3PL companies now offer eco-friendly logistics processes to ensure businesses can stay true to their sustainability promises and reduce their carbon footprint.

What Are the Benefits of Working With a 3PL?

The main benefit of working with a 3PL is workload reduction since the company takes over your logistics processes. Logistics in the supply chain are complicated, so you want to find a comprehensive solution that meets your needs. Here are some other benefits of working with 3PL companies:

Leverage Industry Expertise

Order fulfillment is a complex task, and learning to do it in-house is challenging. Working with third-party logistics service providers gives you access to their expertise and experience. In some cases, 3PL partners can be logistics consultants that help you improve your supply chain and logistics processes.

Save Time and Money

Leasing a warehouse, hiring and training logistics personnel, buying storage equipment and other order fulfillment functions result in high overhead costs. Instead of handling all of those tasks yourself, a 3PL can take over all of them on your behalf – all you need to do is pay their subscription fees. You can then use the time and extra cost savings to develop other business core competencies.

Expand Your Reach

Third-party logistics providers are popular with businesses looking to scale because they can greatly expand your reach. They often operate multiple fulfillment centers across the country or even globally, helping your business sell to more people in other regions and countries.

3PL vs 4PL: What's the Difference?

The main difference between 3PL and Fourth-Party Logistics Providers (4PL) is their scope of work. 3PLs only take over your order fulfillment, while 4PLs take control of your entire supply chain management process. 4PLs also have more power over your business processes since they’re more like partners than vendors.

In addition to 3PL and 4PL, there’s also 2PL, which essentially involves shipping carriers or freight forwarding services. You’re still responsible for handling all inventory, warehousing and logistics processes except for shipping.

There are many differences between 2PL, 3PL and 4PL. Each logistics outsourcing option offers differing levels of services, so do some research before picking the type of logistics provider to work with.

The 3PL Order Fulfillment Process

Most 3PLs in the logistics service industry follow a similar order fulfillment process to get products to your customer base. Here’s an overview of how 3PL order fulfillment works:

3PL Warehousing

3PL warehousing is one of the main services a third-party logistics provider offers. The company provides warehouse space in its fulfillment centers, and you can ask vendors or manufacturers to send items there.

Receiving

The 3PL order fulfillment process starts with receiving or accepting inventory items and storing them in the warehouse. Different third-party logistics providers have different receiving procedures, but it generally entails letting the 3PL provider know that your products are coming so they can prepare the storage space for them.

Picking

Picking happens when a customer places an order on your eCommerce storefront. 3PL companies usually offer integrations with online storefronts, so they’ll receive the order as soon as the customer pays for their shopping cart. The warehouse crew will create a picking list of what items the customer needs, collect them and prepare for shipping.

Packing

When everything on the picking list is picked, the warehouse crew will pack them securely. Some 3PL providers offer packing methods like cardboard boxes, bubble mailers, poly bags and more.

Shipping

Once everything is packed, the third-party logistics service provider will print shipping labels and send the items off to shipping carriers to send. Third-party logistics providers usually have a carrier partner they frequently work with. However, some have a selection of carriers or freight forwarders that you can choose from based on which one offers the best rates and makes timely deliveries.

Returns

Third-party logistics providers can also help you handle product returns. This usually happens when customers receive the wrong items or defective products. Having your 3PL partner handle returns means you don’t have to spend as much on customer service expenses, helping you raise customer satisfaction at a lower cost.

Most Valuable 3PL Services to Look For

Some 3PL companies may offer other services beyond order fulfillment. Here are some useful 3PL services to look for if you want to level up your logistics operations:

Inventory Management

Inventory management is a system companies use to ensure balanced stock levels at all times – not too much, not too little. 3PL companies can help regulate your stock by advising you on when to send in new products, keeping the inventory levels at their warehouse optimal.

Distributed Inventory

3PL companies with multiple distribution centers or warehouses often offer distributed inventory. This means your items will be spread out across the company’s distribution centers, and your 3PL partner will contact the closest fulfillment center to the customer to handle the delivery.

Returns Management

3PL companies can handle customer returns on your behalf whenever they get the wrong item or receive a defective product. The warehouse team can send a replacement product to the customer, then send the defective item back for refurbishment or disposal, depending on its state.

Kitting and Customization

Kitting and customization happen when a customer buys customized product bundles. For instance, let’s say someone buys a bundle containing a bottle of shampoo, a toothbrush and a tube of toothpaste – three items you also sell separately. The 3PL company is responsible for picking each item in the bundle and placing them in one package to ship to the customer.

Advanced Data Analytics

Many 3PL companies use inventory and warehouse management software to handle your logistics operations. In addition to automating various manual processes, their software can also provide you with reports on inventory levels and other relevant data. These reports give you the information necessary to make informed decisions about your order fulfillment and production strategies.

International Fulfillment

Many eCommerce businesses can expand their reach globally with the help of 3PL logistics services. Some third-party logistics companies operate fulfillment centers in different countries, which means you can promise timely deliveries and low shipping costs to international customers.

Key Takeaways

The 3PL environment covers everything a third-party logistics company has and does, including manpower, software and logistics activities. As a business owner, you can work with 3PL companies to improve your order fulfillment process, expand your reach and leverage their expertise.

If you want even more assistance managing your supply chain, you can work with 4PL companies that will take over your entire supply chain operations and develop improvements where needed.

What Is a 3PL Environment FAQs

What is the difference between 3PL & 4PL?

The difference between 3PL and 4PL is their scope. 3PL usually helps you handle order fulfillment and inventory management, while 4PL takes over your entire supply chain management process.

What is the biggest 3PL company?

The biggest 3PL company in the world is Kuehne + Nagel, which posted almost $40.8 billion in gross revenue in 2021.

Is 3PL the same as outsourcing?

3PL is the same as outsourcing because you’re hiring a third-party company to handle your order fulfillment.