What is a 3PL Warehouse? | A Guide to Third-Party Logistics Solutions by Stampede Fulfillment

As the ecommerce landscape continues to evolve, businesses are constantly searching for ways to optimize their operations and stay ahead of the competition. One key aspect to consider is the role of third-party logistics (3PL) warehouses in streamlining the entire supply chain process. But what exactly is a 3PL warehouse, and how can it benefit your ecommerce business? In this comprehensive guide, we will explore the world of 3PL warehouses, their role in ecommerce fulfillment, and the advantages they bring to the table. So buckle up and prepare to embark on a journey that could revolutionize your ecommerce operations.

Understanding 3PL Warehouses

Third-party logistics (3PL) warehouses, also known as lead logistics providers, are essential players in the world of supply chain management. They provide a wide range of services such as inventory management, logistics and transportation services, and order fulfillment to multiple clients, often with additional services and industry-specific solutions. These logistics service providers play a crucial role in streamlining the supply chain for businesses.

By outsourcing these logistics operations to a 3PL warehouse, businesses can focus on their core competencies and let the experts handle the complex and time-consuming operational aspects. The result is a more efficient, cost-effective, and streamlined supply chain that ultimately leads to customer satisfaction and business growth.

Types of 3PL Warehouses

There are various types of 3PL warehouses, each catering to different business needs and industry verticals. Some common types include hybrid 3PLs, which provide fulfillment and storage services for both their own operations and their clients. Tech-enabled 3PLs are technology companies that have developed efficient, integrated shipping and fulfillment solutions for ecommerce businesses, optimizing warehouse storage and operations. Furthermore, some 3PLs specialize in specific industries or verticals, offering tailored fulfillment services to cater to unique business requirements.

One key factor to consider when selecting a 3PL warehouse is its storage capacity. It is essential to collaborate with a 3PL that has sufficient storage space for your existing inventory, as well as the ability to expand as your product line and order volume increase. This is where distributed inventory comes into play, allowing businesses to split their inventory across multiple fulfillment centers to ship each order from the 3PL warehouse closest to the customer. This strategy not only optimizes shipping costs but also reduces delivery times, ensuring a seamless customer experience.

Warehouse Management Systems (WMS) – Shipedge WMS

Warehouse Management Systems (WMS) play a vital role in the smooth functioning of 3PL warehouses. A WMS is a software application that assists in the management and control of daily warehouse operations, from the receipt of goods and materials to their subsequent dispatch. It provides visibility into a business’s entire inventory and facilitates the fulfillment of supply chain requirements.

A WMS streamlines warehouse operations by automating and optimizing processes such as inventory management, order fulfillment, and shipping, ultimately minimizing errors, increasing accuracy, and enhancing efficiency. Additionally, WMS helps to reduce costs related to manual labor and other operational expenses. As such, it is crucial for businesses to evaluate the WMS capabilities of potential 3PL warehouses to ensure seamless integration with their existing systems and processes.

At Stampede Fulfillment, we took all these variables into account before selecting a WMS.  During our vetting process, it became clear that Shipedge (WMS) had the most capabilities out of all the providers.

The Role of 3PL Warehouses in Ecommerce Fulfillment

3PL warehouses play a pivotal role in ecommerce fulfillment, acting as the backbone that connects manufacturers, retailers, and end customers. From order processing to inventory storage, 3PL warehouses ensure that ecommerce businesses can meet customer expectations and deliver products promptly and accurately. By choosing to outsource fulfillment to a 3PL warehouse, businesses can save on costs, streamline operations, and focus on growth, rather than managing complex logistics tasks in-house.

The location of a 3PL warehouse is a crucial factor in determining the efficiency of your ecommerce fulfillment process. A strategically located warehouse can minimize shipping costs and delivery times, ensuring a positive customer experience. Therefore, it is essential to carefully evaluate the location and network of potential 3PL warehouses before making a decision.

Stampede Fulfillment has 3 locations in North Carolina (NC).  Two of which are in Conover, NC.  The other is in Lenoir, NC.  Between the 3 locations, we have over 200,000 square feet of floor space.  Our clients have found that our location is strategic for East Coast distribution and order fulfillment as we can meet 2-day shipping requirements for the eastern half of the continental U.S.  Each of our facilities is just a short drive from Charlotte, NC.

Order Processing

The order processing steps in a 3PL warehouse begin with the receiving process, where incoming inventory is accepted and stored. Once a customer places an order on an online store, the 3PL warehouse’s picking process kicks in. The picker must obtain a list containing items, their quantities and where to find the items. This list serves as a guide to collect the ordered products from the right locations. After picking the items, they are packed and prepared for shipping, with shipping labels generated and affixed to the packages. Finally, the packages are dispatched and shipped to the customers using various shipping methods, depending on the customers’ preferences and the selected shipping options

Efficient order processing is crucial for maintaining customer satisfaction, and many 3PL warehouses offer same-day shipping services to ensure orders are picked, packed, and shipped promptly. Additionally, 3PL warehouses can optimize shipping costs by leveraging dimensional weight pricing techniques, which consider package dimensions to calculate shipping rates. This approach helps maintain logistics costs at a minimum, ensuring businesses can provide affordable shipping options to their customers.

 

Inventory Storage

Efficient inventory management is a critical aspect of ecommerce fulfillment, and 3PL warehouses excel in this domain. They store inventory, synchronize it with online stores, monitor real-time inventory levels, and proactively replenish stock to avoid stockouts. By outsourcing the task to manage inventory to a 3PL warehouse, businesses can focus on their core competencies and growth, while leaving the complex task of inventory management to the experts.

Moreover, 3PL warehouses can help businesses scale their operations by providing flexible storage solutions that can accommodate seasonal fluctuations in demand. This means businesses can expand their product lines without worrying about storage limitations, ensuring they can meet customer needs and capitalize on new market opportunities.

 

Transportation Services

3PL warehouses provide a wide range of transportation services, including transportation or freight management, public/contract warehousing, distribution management, and freight consolidation. They are responsible for the physical movement of goods or services between locations, ensuring that your products reach their destination on time and in optimal condition. Freight forwarders often collaborate with these warehouses to streamline the process.

To achieve this, 3PL warehouses typically partner with a variety of carriers to offer a selection of shipping options, such as ground, air, and ocean freight, as well as expedited shipping services. By leveraging their industry expertise and extensive carrier partnerships, 3PL warehouses can help businesses optimize shipping costs and provide customers with flexible and reliable delivery options.

 

Value-Added Services

In addition to core logistics services, 3PL warehouses also offer a variety of value-added services that can further enhance your ecommerce fulfillment process. These services include packaging and assembly, kitting, repackaging, and distribution management. For example, kitting is a service that allows businesses to customize their inventory preparation for customers by adding stickers or branded materials to orders.

By offering these value-added services, 3PL warehouses can help businesses differentiate themselves from the competition and provide a unique customer experience. This, in turn, can contribute to increased customer satisfaction, loyalty, and repeat business, ensuring the long-term success of your ecommerce operations.

Benefits of Using a 3PL Warehouse

Employing a 3PL warehouse for your ecommerce business offers numerous benefits, including cost savings, operational efficiency, and scalability. By outsourcing logistics operations to a 3PL warehouse, businesses can reduce costs associated with labor, inventory, and transportation, while also streamlining processes and enhancing customer service.

In addition, 3PL warehouses can help businesses scale their operations by providing flexible storage and fulfillment solutions that accommodate fluctuations in demand and facilitate business growth.

In a nutshell, partnering with a 3PL warehouse can have a significant positive impact on your ecommerce business’s bottom line. By leveraging the expertise and resources of a 3PL, you can focus on your core competencies and leave the complex logistics tasks to the professionals, ensuring a seamless and efficient supply chain that ultimately leads to customer satisfaction and business growth.

Cost Savings

One of the primary benefits of using a 3PL warehouse is the potential for cost savings. By outsourcing logistics operations to a 3PL, businesses can eliminate the need to purchase or lease warehouse space, manage logistics operations in-house, hire labor, and invest in technology for fulfillment. Furthermore, 3PL warehouses can help businesses save on shipping costs by offering volume carrier discounts and other cost-effective options.

In addition to these direct cost savings, partnering with a 3PL warehouse can also result in indirect cost savings by allowing businesses to focus on their core competencies, such as product development, marketing, and customer service. This, in turn, can lead to increased revenues and profitability, further justifying the decision to outsource logistics operations to a 3PL warehouse.

 

Scalability

Scalability is another significant advantage of using a 3PL warehouse for your ecommerce business. As your business grows, so too do your logistics and fulfillment needs. A 3PL warehouse can provide additional storage space and fulfillment capabilities to accommodate this growth, allowing your business to scale rapidly and effectively.

Furthermore, by outsourcing your logistics operations to a 3PL warehouse, you can focus on other aspects of your business that drive growth, such as product development, marketing, and customer service. This enables you to capitalize on new market opportunities and ensure the long-term success of your ecommerce operations, all while enjoying the benefits of a streamlined and efficient supply chain.

Choosing the Right 3PL Warehouse for Your Ecommerce Business

With so many 3PL warehouses available, it can be challenging to determine which one is the best fit for your ecommerce business. To make an informed decision, it is essential to carefully evaluate the service offerings, technology capabilities, and location of potential 3PL warehouses. By considering these factors, you can ensure that you select a 3PL warehouse that not only meets your current needs, but also has the capacity and expertise to support your business as it grows and evolves.

Remember, the success of your ecommerce business depends on your ability to deliver products to customers quickly, efficiently, and cost-effectively. By partnering with the right 3PL warehouse, you can achieve these goals and set your business on a path to sustained growth and success.

Summary | Contact Stampede Fulfillment to Learn More

In conclusion, 3PL warehouses play a vital role in the success of ecommerce businesses by streamlining the entire supply chain process from inventory management to order fulfillment. By partnering with the right 3PL warehouse, businesses can reduce costs, improve operational efficiency, and scale their operations to meet customer demands and capitalize on new market opportunities.

The choice of a 3PL warehouse is an important decision that can have a significant impact on the success of your ecommerce business. By carefully evaluating factors such as service offerings, technology capabilities, and location, you can select a 3PL partner that not only meets your current needs but also supports your business as it grows and evolves. So, take the time to choose wisely and set your ecommerce business on a path to success.

Contact the Stampede Team today if your company is looking for a 3PL partner!