Are you considering working with a 3PL Company for your Amazon FBA Business? Here's our beginner's guide to get started!
October 6, 2022
If you want to see business growth with your FBA business, you must delegate the minor tasks so you can focus on the major ones. Finding a Third-Party Logistics Company to help you with inventory management and fulfillment is a great way to do this! New to FBA? Let's unpack what 3PL means and how it can benefit your business.
Third-Party Logistics 3PL for Amazon: Beginner's Guide
Managing inventory has gotten harder since the great disruption of 2020. The world saw a massive spike in e-commerce sales, and Amazon put some rules into place to keep their warehouses from being oversaturated.
Back in 2020, Amazon reduced storage limits, increased storage fees, and started cracking down on too much inventory in their care.
The result? Many sellers have been left wondering where to keep their stuff (and trying desperately to keep it out of their homes).
Third-Party Logistics was already a thriving industry before this - but has become even more popular following Amazon's crackdown on space.
If you're unsure whether using a Third-Party Logistics Company is suitable for you, keep reading to find out!
What Is A Third-Party Logistics Company?
A Third-Party Logistics Company is exactly what it sounds like. It is a company separate from your marketplace and your business entity that helps you handle logistical and supply chain details.
There are a wide variety of services offered in 3PL companies - "logistics" is a rather broad umbrella term.
Some of these may include:
- Inventory Management
- Inventory Storage
- Packing & Shipping Services
- Packaging Customization
- Custom Package Insert Assistance
Every 3PL company is different, which means that the services listed here are not comprehensive and will not apply to every 3PL company you find.
Some will be geared more toward an Amazon seller looking for help with inventory management, tracking, and storage to focus on sales channels and other aspects of the business. Others will be geared toward sellers who need assistance with receiving, package customization, and sending things off to Amazon. So why should you use a 3PL service?
Why Should I Use A 3PL Service?
Once you are big enough to start managing inventory in the thousands and have the budget to offload some of your tasks, you should definitely invest in a 3PL service for a few key reasons.
- 3PL Companies Are Professionals At What They Do.
You likely didn't get into e-commerce because you love managing inventory and dealing with logistics. Handling the nitty-gritty of these details may not be your forte - but a 3PL company specializes in these aspects of the business with multi-channel fulfillment or single-channel ones. If you find a reliable company, you'll have someone on your team you can trust to operate these critical parts of your e-commerce business.
- Using 3PL Increases Your Storage Capacity.
Because of Amazon's new storage limitations, you may not have enough room to keep yourself well stocked. You cannot have a low inventory count to keep growing on Amazon. You can use a 3PL service to ensure that you always have ample inventory in the country where you sell, even if it isn't always in Amazon's warehouse. This is a much more secure business model than constantly shipping over smaller shipments from China.
- 3PL Can Give You More Customization Options.
Some 3PL companies will help you customize your packaging, pick and pack your items, and include product inserts. Of course, you still have to provide the designs - but many 3PL companies are accustomed to providing these services to Amazon sellers and can do so for you reliably.
How To Choose A 3PL Company
Since every 3PL company is different, you have to decide what your priorities are in terms of delegation before you commit to one. What are you looking for? Is your first priority storage or inventory management? Do you need assistance with packaging? Answer these questions, and start researching available 3PL companies near you.
Another thing to consider is how well the company can integrate with whatever software or services you are already using. For Amazon FBA sellers, you will need to consider how well this service can quickly get things shipped to Amazon's warehouse on your behalf.
You will also need to decide on a location. The cheapest option is to find a 3PL company with a fulfillment center close to the port of entry where your goods typically arrive. This reduces freight costs as you won't have to ship products from port to warehouse cross-country.
Suppose you can afford to have the 3PL fulfillment centers located closer to your home base. In that case, you can do so to ensure that you can personally evaluate the goods and maintain a closer relationship with the company. The same result can be achieved by simply visiting the 3PL company a couple of times a year to check in on things. This will likely cost less than the freight costs, regardless.
You will choose your 3PL company based on the services they provide and considering which services you need the most (order fulfillment process, fulfillment operations, storage space, shipping costs, etc.), the location of their business, and their price.
There are plenty of 3PL companies to choose from across the country after the e-commerce pressure cooker of 2020. So get to looking and find one that fits your needs!
We hope this article has helped you understand what 3PL is, how it can be helpful to Amazon FBA sellers, and what to look for when choosing a 3PL company. With the right service on your side, you'll have more time to focus on selling products and less time worrying about the logistics. For customized help building your store and managing these details, reach out to our team - we're happy to help!
Julia Grant is a copywriter specializing in e-commerce and small business, helping businesses expand their reach with copy that clearly communicates their message and converts. She is a certified translator and interpreter and prides herself on providing culturally relevant content in both English and Spanish.See more posts from this author