Introduction

Launching an e-commerce startup is an exciting venture, but it comes with its fair share of challenges. One of the most crucial decisions you’ll face is how to handle order fulfillment – the process of storing inventory, packaging orders, and shipping products to customers. This decision can significantly impact your business’s efficiency, scalability, and ultimately success.

Enter the world of third-party logistics (3PL) providers. These companies specialize in managing the nitty-gritty details of warehousing and shipping, allowing entrepreneurs like you to focus on growing your business. But with countless 3PL options available, how do you choose the right one for your startup?

In this comprehensive guide, we’ll dive deep into 3PL services for e-commerce startups. We’ll explore the basics of how move products from the manufacturer to the customers, to the pros and cons of various 3PL providers. Whether you’re just a beginner or looking to optimize your current fulfillment process, this article will equip you with the knowledge to make informed decisions about your logistics strategy.

We’ll answer critical questions like:

• How do you ship products from overseas manufacturers to a 3PL warehouse?
• What is a 3PL, and how can it help your business grow?
• What are the typical costs associated with using a 3PL?
• Which 3PL providers are best suited for e-commerce startups?

By the end of this article, you’ll have a clear understanding of the 3PL landscape and be better prepared to choose the right fulfillment solution for your growing e-commerce business. Let us begin this journey to streamline your operations and set your startup up for success!

Fulfillment for a Startup Business

So you are just beginng your eCommerce business selling products online and you don’t have the ability to use your garage to accept shipments from your manufacture (no loading dock and/or fork lift), you have limited room to store and inventory products, lack a workspace to package these products and lastly, issues either dropping of the packages or arranging a pickup from carriers like USPS or UPS. Viable solutions are; 1) ship your products to Amazon or Walmart and let them handle all this (spoiler alert – this is the best solution when starting out), 2) rent a warehouse and hire employees (this is typically the best solution once your business is established and flourishing), or 3) outsource to a third party logistics (3PL) company to handle movement of your products from the manufacturing plant to the customer.

A 3PL will manage the inventory (product storage) and shipment (order fulfillment) of your products in the United States of America (USA). In a nutshell, a 3PL’s mission is to store and ship your products. One problem with self-fulfilling your orders is your store is closed on the weekends so no orders are shipped. If using a 3PL, they ship products 7 days a week which means your customer gets the products faster. Note, several 3PLs in the list below are only open 5 days a week. Another benefit of a 3PL is products can be shipped directly from the factory to the 3PL’s warehouse.

Essential Questions (EQ)

The objective of this blog article is to answer the following essential questions

EQ-1 How do we ship products from China to the 3PL?

EQ-2 What is a 3PL and how does it help you make money?

EQ-3 What are the core fees of a 3PL?

EQ-4 Which 3PLs are best suited for an online retailer startup?

Basic Business Background

Legally, there are only three ways to earn money: 1) provide a service, 2) sell a product, or 3) sell knowledge. You might say, not true. For example, you might say you can play the victim and beg for money, steal money, take out student loans and ask the Federal Government to forgive the loan, get loans and claim bankruptcy, treat your parents like they are already dead and ask for your inheritance now, and so on. In these instances, you are a burden on society and if the majority of citizens do this, a tipping point will be achieved and the Country will crumble from within. So, lets now go there.

Earning money by providing a service is know has getting a job. You provide a service that someone else values and in exchange for that service, they give you money. This is the most popular way to earn money but the major issue is you, there is only so many hours you can work in a day.

Earning money by selling products is a better way to earn money over providing a service. This blog article geared for this type of money earners.

Lastly, earning money by selling knowledge, intellectual property, is the best. This is seen has people who write books, offer courses and so on. Think of any digital product such as music where you don’t have to have physical storage of a product.

3PL Overview

In this blog article, we’ll introduce you to the world of 3PL and will share a list of 3PL companies along with our rating for each company. Ratings range from 0 to 5 starts based on how helpful the 3PL company is to startups and small businesses shipping less than 200 packages a month.

