3PLs and the Online Marketplace

online marketplace

The online marketplace has been exploding like a firecracker on the 4th of July ever since companies like Amazon hit the interwebs in the mid to late '90s. And that momentum is not going to stop anytime in the foreseeable future.

Modern consumers are becoming more and more reliant on the ease of access to their favorite products that online shopping allows. There is no need to spend gas to go to the store and no endless checkout lanes to wade through. It's just you and the internet, and whatever you want is just a few mouse clicks away.

In fact, online shopping has become so popular that in February of this year the online marketplace reached a new milestone. The market share of online sales was higher than that of purchases made in traditional department stores.

And as mentioned, that trend doesn't really seem to be slowing down at all. It's expected that by 2021 the e-commerce industry will account for more than $4 trillion in sales each year. The online marketplace has quickly become the go-to source for consumers to purchase everything from shoes to pet food. With the ability to choose shipping methods, free or low shipping rates, and lightning-fast deliveries, the popularity is absolutely warranted!

To uphold this standard, many online merchants depend on the expertise of a 3PL company to manage their warehousing, packing, shipping, and complete inventory solutions. And that brings us to what we are going to cover in this blog post. We are going to take a peek behind the curtain and look at how partnering with a 3PL is a wise idea for just about any online business owner.

If you are going to step into the future, your better go equipped, right?


What Does a 3PL do for the Online Marketplace?

Most of us understand that a third-party logistics company is a complete supply chain solutions provider. If it has anything to do with moving freight from one point to the other, that's the bread and butter of 3PL companies, so to speak.

However, in the world of online sales, there is much more at stake than simply shipping products. Just like any other retailer, storing, organizing, and inventory control are all also vital components for maintaining sales efficiency. For smaller online operations, this all may be manageable by a small team. However, for shippers with higher volumes of sales, this can be an overwhelming load of work to take on. 

Luckily, this is where partnering with a 3PL really starts to become the most viable option.

Some of the most common duties that a third-party logistics company can take over for an e-commerce business include: 


Supply Chain Management

The supply chain for any shipping business is the circle of life that drives success or results in utter failure.

When inventory is received efficiently and shipped out to consumers quickly, the average online business will stay afloat. The key to success in the online retail industry is fine-tuning your supply chain management to reduce costs. However, it must be done without reducing your ability to fulfill customer demands or compromising your shipping quality. This is a service that the best 3PL can offer their online merchants. 

3PLs have the support of large networks of carriers and other logistics experts. Because of this, they are able to oversee and manage most of your supply chain tasks to help you keep running smoothly and without errors.



Maintaining a clean, efficient, and organized warehouse is another area that many online merchants struggle with. 

The problem here is that most online merchants start off with just a small shop. They are generally not acclimated to the runnig and management of an entire warehouse. And even if they were, the cost of overhead to purchase a warehouse, or even lease one is fairly prohibitive for most smaller operations.  

This is where they trust a 3PL to provide full warehousing services. For a nominal monthly price, the 3PL will completely manage their warehousing operations. This means fewer people on the payroll and more time to redirect attention to other tasks.


Reverse Fulfillment

Most customers today will not purchase from an online merchant if they do not offer a 100% money-back guarantee on exchanges or damaged merchandise. When they are dissatisfied and want to return the product, reverse fulfillment is the process they will use. This is another service that many professional 3rd party logistics companies offer their online merchants.  

They can handle the shipping and receiving of returns, process vendor credits, and return the product to the inventory if not damaged. They also communicate directly with the customer, which improves overall customer satisfaction and experience.


Final Thoughts

Arguably the best feature of any 3PL company for an online merchant is the scalability factor.

Most online marketplaces understand that there are peak seasons of sales throughout the year depending on the type of merchandise they sell. As your sales volume increases, a 3PL can further expand their services to meet your growing needs. This flexibility factor serves to further boost the resiliency of your brand and supply chain.

When sales slow, they can likewise reduce production. In the end, this saves the online merchant a tremendous amount of time, money and maintains operational efficiency. 

If you operate an online business that regularly ships products to consumers, and you are considering retaining the services of an experienced 3rd party logistics company, contact the experts at Redwood Logistics today!