Third-party logistics (3PL) providers are the core foundation of modern e-commerce fulfillment and 3PL cost reduction strategies, delivering services such as warehousing, inventory management, pick and pack, packaging preparation, and efficient delivery to shipping couriers as part of complete eCommerce fulfillment services. They majorly work as a full-service logistics partner, or some are experts in specific key areas (for example, warehousing).
For many eCommerce brands, an outsourced fulfillment partner is more cost-effective, less resource-intensive, and less risky than setting up their in-house logistics infrastructure. This will give them access to well-versed fulfillment, which was once exclusive to large enterprises.
As the demand for fast, reliable shipping grows, so does the 3PL market. In the United States alone, there are over 21,000 third-party logistics companies, and they are roughly handling 60% of all retail shipments globally. Working with a leading 3PL fulfillment company can help your organization save money
Why Businesses Choose 3PLs for Cost-Effective Fulfillment
Let’s get into how working with a leading 3PL company can help your organization save money, explaining areas where they can particularly reduce costs across logistics:
How 3PLs Reduce Shipping Expenses and Carrier Costs
Shipping and fulfillment are the core elements of any 3PL provider. They essentially operate through a mix of their own last-mile shipping fleets and partnerships with top carriers like UPS, FedEx, and USPS.
3PL can negotiate bulk discounts with carriers as they are handling shipping for multiple clients, involving hundreds, thousands, or even millions of packages year-round, which individual businesses find difficult to do so. Beyond carrier rates, they can help you save costs in other ways as well.
- Some 3PLs even offer their own fleets for last-mile delivery, which helps reduce the overall costs of courier delivery.
- Optimized routes help reduce overall costs by distributing inventory regionally, reducing the final cost to ship.
Smarter and More Affordable Inventory Management with 3PL Technology
ShipRelax’s key offerings involve inventory management, warehousing, and distribution. To improve the quality of these services, they utilize advanced inventory management systems named Fulfillor, offering real-time stock tracking and alignment with your existing software or platforms. This way, you can track inventory in real-time, ensuring updated inventory across different channels where you sell your products. This approach supports logistics optimization and reduces inefficiencies.
Some 3PLs even offer guidance or support on inventory optimization, such as recommending strategies for reordering and quantities, improving inventory turnover rates, and minimizing excess stock and carrying costs.
Lower Warehousing Costs Through Shared 3PL Facilities
Warehousing is one of the most expensive and core parts of multiple businesses. With strong 3PL partnerships, warehouse costs are lowered as you rent out a small space in their massive facilities alongside hundreds of other businesses.
In modern eCommerce logistics management, 3PLs like ShipRelax have large warehouse facilities that make it possible for ecommerce brands to benefit from their economies of scale, specifically storage. When you tap into their established, high-volume network, the amount you pay for cost per square foot decreases because the service operates in bulk.
Reducing Labor Costs Through Scalable 3PL Staffing Solutions
Hiring and managing staff for handling, pick and pack, warehouse and inventory management is a tedious and expensive process. You have to screen and train staff and during the busy seasons, the demand for labor rises with the responsibilities increasing.
For small businesses, it is expensive to hire full-time staff for a specific time of the year. Taking help from 3PL experts means they can access their skilled and full-time workforce that can efficiently distribute work across several businesses. You can scale labor as required, with 3PL providers taking care of hiring, training, and supervising. A larger and accessible workforce means you can save considerably and avoid disruption. This also improves overall supply chain efficiency.
Saving Technology Costs with FulFillor-Powered 3PL Systems
Logistical activities require robust and advanced technology, their WMS software and automation tools, which a 3PL provider like ShipRelax leverages. They make use of the newest technology and tools to support inventory, warehouse, transportation, and other processes. FulFillor is a next-gen fulfillment software that supports order fulfillment automation for faster processing. ShipRelax uses for real-time inventory insights, transparent and better warehousing insights, automated pick, improved compliance, and more.
By outsourcing logistics to a reputed 3PL, you can save on technology costs as you don’t require maintenance of these tools and handling IT staffing or support. While you’ll still need tools like CRM and Inventory Management System, but by just maintaining these tools, you can save money by not having to invest in other technologies or 3PL technology integration costs. ShipRelax leverages advanced WMS and automation tools built by NOI Technologies, ensuring seamless integration, real-time inventory tracking, and scalable performance.
Better Risk Management and Compliance Through 3PL Expertise
3PLs can drastically help mitigate potential logistical risks through logistics risk management practices, advanced WMS software, or other technologies, real-time tracking, robust analytics, and other features. Many 3PLs also offer comprehensive insurance and include regulatory compliance in their service offerings, in the form of a compliance officer, so you don’t need to hire them internally. This way, you can save on compliance and risk management while minimizing potential expenses arising from neglecting risk management.
Expanding into New Markets Without Heavy Investment
Entering new regions typically requires significant investment, research, and effort to place inventory for timely delivery to customers. When you outsource logistics to a 3PL, you instantly get access to their global 3PL network and established warehouses and fulfillment networks in your target markets, eliminating the need to build from scratch.
With their existing relationships with carriers, you can simply send inventories to their facilities. They even offer advanced international shipping solutions, including consolidated shipments, customs processing, and others. This makes expanding into new markets faster, smoother, simpler, and far more affordable.
How ShipRelax Helps eCommerce Businesses Reduce Logistics Costs
Using the right 3PL company can help you reduce costs across every phase of ecommerce logistics help your organization save money and reduce logistics costs. From warehousing, pick, pack and ship, transportation to delivery, they offer professional 3PL services at a fraction of the cost than if you handled it all in-house. At the same point, you’ll get access to smarter technology, aligned inventory management, compliance, and a lot more while ensuring enhanced customer experience.
Explore How ShipRelax Reduces Your Logistics Costs
FAQs About Cost Savings with 3PL Providers
- What are the biggest benefits of using a good 3PL for small ecommerce businesses?
One of the great benefits of outsourcing logistics to a 3PL for small ecommerce businesses is cost savings. They can save significantly through access to their professional warehousing, shipping, and fulfillment services without stressing about investing in their own infrastructure. They can share costs with other brands while maintaining premier quality service. - How do 3PLs handle seasonal demand surges?
Leading 3PLs offer flexibility and scalability; they can effortlessly adjust storage space and staffing levels to match seasonal peaks without requiring you to rent more space or hire extra staff. This adaptability is crucial to maintaining smooth operations throughout the year. - What kind of technology does 3PL use?
3PLs use advanced logistics software to get access to benefits like real-time stock tracking, smooth inventory and warehouse management, automated inventory updates, and more. These systems connect with your existing platform, reducing the need for internal IT support, saving costs and time.