For many small to medium businesses (SMBs), the early days of the business are notable for owners in that they have more time than money. Tasks that they could hire someone for they typically do themselves to save money, overhead, and the responsibility of managing others.

But as a business grows, especially an ecommerce business, that changes. Owners begin to look for ways to delegate some of the work. Offloading the responsibility of logistics can not only free up time for the business owner but has many other benefits as well. This is where a third-party logistics provider (3PL) can help take your business to the next level.

But what exactly is a 3PL? And what benefits come from using one?

What a 3PL Does

As mentioned, 3PL stands for third-party logistics. But what exactly does that mean?

The 3PL is an entity outside of your company that provides services to your organization, in this case, logistics. A 3PL helps companies with any kind of mail order, such as ecommerce, with their warehousing, packaging, and shipping of products.

Essentially what a 3PL does is place your products in their warehouse space. Then, as orders come in, the staff of your logistics provider picks the order from your inventory, packages it, and ships it out to your customer.

For many ecommerce merchants, that’s a clear benefit right there. No one starts an online storefront because they love packaging and shipping. But when first starting out it’s part of what needs to be done to get the company on its feet, and many small business owners take on the responsibility themselves.

Yet that model is neither sustainable or scalable. As a merchant grows, the business owner must be more involved with the running of their business and let others handle the day to day process of getting merchandise out to customers.

Obviously, one way to handle this is to hire staff to take care of managing inventory, pulling orders, and getting them to shippers for delivery. So why would someone choose a 3PL over hiring their own team to manage logistics?

The Benefits of Using a 3PL

The advantages to your business of going with a 3PL include important benefits like saving you time and money.

Warehouse Space and Leasing

As your business expands, you’ll need more room for your inventory. But renting warehouse space can be a big investment, locking you into a lease that may not be advantageous to you in the long run.

Most 3PLs are flexible. As your inventory and demand fluctuate, your logistics partner can adapt to meet the need. This can be a big bonus if your business is cyclical or seasonal. Your partner has both the warehouse space and the staffing experience to manage both increases and decreases in inventory and space. This saves you from leasing space you don’t need most of the year or trying to predict staffing needs during peak times.

No Need for Additional Staff

Staffing up during peak times isn’t the only headache that can come from managing inventory and shipping yourself. But it’s certainly one of them.

As any HR manager will tell you, hiring is a very time-consuming task. Lining up interviews, speaking with candidates, managing paperwork for new employees, all of these are hiring tasks that take a great deal of time and take you away from running your business. And if you’re doing seasonal hiring, you’ll be doing this regularly.

What’s more, even if you’re just hiring regular staff, you still need to go through the processes of finding candidates and onboarding them. Beyond that, you also need to manage that staff – ensure they are working, and working well, that they have everything they need to do their job, complete reviews, and so forth.

With a 3PL, your partner manages all of that for you. Seasonal staff increases are common, and something they are equipped to handle. And there is no paying staff during slow periods, either. Instead, when your company doesn’t need help, your partner can use its staff elsewhere and for other clients.

You Focus on Your Business, they Focus on Theirs

Your business needs your attention. Marketing, sales, managing staff, planning for growth – these are all important tasks that need your attention.

But picking and shipping, inventory management, and handling returns, while important parts of an ecommerce business, are not things that need your specific attention. These are tasks that don’t need the company vision, or the company visionary, to manage.

Instead, by allowing an expert to handle these tasks, they’ll be completed efficiently and with fewer mistakes. What’s more, a 3PL will invest in both locations and equipment that make logistics as streamlined as possible.

Logistics partners choose locations specifically to optimize their shipping coverage and speed. They also invest in warehousing equipment and software specifically to enhance their business. Most small to medium sized businesses don’t have the luxury of investing in logistics software or warehouse automation equipment or even the need.

How to Make Using a 3PL Even Better

These benefits apply regardless how you interact with your 3PL. Once they have the order, the logistics can be handled in a streamlined fashion.

But the challenge can be the communication between you and your logistics partner. The management of a shipment may be an encapsulated process. But everything surrounding it requires attention from both your business and your partner.

There are data points that surround the packing and shipping of an order – from what’s in the order itself, to inventory levels, to return eligibility and customer service – that are important to how well your business runs.

Same day shipping from your 3PL is great if they can get the orders in a timely manner. Selling an item that is out of stock is a customer service nightmare.

For things to run as smoothly with your partner as possible, an integration between your ecommerce and back office systems and the 3PL’s systems is a game changer. Integrations automate the exchange of data, allowing your 3PL to quickly have access to your order information, and for your business to have visibility into your logistics.

No matter if your ecommerce company has grown from a mom and pop start-up run out of your garage, or started out as a business that needed significant warehouse space, a 3PL can save you time and money while improving your customer’s experience. Integrating with your partner can raise your game, even more, creating a well-oiled machine that is ready for growth.