Mastering the Art of Outsourcing Fulfillment for Your Wholesale Business
If you’ve been running a wholesale brand for a while, chances are you’ve come across a major hurdle: how to efficiently handle inventory management, shipping, and fulfillment. Maybe you’re juggling orders, packing them yourself, or trying to figure out how to scale your logistics without losing your sanity. Here’s the thing: outsourcing some of these tasks to a 3PL (Third-Party Logistics) provider might be your ticket to growth and stress relief. In this post, lets break down everything you need to know about when to outsource, what to look for in a 3PL, and how to select the right partner to help you streamline your operations.
What is a 3PL (Third-Party Logistics)?
Let’s start with the basics. A 3PL is a company that provides outsourced logistics services. These companies specialize in handling different aspects of your supply chain, such as inventory storage, order fulfillment, packaging, and shipping. By outsourcing these tasks, you free up valuable time to focus on your core business—growing your brand, finding new customers, and refining your product offerings.
Some common 3PL services include:
Warehousing: Storing your products in a secure facility.
Inventory Management: Keeping track of your stock levels and managing replenishments.
Order Fulfillment: Picking, packing, and shipping orders directly to your customers or retailers.
Returns Processing: Handling returns from customers and ensuring smooth exchanges or refunds.
Why Should You Consider Outsourcing to a 3PL?
As a wholesale brand, you have many balls to juggle: product sourcing, marketing, customer service, and, of course, fulfillment. If you’re struggling to manage your warehouse space, shipping costs, or fulfillment efficiency, it might be time to consider outsourcing to a 3PL. Here are some compelling reasons why outsourcing could be a game-changer for your business:
Scalability: As your business grows, your logistics requirements evolve. What worked when you were fulfilling 100 orders a month might not suffice when you hit 1,000 or 10,000. 3PL providers have the infrastructure, technology, and expertise to scale with you. Whether it’s handling seasonal spikes or expanding to new markets, they can adjust to your needs.
Cost-Effectiveness: Managing your own fulfillment can be costly. Think about warehousing, equipment, shipping costs, and the labor involved in picking and packing orders. With a 3PL, you pay for the services you need, often with reduced shipping rates and storage costs due to their economies of scale. Plus, you save on the overhead costs of managing a fulfillment center.
Focus on Core Activities: Outsourcing logistics lets you focus on what really matters: running your business. You don’t need to worry about inventory management, finding warehouse space, or dealing with shipping carriers. You can focus your energy on growing your brand, developing new products, or creating marketing campaigns.
Expertise and Technology: 3PL providers are specialists in logistics. They have sophisticated inventory tracking systems, efficient packing processes, and established relationships with shipping carriers. By leveraging their expertise and technology, you get the best of both worlds: efficient operations and fewer headaches.
When Should You Outsource?
Knowing when to outsource is just as important as knowing how. Here are a few signs that it might be time for your wholesale brand to partner with a 3PL:
1. You’re Struggling with Inventory Management
Managing inventory can get complicated, especially as your business grows. Keeping track of thousands of products across multiple sales channels—whether it’s your online store, Amazon, or wholesale accounts—requires a solid system in place. If you find yourself running out of stock or overstocking, or if manual inventory management is taking up too much time, a 3PL can help by offering real-time inventory tracking.
2. You Can’t Keep Up with Fulfillment
If order volume has increased, or spikes seasonally and you’re no longer able to handle packing and shipping efficiently, it may be time to outsource. A 3PL can handle the entire fulfillment process, from receiving your inventory to packing and shipping orders directly to customers.
3. You Need More Storage Space
If your inventory is expanding and you're running out of space in your garage or small warehouse, a 3PL can provide the storage you need. You don’t have to invest in your own warehouse, hiring additional employees or worry about renting additional space. You only pay for what you use, so it's easier to scale.
4. You Want to Offer Faster Shipping
As customer expectations rise, providing faster shipping becomes increasingly important. A 3PL with multiple fulfillment centers can help speed up delivery times, especially if they have facilities close to your customers. Many 3PLs also offer same-day shipping or next-day shipping options to enhance the customer experience.
5. You’re Expanding into New Markets
If you’re planning to expand to a new region or overseas, 3PLs can help you navigate logistics without the complexity of establishing a warehouse and distribution network on your own. With their established network and infrastructure, they can help you fulfill orders in new locations, even internationally.
What to Look for in a 3PL Provider
Now that you know the signs that it’s time to outsource, let’s dive into what you should look for in a 3PL provider. Selecting the right partner is crucial to your success. Here are key factors to consider:
1. Cost Structure
Pricing with 3PLs can vary widely depending on the services you need. Some of the common charges to expect include:
Storage Fees: 3PLs typically charge based on how much space your products occupy in their warehouse. This could be per pallet, per shelf, or per square foot.
Pick and Pack Fees: 3PLs charge for picking the items from inventory and packing them for shipment. This is usually priced per order or per line item.
Shipping Fees: The 3PL will also charge for shipping, and many offer discounted rates due to their relationships with major carriers.
Returns Processing Fees: If your customers return items, you may incur additional fees for processing the returns.
It’s important to understand the full pricing structure upfront to avoid surprises down the road. Ask for a detailed quote that outlines all potential charges, including any hidden fees like labeling or special handling.
2. Technology Integration
A good 3PL provider will offer robust technology that integrates seamlessly with your existing systems. For example, if you're using Shopify, you want a 3PL that integrates with Shopify’s platform for real-time inventory updates and order tracking. The right technology ensures smooth operations and keeps you in the loop without any manual tracking.
Look for features like:
Real-time inventory tracking
Order tracking and notifications
Customizable reports and analytics
Integration with your eCommerce platform (Shopify, WooCommerce, etc.)
3. Location and Fulfillment Centers
Where your 3PL’s fulfillment centers are located can have a significant impact on shipping times and costs. If they have fulfillment centers across the U.S. or internationally, they can reduce shipping time and costs for your customers. Choose a 3PL with strategically placed warehouses based on your target market.
4. Customer Service and Support
Great customer service is essential. You need a 3PL that’s responsive, reliable, and always ready to help with any issues that arise (because they do!) Make sure the provider at minimum has a dedicated account manager or support team available to assist you.
5. Experience with Wholesale Brands
Some 3PLs specialize in serving wholesale brands, and they’ll have experience handling the unique needs of B2B logistics. They’ll understand how to handle bulk shipments, large volumes of inventory, and special requirements that come with selling to retailers.
Popular 3PL Providers for Wholesale Brands
Here are three nationwide 3PL providers that offer services for wholesale brands. Lets break down their pros and cons to give you a general overview and help you make an informed decision:
1. ShipBob
Website: ShipBob.com
Overview: ShipBob is a well-known 3PL provider that serves brands of all sizes, including wholesale businesses. They offer fast, reliable fulfillment and have fulfillment centers across the U.S. They integrate with platforms like Shopify, Amazon, and WooCommerce, making it easy to manage orders.
Pros:
Nationwide fulfillment centers
Transparent pricing and no hidden fees
Integration with top eCommerce platforms
Same-day or next-day shipping options
Excellent customer service
Cons:
Can be expensive for small businesses due to storage and shipping fees
Some users report that the dashboard can be difficult to navigate at times
Limited international fulfillment options
2. Rakuten Super Logistics
Website: RakutenSuperLogistics.com
Overview: Rakuten Super Logistics offers advanced fulfillment solutions and specializes in helping eCommerce businesses scale. They have a network of fulfillment centers that help reduce shipping times.
Pros:
Offers a 2-day delivery guarantee
Multiple fulfillment centers across the U.S.
Integration with popular eCommerce platforms
Customized fulfillment solutions for wholesale businesses
Cons:
Higher pricing compared to other 3PLs
Some users experience delays during peak seasons
Limited international shipping options
3. Red Stag Fulfillment
Website: RedStagFulfillment.com
Overview: Red Stag Fulfillment is known for its excellent service and focus on accuracy. They’re a great option for wholesale brands that deal with large, bulky, or high-value products. Their shipping speed and accuracy are highly rated by clients.
Pros:
Specializes in handling large, bulky, and high-value items
Highly accurate order picking and packing
Transparent pricing and detailed reports
Great customer service
Cons:
Limited number of fulfillment centers (only 3 in the U.S.)
Pricing may be higher for smaller brands
No international fulfillment
4. ShipMonk
Website: ShipMonk.com
Overview: ShipMonk is a tech-driven 3PL that offers advanced eCommerce integrations, scalable solutions, and customizable branding options, making it ideal for growing businesses looking for flexibility and efficiency.
Pros:
Advanced technology and seamless integrations with major platforms
Highly scalable with multiple U.S. fulfillment centers
Custom packaging and kitting services available
Excellent customer service with dedicated account managers
Cons:
Higher costs for small businesses or low-order volumes
Limited international fulfillment compared to larger providers
Only three U.S.-based fulfillment centers
Complex setup process for new users
While big names like ShipBob, Rakuten, Red Stag and ShipMonk get a lot of attention, the world of 3PL (third-party logistics) providers is vast, and there are many smaller and specialized providers that might be a better fit for your specific needs. But, regardless of whether you're working with a major player or a smaller, niche provider, it's critical to ask the right questions and ensure that your contract clearly outlines all key details.
Let’s take a deeper dive into these important considerations that you should keep in mind when evaluating 3PLs:
Key Questions to Ask Your 3PL Provider
1. What Happens in the Event of a Disaster?
Disasters, whether natural (fires, floods, earthquakes) or technical (server outages, cybersecurity issues), can severely disrupt your fulfillment process. You need to understand your 3PL’s contingency plans and how they manage risk:
Disaster Recovery Plan: Ask them to explain their disaster recovery plan in detail. This should include how quickly they can get operations back online in the event of a disruption.
Back-Up Locations: Do they have multiple fulfillment centers in different regions? This can help mitigate risks if one location is affected by a disaster.
Business Continuity: How do they ensure that your operations continue with minimal disruption? Are they prepared for major disruptions, such as a data breach or natural disaster?
2. Who Holds the Insurance?
Insurance is crucial for mitigating the risk of loss. A 3PL should have adequate insurance coverage to protect your inventory, especially if it’s high-value or fragile.
Inventory Insurance: Who insures your products while they are in the warehouse? Some 3PLs include this coverage in their service fees, while others may charge it as an additional cost.
Liability Insurance: What happens if an item is damaged during the packing process? Who is responsible if a package gets lost or damaged in transit?
Terms of Coverage: Be sure to clarify the limits of their insurance. You don’t want to find out your inventory is under-insured when you need it most.
3. What is Their Error Rate?
Errors in fulfillment—such as shipping the wrong product, incomplete orders, or inventory discrepancies—can be costly and hurt your reputation with customers.
Error Rate: Ask about their error rate for order fulfillment. Ideally, you want a 3PL that boasts a low error rate (preferably less than 1%).
Penalties for Mistakes: Are there penalties for errors? If the 3PL makes a mistake, will they take responsibility for it or pass the cost onto you? Clear guidelines and expectations are essential to avoid frustration down the line.
4. Can They Work with Your Software or Marketplace?
In today's digital age, the ability for your 3PL to integrate with your existing systems is crucial for smooth operation. If you’re selling through multiple channels, such as Shopify, Amazon, Etsy, or a custom website, your 3PL must be able to seamlessly connect with these platforms.
Software Integration: Does the 3PL have the capability to integrate with your eCommerce platform and any marketplaces you sell on (Amazon, Etsy, etc.)? This integration ensures that your inventory levels are accurate in real-time, that orders are efficiently processed, and that tracking information is sent to your customers automatically.
API Support: Does the 3PL offer an API that integrates with your existing software stack? This can significantly streamline your workflows and reduce the chances of manual errors.
Customization: Can the 3PL handle specialized requirements like custom packaging or kitting (combining multiple products into a single order)?
5. What is Their Pricing Model and Structure?
Before you sign a contract, you need to understand how the 3PL charges for its services. It's essential to read the fine print to avoid hidden fees and surprises down the line.
Storage Costs: As mentioned earlier, many 3PLs charge based on the amount of space your products occupy. Clarify if they charge by cubic foot, pallet, or shelf. Some also have minimum storage fees, so be sure to get the specifics.
Pick and Pack Fees: Ask about their pick and pack fees—do they charge per order or per line item? Some providers may also charge extra for more complex packaging or special handling.
Shipping Costs: How does the 3PL handle shipping costs? Will they pass on shipping rates from their carrier partners, or do they offer discounted rates? Make sure you understand whether shipping is included in your monthly fees or is a separate charge.
Long-Term Storage Fees: Some 3PLs charge more for inventory that sits on their shelves for an extended period (often 30 days or more). It's important to factor in these additional costs when evaluating their pricing.
6. What Are Their Client References or Testimonials?
Before committing, ask for references or case studies that can provide insights into the 3PL’s performance. If possible, try to connect with other wholesale brands that use their services.
Referrals: A reputable 3PL should have referrals from clients in your industry or from businesses of your size. Ask about their experience with the 3PL’s customer service, reliability, and flexibility.
Customer Reviews: You can also research online reviews or industry-specific forums to see what other businesses say about the provider.
Protecting Your Business with the Right 3PL
Outsourcing your fulfillment to a 3PL is a major step in scaling your wholesale business, but it's crucial to make sure you're partnering with a reliable provider who meets your specific needs. Taking the time to ask the right questions, read your contract thoroughly, and understand the provider's capabilities will save you from frustration, extra costs, and potential inventory issues in the future.
Don’t just go with the first 3PL that comes your way—invest the time in doing your due diligence. Make sure they can work with your existing systems, that they have a solid disaster recovery plan, and that their pricing structure aligns with your budget. If things go south, you want to be able to navigate the situation smoothly without worrying about your inventory being held hostage.
So, before you sign that dotted line, make sure you've covered all the bases. Your business—and your peace of mind—depend on it. Is a 3PL Right for Your Wholesale Brand?
Outsourcing to a 3PL is an excellent move for wholesale brands looking to scale without the headaches of managing inventory, packing, and shipping. By partnering with the right provider, you can save time, reduce costs, and focus on what you do best—growing your brand.
When choosing a 3PL, consider factors like cost, technology integration, location, and the level of customer support. Understand that each provider has its strengths and weaknesses, and it’s essential to choose one that aligns with your needs and growth trajectory.
As your business grows, so will your logistics needs, and a 3PL can help you meet those challenges head-on.
Key Takeaways:
What is a 3PL: A provider that handles logistics like storage, fulfillment, and shipping for wholesale brands.
When to Outsource: Consider outsourcing when inventory management, order fulfillment, or storage becomes too overwhelming.
What to Look for: Transparency in pricing, technology integration, and strong customer support are critical factors to consider when selecting a 3PL.
Now you may be asking yourself... When Does It Make Financial Sense to Outsource to a 3PL?
Commentaires