Back to blog

Third-Party Logistics (3PL) is the Future of E-commerce Product Distribution

Posted on July 03, 2019
by Emma Burgess

Third Party Logistics is changing the shape of e-commerce product distribution by providing a range of flexible storage and distribution services to their customers. The industry looks set to make even more advances with technological innovations such as automation and advanced IT solutions.

What are third-party logistics?

Third-party logistics, or 3PL, is a variety of services and processes that support your business.

Third party providers offer warehouses and distribution networks that get your products to your customers quickly and efficiently.

Many small businesses are turning to 3PL providers to reduce costs and overheads, improve flexibility and scalability and therefore ultimately improve customer satisfaction.

The growth of 3PL

More and more retailers are outsourcing part or all of their company’s distribution and fulfilment to third-party providers. A recent survey has estimated that 86% of Fortune 500 and 96% of Fortune 100 companies use these services.

However, 3PL is not just for big businesses. It is often the perfect solution for small businesses, allowing them to expand without the need for the financial outlay of warehousing and staff costs.

The 3PL sector has seen rapid expansion in recent years. In 2016, the global third-party logistics market was approximately 800 billion dollars. By 2020 that number is set to rise to $1.1 trillion.

The sector began as mainly in order to provide 3PL warehouses to customers without the space to store their own products. Alongside this, these companies developed inventory management and packing and shipping solutions for their clients. Today, 3PL can service almost all aspects of the supply chain.

What 3PL can do for your business

Third-party logistics offers a solution to many of the problems of start-ups and growing businesses. No longer do small business need to rent large warehouses or employ staff to pick, pack and post. Store your products in a 3PL warehouse and leverage the skills, knowledge and purchasing power of that company to grow your business.

Warehouse management can be a major headache for online businesses. Legal fees, contract negotiations, long/inflexible leases, security, heating, lighting, health and safety. All these issues are removed at a stroke with third-party logistics.

In addition, using a third-party solution can streamline your checkout system, alleviate customer concerns about payment security and solve the issue of customer returns.

Companies which offer Third-party logistics can handle the supply chain from manufacturer to consumer, allowing you to focus on other areas of your business.

How 3PL is changing the future of e-commerce product distribution

Because third-party providers are experts in warehouse management and inventory control, they can provide solutions that are far beyond the capabilities of many small businesses. 3PL invests in the most up to date technologies, so you don’t have to. They also have existing relationships with shippers and use the economies of scale to get the best deals on shipping costs.

3PL companies also invest in advanced technologies to streamline e-commerce distribution. As these technologies advance, their customers will automatically benefit from these advances which include the following.

Inventory management and stock picking

Inventory management is key to efficiency. Providers are using advanced software systems which integrate with popular e-commerce and inventory management systems such as Shopify and WooCommerce. They are investing in new technologies to streamline picking procedures to increase efficiency and reduce costs. Further advances on the horizon include automated identification and data collection, low energy sensors and robotics.

Improved delivery

3PL use real-time analytics to determine the fastest routes to get product to customers. This increases efficiency and reduces costs. In addition, as customers demand faster and faster delivery times, providers are able to respond to that need.

Integrated cloud-based platforms

By using cloud-based technologies, 3PL allows you to access information about your business at anytime and anywhere. Using cloud-based solutions also eliminates the need for IT system upgrades.

Overall, these advances will result in a cheaper solution for your business as well as a more satisfying experience for your customers.

If you are ready to move your business to the next level or want to remove the hassle of leasing storage space and running a delivery operation, then Huboo can help.

We offer the lowest prices, free storage and the flexibility you need whether your business is large, small or growing fast. In addition, our 99.9% accuracy rate will provide your customers with the five-star service they expect.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get in touch

Ready to get started or have any questions?
Fill in the form or call us: 0330 8080 909

Need to Contact Our Support Team?

Contact us