How dose 3PL work?

How dose 3PL work

Third-party logistics(3PL) providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers’ needs, based on market conditions, to meet the demands and delivery service requirements for their products. Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.

The global 3PL market reached $75 billion in 2014, and grew to $157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80 percent of all Fortune 500 companies and 96 percent of Fortune 100 used some form of 3PL services.

Third-party logistics providers include freight forwarders, courier companies, and other companies integrating & offering subcontracted logistics and transportation services. Hertz and Alfredsson (2003) describe four categories of 3PL providers:

Standard 3PL Provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.[4]
Outsourcing may involve a subset of an operation’s logistics, leaving some products or operating steps untouched because the in-house logistics is able to do the work better or cheaper than an external provider.[5] Another important point is the customer orientation of the 3PL provider. The provider has to fit to the structures and the requirements of the company. This fit is more important than the pure cost savings, like a survey of 3PL providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third-party logistics provider were mentioned as much more important than pure cost savings.

First party logistics providers (1PL) are single service providers in a specific geographic area that specialize in certain goods or shipping methods. Examples are: carrying companies, port operators, depot companies. The logistics department of a producing firm can also be a first party logistics provider if they have own transport assets and warehouses.[9]

Second-party logistics providers (2PL) are service providers which provide their specialized logistics services in a larger (national) geographical area than the 1PL do. Often there are frame contracts between the 2PL and the customer, which regulate the conditions for the transport duties that are mostly placed short term. 2PLs provide own and external logistics resources like trucks, forklifts, warehouses etc. for transport, handling of cargo or warehouse management activities.Second-party logistics arose in the course of the globalization and the uprising trend of lean management when the companies began to outsource their logistics activities to focus on their own core companies. Examples are courier, express and parcel services; ocean carriers, freight forwarders and transshipment providers.

The most significant difference between a second party logistics provider and a third-party logistics provider is the fact that a 3PL provider is always integrated into the customer’s system. The 2PL is not integrated; in contrast to the 3PL, it is only an outsourced logistics provider with no system integration. A 2PL works often on call (e.g. express parcel services) whereas a 3PL is almost every time informed about the workload of the near future. As technology progresses, the methodology for notifying a 3PL of inbound workload usually falls on API integrations that connect, for example, an E-commerce store with a fulfilment center. Another point that differs 2 and 3PL is the specification and customizing of services. A 2PL normally only provides standardized services, whereas 3PLs often provide services that are customized and specialized to the needs of their customer. This is possible due to long term contracts that are usual in the third-party logistics market. Cost-effectiveness of a third-party logistics provider is only given over long periods of time with stable contract and profits. In contrast to that second party logistics services can’t be customized, concerning to the fluctuating market with hard competition and a price battle on a low level. And there we have another distinguishing point between 2PL and 3PL: Durability of contracts. 3PL contracts are long term contracts, whereas 2PL contracts are of low durability so that the customer is flexible in responding to market and price changes.

With companies operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at the same time – requires a common technological solution.[10] Non-asset based providers perform functions such as consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution.[11] However, they do not employ any truck drivers or warehouse personnel, and they don’t own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers but maintain a significantly greater degree of “hands-on” involvement in the transportation of products. These providers are 4PL and 5PL services.

A fourth party logistics provider has no owned transport assets or warehouse capacity. They have an allocative and integration function within a supply chain with the aim of increasing the efficiency of it. The idea of a fourth-party logistics provider was born in the seventies by the consulting company Accenture. Firms are outsourcing their selection of third-party logistics provider and the optimization process of the integration of these to a PL as an intermediary. That reduces costs and the 4PL have to have an overview of the whole logistics market to choose the ideal 3PL for all operative logistic activities. For being able to provide such an ideal solution fourth-party logistics providers need a good knowledge of the logistics branch and a good IT infrastructure. A fourth party logistics provider selects the 3PL providers from the market which are most suitable for the logistical issues of their customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3PL provider is the operative logistics.[12]

Fifth party logistics providers (5PL) provide supply chain management and offer system-oriented consulting and supply chain management services to their customers. Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a relatively new model for third-party logistics operations – the “non-asset based logistics provider.

Tips to Make Your Product More Impressive

1, Hop on trends early.

Take advantage of an emerging market and carve out a spot for your brand. 

To be successful in doing so, it’s pivotal that you stay up-to-date on recent, trending products and services –– and then launch an ecommerce site to capitalize on them before they hit peak popularity.

As a small business owner, hopping on trends early can give your business a huge upside. You’ll have the opportunity to own SEO keywords and establish yourself as a leader within the market you serve early on.

Start thinking of products or services that have been trending up in recent years.

