The traditional business model of handling many or all operations in-house isn’t always the most productive. This is particularly true for small eCommerce businesses. Many eCommerce companies have been able to expand operations while operating on a shoestring. Third-party logistics services allow you to partner with pros on one of the most important aspects of your eCommerce business. That allows you to focus on marketing, growth, and customer satisfaction.

The 3PL business model is the most common type of outsourced logistics company. There are other types such as 4PL and 5PL, but by far most companies large and small are interested in 3PL.

3PL stands for third-party logistics, described above. The term third-party logistics is often also used interchangeably with order fulfillment. A third-party warehouse provides a full range of eCommerce fulfillment services. This can include warehousing, order processing, and shipping and receiving. Many 3PL warehouses provide other services. These can include customer support, returns processing, and customization.

There are several benefits of this operational model.

• Lower cost of goods sold. When you purchase products upfront, you will pay the wholesale price. The more you buy, the lower your costs and the higher your profit margins.
• Greater flexibility in product sourcing. When you use an eCommerce fulfillment business model, you can more easily source products from more than one manufacturer. All your items will be stored in the same warehouse, so orders that include products from multiple suppliers can ship in the same box. This saves on shipping costs.
• More control over your logistics operations. You get to choose an order fulfillment partner that provides the services your customers expect.
• Faster order fulfillment. You can pick a third-party logistics service with warehouse locations that will get your orders delivered quickly.