Third-party logistics (or 3PL) refers to the outsourcing of commerce & e-commerce logistics processes to a third party business, including inventory management, warehousing, and fulfillment. 3PL providers allow e-commerce merchants to accomplish more, with the tools and infrastructure to automate retail order fulfillment, especially since as a business grows, doing your own fulfillment starts to present problems, therefore needing you to scale up to a 3PL partner.

The 3PL shipment fulfillment process

So what exactly happens at a 3PL’s warehouse once a customer clicks “Submit order” on your online store? Let’s explore the entire process from start to finish.

Receiving

A 3PL can’t ship orders without inventory on hand. The “receiving” of inventory in a 3PL warehouse refers to the acceptance of incoming inventory followed by its storage.

Let's say you have bought products from a manufacturer and they have prepared the shipment for dispatch in their warehouse. We will coordinate with the carrier of your shipment, receive it to our warehouse, break it down, count it carefully, inspect it for damage and input all parameters of the received order into our system for you to review.

After that it is up to you what happens to the shipment – you can either have us prepare the shipment for a new destination(Business-to-business), or warehouse it and fulfill it as single orders to end consumers(Business-to-consumer).

Decoding

Sometimes the items in a shipment are coded in order for the manufacturer to control where the shipment ends up based on contractual obligations with the distributor(you). If there is coding present in the form of labels or invisible ink codes on items we will de-label each individual item in the shipment, or remove any and all specific markings on individual items left by the manufacturer, as well as re-label everything afterwards as per your instruction.

Warehousing

Once we receive your inventory, we store your items in our fulfillment center. Each SKU has a separate dedicated storage location, either on a shelf, in a bin, or on a pallet.

Different 3PLs have different storage capacities; not all 3PL warehouse space is created equal. It’s important to work with a 3PL that has more than enough storage space for your current inventory — as your product line and order volume grow, your 3PL storage must be able to scale with you.

Picking

When a customer places an order, it’s time for the 3PL fulfillment process to begin.

Some 3PLs require you to manually upload orders to their system. Sometimes, this involves spreadsheets including order details, customers’ shipping details, and more.

Other 3PLs have sophisticated technology that integrates directly with your ecommerce platform or marketplace. These 3PL fulfillment software integrations bring orders, shipments, inventory tracking and stock levels, and more together in one place to streamline the fulfillment process for more automated shipping.

This includes automatically pushing customers’ online orders to your 3PL as soon as they’re placed.

Packing & Shipping

When all items in an order have been picked, it’s time to get them securely packed for shipping. The packing materials used will depend on your 3PL’s capabilities, your brand preferences, and the items being shipped.