2, Find products that fulfill guilty pleasures.

It always comes back to what we’re passionate about. Another proven successful product is one that caters to customers’ passions, or even their vices.

Shoppers often spend more on their guilty pleasures, developing deep loyalty to brands that understand their obsessions.

From its early beginnings, Jeni’s Ice Cream sought to capture this emotion with their customer base. 

3, Identify and serve niche segments.

Niche segments often spell out success for ecommerce businesses.

The reason for niche segments comes down to resonating with a highly-engaged, and highly-converting, audience. Serving a niche segment is a great business proposition because you create a product that solves an issue for a very passionate audience segment.

Serving a passionate niche audience will help build brand awareness, online traffic and, ultimately, new and returning converting customers.


How To Get Traffic for Your Web Store

Want to eliminate the need to pay for costly marketing and advertising materials? Get more free high-quality traffic for your online shopping site using any of these methods. Selling products and services online needs traffic combination of quality and quantity.

1,Advertise and submit your website to social media, online directories, blogs, and search engines to bring more traffic to your website. This is an excellent way to increase viewership and leads.,
2,Get started on content marketing. Create articles that are fun, creative and personalized. The best way to entice your readers to another level is to add infographics and images. Images are also effective in getting people interested in your brand.
3,Pay attention to SEO. The rules are simple to find the right keywords your website will use. Always think about words that have low competition. Never go for the high competition keywords. Consider the length and how it is being used in the content. Optimize your page, use breadcrumbs, do internal and backlinks.,
4,Don’t forget to start a list for your email campaigns. Create email campaigns that are relevant and original. So your readers will come back for more. Even though email marketing is traditional, they are powerful and have the potential to increase your traffic.
5,Analyze the traffic coming in and out of your website. Every aspect of your websites like the pages, comments, and content engages your customers in different ways. Optimizing your pages including your comments helps your website rank better on search engines.
6,Use video in your email marketing and content. Hold your audience attention creating unique and fun videos that go well with your brand.

How to Choose Order Fulfillment Service Provider in China?

Because of the cheap labor and developed manufacturing industry, sending from China fulfillment service are the first choice of a lot of e-commerce sellers. Most of the order fulfillment service providers in China are located in Shenzhen, which is very close to the logistics hub HongKong. Recent years more and more companies start to provide order fulfillment service, but their service level are very uneven. Be ware of the unqualified companies with lousy services, they will drag your business down and make you suffer from money loss. Here are some tips to choose quality order fulfillment service company in China.

How to Choose Order Fulfillment Service Provider in China

Consider the tech strength

Global shipping related order fulfillment involves a lot of orders and sections, so it need technologies to make the process seamless. Tech oriented service normally means the fulfillment team is technically powerful enough to provide a whole scientific system including the fulfillment integration of a varies of e-commerce platforms. Fulfillment integration can reduce the manual transfer times, which not only saves time and energy, but also lower the error rate.

ChinaDivision has developed easy-to-use fulfillment integration for multiple platforms, such as Shopify fulfillment integration, openCart fulfillment integration, WordPress fulfillment integration, magento fulfillment integration, etc.

“The dashboard looks great and it already synced my orders, I will surely be adding SKUs later”,after installing our Shopify fulfillment plug-in and synced a lot of orders within seconds, one of our clients e-mailed us happily. ChinaDivision fulfillment integration is stable and starter friendly, we are still adding more features to make it more powerful.

Choose the service with high performance-price ratio

Budget control is essential for any kind of business, but pursuing low price blindly will make you fall into a trap, for example, your fulfillment provider shuts down with out notice. Order fulfillment requires a series of specialized skills, all of them need years of experiences, which is too long for some companies who just rent a warehouse and start to post ads. Fortunately, quality service doesn’t have to be expensive. With optimized operations, the order fulfillment process can be very efficient and cost-effective.

Unlike some China based fulfillment companies, ChinaDivision is not start from scratch, its brand owner Shenzhen CNstorm E-commerce Co.,Ltd, also owns a B2C platform, which has been operated for years. With the experiences accumulated from the B2C business, ChinaDivision have provided high performance-price ratio service to clients all over the world.

Investigate the express carrier cooperation

The express carriers, such as UPS, DHL, EMS, etc, charge much lower shipping fees from their long-term cooperation partners. In this case, choosing the fulfillment company with better carrier cooperation can reduce a lot of your shipping cost. More than that, deep cooperation also means better communication, it can make a lot of differences in global shipping. You can monitor your order status in real time and deal with problems promptly.

Running global shipping related business, ChinaDivision have cooperated with the world-leading express carriers for many years. We also have dedicated line services, which integrated with European countries to take care of last mile delivery.