Below is a list 3PL companies with a 0-5 star rating on helping startups. A 0-star rating means the 3PL only works with established companies that have minimum monthly orders of 1000 or more units a month.

According to Steve Chou, do whatever is necessary to offload the tedious parts of your business, that is the inventory and shipment of your products to a 3rd party vendor.

Not having to deal with storing and shipping product greatly frees up your time to focus on other aspects of your business like marketing, product development and sales. Having run our warehouse [Bumble Bee Linens] for over a decade now, I can candidly say that managing inventory is a major pain in the rear and should be avoided at all costs unless you have a compelling reason to do so. The main reason we still carry our own inventory today is because we offer personalized goods which must be carefully embroidered by our staff.

The Ultimate Guide To Fulfillment Center & 3PL Warehousing, My Wife Quit Her Job by Steve Chou

Before we can compare the benefits and the disadvantages of a 3PL, we will discuss the process of moving products from your manufacturing plant in China to the USA. Companies like Amazon provides this service, some 3PLs handle shipment between the USA port to the 3PL warehouse and some 3PLs require you to get your products shipped to the 3PL warehouse.

Emerging Trends in 3PL and E-commerce Fulfillment

The 3PL and e-commerce fulfillment landscape is rapidly evolving, driven by technological advancements and changing consumer expectations. One significant trend is the increasing adoption of automation and robotics in warehouses, improving efficiency and reducing errors. Artificial Intelligence (AI) and Machine Learning (ML) are being integrated into inventory management and demand forecasting systems, enabling more accurate predictions and optimized stock levels. Another emerging trend is the rise of micro-fulfillment centers in urban areas, allowing for faster last-mile delivery to meet the growing demand for same-day and next-day shipping. Additionally, the concept of “fulfillment-as-a-service” is gaining traction, offering more flexible and scalable solutions for e-commerce businesses of all sizes. Blockchain technology is being explored for enhancing supply chain transparency and traceability. Lastly, there’s a growing emphasis on omnichannel fulfillment capabilities, as 3PLs strive to provide seamless integration across various sales channels, including online marketplaces, social media platforms, and brick-and-mortar stores.

EQ-1 How do we ship products from China to the 3PL?

Lets take a step backwards to briefly discuss the steps to get your products from China to the 3PL warehouse. A freight carrier is a company that specializes in transporting products globally (as a freight forwarder) and/or domestically. A drayage carrier is a freight carrier who specializes in transporting products from a port to the 3PL warehouse.

Drayage is the process of transporting a piece of cargo from and to a port.

Drayage carriers can transport cargo from a port to a warehouse, or the other way around.

Mostly, a drayage company is a trucking company that is specialized in moving containerized freight in and out of ocean/sea ports and/or intermodal facilities.

Drayage carriers typically move freight domestically over short distances, like from a sea port to a 3PL warehouse.

According to drayage.com Drayage Directory, there are 4975 companies in the U.S. that offer drayage services (When we last checked; this number keeps changing).

But, since drayage.com charges a fee for listing, the number of drayage companies is estimated to be more than that.

Some large trucking companies like Swift and J.B. Hunt offer drayage services.

Here is a list of the top 10 drayage carriers in the U.S. (updated 2024):

1. J.B. Hunt intermodal
2. Hub Group
3. Evans Delivery
4. Schneider
5. IMC Logistics
6. RoadOne IntermodaLogistics
7. Container Port Group
8. Swift Intermodal
9. NFI
10. Universal Intermodal Services

Amazon Global Logistics

The Amazon Global Logistics (AGL) offers service to pickup your products from the manufacture in China and handle all the logistics to either an Amazon Warehousing and Distribution (AWD) or Amazon Fulfillment Center (FBA).

Flexport

Deliverr and Shopify Logistics were acquired by Flexport in June 2023, see Celebrating One Year of Fulfillment: Flexport’s Vision for Building the Best End-to-End Logistics Solution. Flexport offers ominchannel fulfillment which is “from factory floor to customer door.” Main disadvantage of Flexport is lack of human emotion, impersonal, when shipping your products. You don’t know which Freight Business is being used to transport your products from China to USA.

Also, Flexport can act like Temu, where the fulfillment stays in China and once the customer order is made, the product is placed on Flexport’s 747 airplane which flies from China to one of five Flexport’s fulfillment hubs (Los Angeles, Dallas, Atlanta, Chicago, and Phillipsburg in New Jersey).

Then Flexport trucking unloads the airplane and delivers the package to the last mile carrier such as USPS or UPS. In Los Angeles, the Flexport warehouse is next door to the UPS shipment center.

If the product is valued under $800 don’t have to pay custom duties.

EQ-2 What is a 3PL?

A 3PL company manages the intake of shipments from your manufacture, storage/inventory of these products, packaging and finally shipment to the individual customer. In a nutshell, the mission of the 3PL is to store and ship your products. Mostly, “3PL” and “fulfillment center” are used interchangeably, since they both provide the same services.

3PL Pros and Cons

Benefits (Pros) of using 3PL

1. Remove clutter in your life by storing a product at a warehouse instead of your garage
2. Save effort so you can focus on higher value tasks by outsourcing these tedious tasks.
3. Save money – real estate. Storing inventory costs money, such as paying mortgage on your home or renting a storage unit or warehouse.
4. Save money – labor. Also there is a cost in your own personal time. So if you provide a service that is worth say $50 an hour then why would you do lower value tasks that you could hire someone to do at say $15 an hour.
5. Save time for your customer. Some, but not all 3PL offer shipping 7 days a week so your customer will get their package sooner and thus they save time.
6. Save money – economy of scale. Carriers provide discounts when shipping in bulk.

Disadvantages (Cons) of 3PL

1. Products are not in your control and you have to rely on someone else, just like relying on a carrier like USPS or UPS.
2. Using a 3PL will cost you money. You might have access to cheap labor and low rent warehouse and you will keep this part of the business in-house to save money.

EQ-3 Core Fees of a 3PL?

1. Receivable Cost – inbound cost of products coming into the warehouse, typically on a pallet and moved to storage shelves.
2. Storage Cost – sometimes a flat fee or like Amazon higher storage fees around Christmas
3. Picking and Handling Cost – labor cost to move the product off the shelf and into a shipping box.
4. Shipping Cost

The cost of these services depends on various factors, such as volumes of your orders and inventory, and special services that your e-commerce startup might require; for example, you might need to have your inventory stored in a climate-controlled environment or refrigerated.

You might require upgraded services from the 3PL company, such as custom branding package inserts, combining several items together known as kitting.

The most important aspect after these four core costs/fees is how the 3PL will address customer support. If the 3PL says they address customer support via email and you have an account manager, that is a super red flag because what we [Keep Space] have found is that they are going to be appointing you to one person who is managing several businesses. Those emails and dialogues are connected to different orders and it’s easy for miscommunication between the support person and the operations.

So you want to make sure you have some way to connect directly with the operations team in some structure and they have a either a ticketing system or communication structure within their software so that you’re able to have the control to remove the potential error costs that will be added to your total cost.

Example, Amazon fulfillment house requires barcodes on the boxes and if they are placed incorrectly, then Amazon has a big issue with this and will charge you.

How much should your 3PL cost? by Jesse Emia at KeepSpace.com.au

A good 3PL will save you money

By outsourcing logistics to a 3PL provider, small businesses can eliminate the need for costly investments in warehouses, transportation vehicles, and technology systems

ShipHero Blog – Best 3PL Providers for Small Businesses

1-Warehouse Receiving Process

Receiving products into the 3PL warehouse is more than just having your factory ship directly to the 3PL. Proper documentation requirements include: label information, number of items per shipment container, number of packages per pallet, number of items per carton and required size and weight.

Different third-party logistics (3PL) companies have varying approaches to sending inventory to warehouses. So, you must adhere to their instructions before sending them your inventory.

Often, the process involves answering a Warehouse Receiving Order (WRO) label, which will be attached to each stock. The label contains a barcode that will be scanned using a WMS to provide the data on your purchase and to ensure you are receiving the correct order.

The Warehouse Receiving Process: What You Need to Know by Alexandra Ortolani with EasyShip

2-Inventory Storage Options and Fees

Typically offer Bin, Shelf and Pallet storage. 3PL storage costs follow two pricing models: 1) on demand storage with has a fluctuating cost and 2) dedicated space which has a monthly fixed cost.

On-Demand 3PL Storage

The cost of this model changes based on the size of your inventory.

The cost can be calculated based on one or more of the following:

• Per pallet
• Per shelf
• Per square foot
• Per cubic foot
• Per bin type (small, medium, or large bins).

The benefit of this pricing model is that it gives businesses more flexibility when it comes to storage costs. Less inventory means less storage costs.

However, if the 3PL company is charging per pallet, your startup will pay the same fees whether the pallet is full or just a single box stored on it. Note, some 3PL companies solve this by consolidating pallets or moving small quantities of inventory to a shelf/rack.

Dedicated 3PL Storage Space

This option is generally more suitable for larger businesses that have bulkier inventory needs. The 3PL will either a) assign a dedicated space in their facility or b) allocate the entire warehouse for the inventory. In this model, the fees, paid monthly, are fixed. It will not change as the inventory changes. This is the same as having your own fulfillment facility.

3-Picking and Handling Fees

Typical the cost to have an employee receive the order, retrieve the product from the warehouse shelf, box it and apply a mailing label.

4-Shipping Cost

Typically use USPS to ship smaller size products and UPS for larger/heavier items. Shipping items costs around $8 from USPS. Sometimes you can get a cheaper ship rate if you use ebay – Shipping rates for sellers. If using Amazon, the shipping cost is around $4 a package. The general recommendation when selling on Amazon is to price your products between $15-$85. The ideal product size and pricing on Amazon is a product you can hold in your hand and is priced around $25-$30.

So in a nutshell, a 3PL will receive and store your products, assemble your products into custom boxes and insert any manuals (process is know as making a kit or kitting). Then handoff the package to a mail carrier like USPS or UPS. Lastly, the 3PL will handle any product returns based on what your Standard Operating Procedure (SOP) is. For example, do a quick inspection on the returned product and if favorable, place it back on the rack to be shipped to a new customer.

EQ-4 Which 3PLs are best suited for an online retailer startup?

Amazon – Fulfilled By Amazon (FBA)

Amazon Fulfillment By Merchant (FBM)

The Amazon Fulfillment By Merchant (FBM) program provides the ability to use a private 3PL and still sell on Amazon. It appears in the past FBM products were not eligible for Amazon Prime shipping but a new program, Seller Fulfilled Prime is available. Note, according to Dave at Kayo3PL, the Amazon Seller Fulfilled Prime program of 2-day shipping is impossible for a 3PL to meet, essentially the 3PL has to be Amazon.

Amazon Multichannel Fulfillment

Amazon MultiChannel Fulfillment (MCF) Will have to store your products at multiple warehouses which will cost you the seller more money but should provide faster delivery times to the buyer. Amazon Warehousing and Distribution (AWD).

FBA stands for “Fulfillment by Amazon,” which means that Amazon handles the storage, packaging, and shipping of the products for sellers….Amazon has increased the cost of sending inventory to their warehouses by requiring sellers to send products to multiple locations.

Fred McKinnon, Amazon FBA Low Inventory Level Fees at E-Business Online

Custom BackOffice Solutions Fulfillment

Custom BackOffice (CBO) Solutions will store your merchandise in their warehouse, provide pick-and-pack services at a fixed rate for standardized items within 24 hours of the order receipt. Located in Tucson AZ, jean@cbosolutions.com. Requested quoted on 15 July 2024 via online form.

CBO Before Finding ShippingEasy case study. Tiffany Pierson, vice president and operations manager of Custom Back Office Solutions, a 3PL business.

eFulfillment Service Fulfillment

Offers a pay-as-you-go and no minimum order requirements (see Startup eCommerce Fulfillment). Looks promising and is recommended by Steve Chou – The Top 3PLs And Fulfillment Centers. The warehouse and corporate headquarters is located at 807 Airport Access Road (unit D), Traverse City, MI 49686

FedEx Fulfillment

The FedEx average daily volument requirement is 200-3000 packages per day in order to have FedEx ecommerce fulfillment (FedEx chat with Rebecca Fields, rebecca.fields.osv@fedex.com, FedEx Business Sales & Support. on 10 July 2024)

FedEx Fulfillment as a 3PL

Kayo3PL Fulfillment

Offers fulfillment services in USA and Canada. No contracts or minimums. Looks promising. Offering direct shipment receiving from China to their warehouse in Niagara Falls New York. Contact David Petti, CEO & Founder mobile 905-920-1396, email dave@kayo3pl.com, Lisa, Account Manager, once a week virtual teams meetings M-F 8-4PM EST

1. Can I ship directly from China manufacture to Kayo3PL warehouse?
2. Do you have a sample warehouse receiving order (WRO)?
3. Do you have a recommended freight shipper from the port to your warehouse? Freight Brokerage FTL/LTL Brokerage in North America. One SKU per pallet. Visit the 1) factory myself or 2) hire an sourcing agent to inspect.
4. Storage fees charged monthly? No
5. Storage fees $0.?? ft³ year around or higher price around Christmas? No seasonal
6. Where are fees for the shipping boxes and packing peanuts?
7. What is included with the Picking Fee? charge for envelopes and boxes
8. Shipping done 7 days a week? No, M-F
9. Email tracking code sent to customer? Yes, sent to WooCommerce
10. Amazon Seller Fulfilled Prime requires 2 day shipping. No, impossible for 3PL, send little by FBA
11. Does Kayo3PL accept product returns? Yes, place back on shelf
12. Have warehouse in Las Vegas NV? No, warehouse
13. References – List of 3 companies that use Kayo3PL Fulfillment? Popcorn company
14. Connect to WooCommerce? Yes
15. Sample Invoice – charges broken down or just lump sum monthly fees?
16. Storage insurance
17. Shipping claim

Prep N Co Fulfillment

Prep N Co is located at 3380 W Hacienda Ave, Suite 104 in Las Vegas NV 89118.

Prep N Co is a 3PL Logistics Company in Las Vegas, NV. We specialize in helping ecommerce merchants manage their supply chain with a 48 hour shipping turnaround time! Common 3PL services include warehouse and inventory management, order fulfillment, shipping coordination, retail distribution, exchanges, and returns.

Selery Fulfillment

Offers multichannel order fulfillment and warehousing. Minimum $1000 in monthly in expenditures so not recommended for a startup. Has warehouse in Salt Lake City Utah.

ShipBob Fulfillment

ShipBob Fulfillment center locations include 6565 Nascar St, suite 150, North Las Vegas NV 89115

ShipBob offers total fulfillment cost for Direct-To-Consumer (DTC or D2C) order fulfillment. This includes fees to receiving your inventory, warehousing your products and shipping each order.

ShipBob pricing and ShipBob’s Standard Business to Consumer (B2C) pricing has a startup plan for merchants shipping under 400 orders per month. Filled out online form requesting a quote on 13 July 2024.

1. Receving Fee – $35 (first 2 hours)
2. Storage Cost – $40 for pallet (48″x40″x54″) (Width 4′ x Length 3.3′ x Height 4.5′) or 60 ft³ cost of $0.67 per ft³ which is better than Walmart storage fee $0.75 ft³
3. Picking Fee – $0.26 + 3% credit card processing fee
4. Shipping Fee

Standard pallet size, see 1001pallets.com

To avoid the 3% credit card fees, ShipBob offers an automated clearing house (ACH) payment option supported by US-based banks that allows ShipBob to receive payment directly from a checking or savings account. See Setting up Payment through ACH (Bank Account).

Emily Anderson, Business Development Representative, email eanderson@shipbob.com, cell 1-773-249-9265. Spoke with on the phone 7/16/2024, young lady, limited knowledge, didn’t have pricing information and after the call was more confused on storage fees than when before.

1. Can I ship directly from China manufacture to ShipBob warehouse? Yes, WRO warehouse reciving order
2. Storage fees charged monthly? Gross plan or customize pricing 400 min
3. Storage fees $0.67 ft³ year around or higher price around Christmas?
4. Where are fees for the shipping boxes and packing peanuts?
5. What is included with the Picking Fee?
6. Shipping done 7 days a week? No, M-F
7. Email tracking code sent to customer? Yes
8. Amazon Seller Fulfilled Prime requires 2 day shipping. No
9. Does ShipBob accept product returns? Yes, place back on shelf
10. Have warehouse in Las Vegas NV? Yes
11. References – List of 3 companies that use ShipBob Fulfillment?
12. Connect to WooCommerce?
13. Sample Invoice – charges broken down or just lump sum monthly fees?

ShipHype Fulfillment

Minimum Fulfillment – 1000 orders per month. $499 monthly fee if you have less than 1000 orders a month. See ShipHype Fulfillment website.

ShipHero Fulfillment

ShipHero is not a 3PL but a software company. Minimum Fulfillment – 5000 orders per month according to Dan Panicko, Business Development Team Lead, Daniel.Panicko@shiphero.com, 847-302-2115 (email response on 12 July 2024)

ShipMonk Fulfillment

Ship Monk (formerly Ruby Has) is a fulfillment service that caters to businesses of all sizes. Ship Monk Pricing.

1. Receving Fee – $35 (first 2 hours)
2. Storage Cost – $25 for pallet (48″x40″x54″) (Width 4′ x Length 3.3′ x Height 4.5′) or 60 ft³ cost of $0.42 per ft³ which is better than Walmart storage fee $0.75 ft³
3. Monthly minimum pick and pack Fee –
4. Shipping Fee

Warehouse locations – Las Vegas NV

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ShipMyOrders Fulfillment

“We do have a monthly minimum service fee of $500. This is to prevent companies that want to use us only for storage. All service fees will be deducted from this fee. For example, say your fulfillment fees (order and pick fees) for the month were $150, receiving fees were $20, and you had a special project that was $100. That would mean you spent $270 in service fees, so at the top of the next month you would be charged $230 ($500 – $270 = $230). Heather Waldman, Director of Sales, sales@shipmyorders.com, 1-702-888-355-5545 ext 302. Spoke with her on 7/16/2024, very helpful.

Need barcode for each individual item and also the case (say 12 units) also have a barcode.

1. Can I ship directly from China manufacture to ShipMyOrders warehouse? Yes
2. Storage fees charged monthly? Yes, $500 in service fees.
3. Storage fees $0.67 ft³ year around or higher price around Christmas? No.
4. Where are fees for the shipping boxes and packing peanuts?
5. What is included with the Picking Fee?
6. Shipping done 7 days a week? no, Mon-Fri
7. Email tracking code sent to customer? This is done by shopping cart upload also in the client portal.
8. Amazon Seller Fulfilled Prime requires 2 day shipping. No, if weekend.
9. Does ShipMyOrders accept product returns? Standard Operating Procedure added back to inventory.
10. Have warehouse in Las Vegas NV? Yes
11. References – List of 3 companies that use ShipMyOrders Fulfillment?
12. Use WooCommerce API, every 20 min.
13. How are the invoices broken down by line item. Provide example.

Located in 4031 Industrial Center, Suite 705, North Las Vegas Nevada, USA, see Google Maps

Company References using ShipMyOrders

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ShippingTree Fulfillment

ShippingTree requires minimum 500 monthly order for start-ups, see ShippingTree pricing. Submitted online quote 7/15/2024.

ShipRight (Ship-Right Solutions) Fulfillment

Formerly Ship-Right Solutions, shipright.biz is an order fulfillment center. Requested quote on 15 July 2024 via online form. Contact Todd Flaherty, Partner 207-610-7748

Walmart Fulfillment Services (WFS)

Link to Walmart Fulfillment Services says to ship and store any amount of inventory you choose, without minimums or maximums but only, that is exclusively, for items sold on Walmart Marketplace. WFS Fees – monthly storage is $0.75 per cubic foot Jan-Sept and $2.25 between Oct-Dec if the product is stored more than 30 days.

How to Choose the Right 3PL for Your Specific Business Needs

Selecting the right 3PL partner is crucial for the success of your e-commerce business. Here are key factors to consider when making your decision:

1. Assess Your Business Requirements:
   • Order volume: How many orders do you process monthly?
   • Product characteristics: Consider size, weight, and special handling needs.
   • Seasonal fluctuations: Does your business have peak periods?
   • Growth projections: How quickly do you expect to scale?
2. Evaluate 3PL Capabilities:
   • Warehouse locations: Proximity to your customers affects shipping speed and costs.
   • Technology integration: Ensure the 3PL’s systems can integrate with your e-commerce platform.
   • Specialization: Some 3PLs excel in specific industries or product types.
   • Value-added services: Consider needs like kitting, customization, or special packaging.
3. Analyze Costs:
   • Compare pricing structures: Understand all fees (receiving, storage, pick and pack, shipping).
   • Look for hidden costs: Ask about potential additional charges.
   • Consider scalability: How will costs change as your business grows?
4. Assess Reliability and Performance:
   • Check references and case studies.
   • Review performance metrics: Order accuracy, shipping times, inventory shrinkage.
   • Evaluate customer service: How responsive is the 3PL to issues?
5. Consider Scalability and Flexibility:
   • Can the 3PL accommodate rapid growth?
   • Are there minimum order requirements?
   • How easily can you adjust services as your needs change?
6. Examine Technology and Reporting:
   • Real-time inventory visibility
   • Order tracking capabilities
   • Detailed reporting and analytics
7. Investigate Shipping Options:
   • Carrier relationships and negotiated rates
   • International shipping capabilities if needed
   • Ability to meet your delivery time promises
8. Evaluate Returns Process:
   • How are returns handled?
   • Are there additional costs for returns processing?
9. Consider Compliance and Security:
   • Industry-specific certifications if required
   • Data security measures
   • Inventory insurance
10. Visit the Facility:
    • If possible, tour the warehouse to assess cleanliness, organization, and technology in use.
11. Start Small:
    • Consider running a pilot program before fully committing.

Remember, the right 3PL for your business should align with your current needs while also supporting your future growth. Don’t hesitate to ask detailed questions and request references from current clients in your industry. Your 3PL will be a crucial partner in your business, so take the time to make an informed decision.

By carefully considering these factors, you can select a 3PL that not only meets your current operational needs but also support your long-term business goals and growth strategy.

Conclusion

As much as I didn’t want to say this, I recommend a startup online retailer to just use Amazon to warehouse and ship your products. The next best option is to use Walmart, but the biggest disadvantage with Walmart Fulfillment Services is it only works for sales within Walmart Marketplace. Walmart will not fulfill orders on your company website’s shopping cart.

After analyzing various 3PL options, it’s clear that for most e-commerce startups, Amazon Fulfillment by Amazon (FBA) stands out as the top recommended choice. While this recommendation might seem counterintuitive given the numerous alternatives discussed, there are several compelling reasons for this:

1. Scalability: Amazon’s vast infrastructure allows startups to scale quickly without worrying about warehouse capacity or shipping logistics. As your business grows, Amazon can easily accommodate increased volume.
2. Brand Exposure: Utilizing FBA automatically makes your products eligible for Amazon Prime, potentially exposing your brand to millions of Prime members and increasing sales opportunities.
3. Customer Trust: Amazon’s reputation for fast, reliable shipping can boost customer confidence in your product, even if they’re unfamiliar with your brand.
4. Simplified Operations: FBA handles storage, picking, packing, shipping, and even customer service for returns. This allows startup founders to focus on product development and marketing rather than logistics.
5. Competitive Pricing: Despite fees, Amazon’s economies of scale often result in “last mile” shipping costs with USPS and UPS lower than what most startups and 3PLs could negotiate independently.
6. Multi-Channel Fulfillment: While not as cost-effective as pure FBA, Amazon does offer fulfillment for orders from other channels (Walmart Marketplace, your own website, Etsy, TikTok, Facebook, and so on), providing flexibility as you grow.
7. No Minimums: Unlike many 3PLs that require minimum monthly orders, Amazon FBA has no such restrictions, making it accessible to businesses just starting out.
8. Technology Integration: Amazon’s systems integrate seamlessly with their marketplace, simplifying inventory management and order processing.
9. Timely Order Fulfillment: Amazon warehouse robots start order fulfillment the minute the consumer purchases the product. Typically 3PLs only do fulfillment during business hours which is typically Monday thru Friday, 8:00am to 5:00pm.

However, it’s important to note that Amazon FBA isn’t without drawbacks. These include:

• Less control over the fulfillment process
• Potential competition with Amazon’s own products. Amazon is known to create an “Amazon Basic” product that is similar to yours and offer it at a lower price, thereby in direct competition with you.
• Higher fees inventory during peak seasons
• Strict packaging and labeling requirements. Amazon requires you include a 12-digit Universal Product Code (UPC) on your products. In addition you also need to add Fulfillment Network Stock Keeping Unit (FNSKU) over the UPC barcode. The FNSKU is Amazon’s way of tracking your product inside their warehouses and this is what they scan and match to your listing ID. Note for private label products where you should be the only seller on the listing, then the UPCs should be fine. to just use a UPC code but for a piece of mind so your products don’t get lost,
• For books the 10-character Amazon Standard Identification Number (ASIN) is the same as the ISBN, but for all other products, a new ASIN is created when the item is added to the Amazon catalog. A products ASIN can be used to search on Amazon and Google.
• Only one barcode per product. Can’t have both a UPC and FNSKU on the package. The FNSKU must be placed over the UPC if it isn’t a private label product. Side note, purchase UPC codes from www.gs1us.org. Remember you can only sell a private label on Amazon with a valid UPC.

For startups selling products that don’t align well with Amazon’s model (e.g., very large items, hazardous materials, or luxury goods), or for those prioritizing building a strong independent brand, other 3PL options might be more suitable.

Walmart Fulfillment Services (WFS) emerges as the second-best option, particularly for products well-suited to Walmart’s customer base. However, its limitation to the Walmart Marketplace significantly reduces its flexibility compared to Amazon FBA.

For startups requiring more customization or control over their fulfillment process, 3PLs like FlexPort, ShipBob or Kayo3PL could be strong alternatives, especially as the business scales and can meet minimum order requirements.

Ultimately, the best 3PL solution depends on your specific product, target market, growth projections, and long-term business strategy. While Amazon FBA offers the most accessible and comprehensive solution for most e-commerce startups, it’s crucial to regularly reassess your fulfillment needs as your business evolves.

We recommend starting with Amazon FBA if possible, then considering a transition to a more specialized 3PL as your business grows and your needs become more complex. This approach allows you to benefit from Amazon’s infrastructure and market reach in the critical early stages while preserving the flexibility to adapt your fulfillment strategy as your brand matures.

If you have any additional information about a 3PL, please leave a comment below.

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Frequently Asked Questions (FAQ) – Common Questions Startups Might Have About 3PL Services

1. What exactly is a 3PL? A 3PL (Third-Party Logistics) provider is a company that offers outsourced logistics services, including warehousing, inventory management, order fulfillment, and shipping.
2. How much does it cost to use a 3PL? Costs vary widely depending on your needs and the 3PL’s pricing structure. Typical fees include storage costs, pick and pack fees, and shipping costs. Many 3PLs offer custom quotes based on your specific requirements.
3. Do I need a minimum order volume to use a 3PL? Some 3PLs have minimum order requirements, while others cater to businesses of all sizes. Always check the minimum requirements before committing to a 3PL.
4. Can a 3PL integrate with my e-commerce platform? Most modern 3PLs offer integrations with popular e-commerce platforms like Shopify, WooCommerce, and Amazon. Always verify compatibility with your specific platform.
5. How quickly can a 3PL ship my orders? