When you’re in ecommerce, you’re not just competing to have the best products in the market. You will also have to compete for faster shipping to appease impatient buyers. The 3PL industry in the United States is already at $196 billion in 2021 because as more transactions are done online, third-party logistics companies are becoming better and more competitive.
But which 3PL company is right for your ecommerce business?
Related Reading: What is 3PL and How to Find a Great One in 2021 [Ultimate Guide]
What Is a 3PL and How Does It Compare With In-House Fulfillment?
3PL is short for third-party logistics. These are companies that help store inventory, fulfill orders, and manage shipments for other businesses.
Not all ecommerce businesses use 3PLs because they opt for in-house fulfillment instead. So before deciding which 3PL you should choose, you first need to determine whether you need a 3PL for your ecommerce business at all.
There are a couple of factors to consider:
- Are your products fit for in-house fulfillment?
- If your products require special packaging that needs to be made manually, e.g., intricate packaging for gift items, then you’re better off with in-house fulfillment as long as you can handle the number of orders.
- Do you have enough resources to meet distribution demands?
- Remember that you’re competing with businesses that use 3PL companies that have high-tech robots and systems in place with hundreds of workers. Can you be sure that you can keep up with your orders?
- Are your employees ready for in-house fulfillment tasks?
- You should at least have a few people in your team who knows how to handle fulfillment to get your products packed and shipped to your customers in time.
- Are you ready to expand your fulfillment centers when your business needs it?
- If you run your business well enough, you will eventually need to expand your in-house fulfillment. How will you handle international orders? Are you prepared to invest more for fulfillment when needed?
Related Podcast: E330: Focusing on Logistics to Increase Profitability
Whether you stick with in-house fulfillment or opt for a 3PL company depends on the nature of your business. Here are the advantages of each, and you can decide which factors are more important.
|Advantages of In-House Fulfillment||Advantages of Using a 3PL Company|
Some sellers will find it easy to make a decision. Others will have no choice, just like some Amazon sellers when they found their restock limits reduced. But when you’re torn, remember you can always go for a hybrid model. Best of both worlds, eh?
A Comparison of the Largest 3PL Companies in the United States
Here, we look at six of the largest 3PLs that are trusted by ecommerce business owners. We tried to focus on tech-forward companies, generally backed by significant funding. We looked at the size of these companies as well as their features, costs, and locations.
|Employees||Funding||Year Established||Do they own their warehouses?||Contact info|
|ShipBob||444||330.5M||2014||Yes, but they also work with partners||1-312-313-1104|
|Amazon MCF||125,000||–||2006||Yes||00 1 206-922-0880|
|Warehouse / Fulfillment Center Locations|
|Allows Custom Packaging?||Offers Kitting / Bundling?||Handles Returns?||FBA Prep|
|Deliverr||No||Yes||No||No, but partners with Amazon fulfillment warehouses like My FBA Prep|
|ShipHero||Yes||Yes||Yes, but pre-approval is required||Yes|
|Integrations / Partnerships|
|Amazon MCF||Yes||Yes||No, but you can use integration solutions such as CartRover||Yes||Yes|
*Note on the next table: These 3PLs have different pricing schemes. Some include the pick and pack fee with shipping and other costs, while others have it separated.
|Storage Fees||Pick and Pack Fees||Returns Processing|
|ShipBob||$40 per pallet per month, $10 per shelf per month, $5 per bin per month||Pick and pack is free for the first four picks in an order, then $0.20 per pick for the fifth pick and after||$3 processing fee per returned order|
|ShipMonk||Bins: $1 to $4 per month, depending on the bin size||Depends on number of orders, but there’s a minimum of $250 per month||$2.00 + .50/additional item|
|Deliverr||Starts at $0.72 per cu. ft. per month||(Pick and pack fee is included in the fulfillment fee.)
Starts at $3.99 per unit
*This amount includes receiving, shipping, order handling, pick pack and package costs.
|ShipHero||Starts at $0.65 per cubic foot
**Charged daily per SKU based on the total cubic volume in stock
|(Pick and pack fee is included in the fulfillment fee.)
Starts at $5.29
*This amount includes receiving, order processing, picking the product, packing the order, the shipping box and postage.
|Restocking Fee: $2.75 for first item and $0.25 for each additional item
Inspection Fee: $3.45 per unit returned (apparel) / $2.95 per unit returned (non-apparel)
Self Returns: $2.75 for first item and $0.25 for each additional item + inspection fee per unit (if applicable)
Paid Label Fee: cost of return label
Return to Sender: shipping label back, same cost it was to send out (if applicable)
|Amazon MCF||Starts at $0.75 per cubic foot.
Depends on month, size of items, and product type
|(Pick and pack fee is included in the fulfillment fee.) Fulfillment Fee starts at $3.99 per unit order. But more unit orders means lower cost.||Depends on product type. Some have a $0 returns processing fee|
|FedEx||$8-$15 per pallet/month||Pick and pack: $0.40 per unit, including standard packing materials
*Shipping rates are discounted FedEx rates
|$2.50 per order|
|Delivery / Shipping Speeds (Domestic Only)|
Related Reading: How to Make Money as a Seller From Free Shipping
|Additional Features / Facts About the 3PLs|
|ShipBob||>ShipBob’s software allows you to share it with unlimited users at no extra cost.
>You can bulk update product names
>Best Fulfillment Technology by AdWeek’s Retail Awards
>Top Performer, Best Shipping Software 2021
|ShipMonk||>For their kitting service, you will receive three photos the day before your boxes are assembled to ensure a great unboxing experience.
>Award: 2021 Excellence in Customer Service Awards by the Business Intelligence Group
|Deliverr||>They have a cost calculator where you can just enter your ASIN and it will give you both the fulfillment and storage cost.
>Doesn’t offer international fulfillment
>For the two-day express shipping, your customers will receive a $5 credit from Deliverr if the order doesn’t arrive on time.
>Deliverr doesn’t insure products in its fulfillment network.
|ShipHero||>Has a storage pricing calculator so you can easily estimate your storage costs
>If you choose to ship with custom packaging and you run out of it, ShipHero may be unable to continue shipping your products unless you call them.
|Amazon MCF||>Unlike FBA, MCF has no referral fees.
>Just like FBA, some products are restricted.
|FedEx||>They pioneered the tracking number.
>It partners with 21,000+ retail stores, so you customers can opt to pick up their deliveries in-store.
>It has almost 800 cargo planes.
Which 3PL Company Should You Choose?
A lot of factors come into play when it comes to choosing a 3PL. Here’s a video to help you decide.
You should determine which factors are more important to you. Is custom packaging a must? If so, you can’t use Deliverr or Amazon MCF.
Note: Before, Amazon MCF sends only Amazon-branded boxes, but there’s a new program called Blank Box Fulfillment, where Amazon uses unbranded boxes to ship orders. However, it’s still in beta testing as of this writing.
Other things you should consider are the reviews as well as customer support. FedEx, for example, receives a lot of bad reviews, ranging from late deliveries to bad customer support. ShipMonk, on the other hand, has an overall good rating.
While you’re not always responsible for any delays or mistakes made by your 3PL, your buyers will associate their service with yours. Thus, finding the right 3PL is crucial for your ecommerce business. The wrong one can lead to more unsatisfied customers and bad reviews, while a good one can help you gain customer loyalty.
Which 3PL company do you use and how likely are you to recommend it? Leave your answer below.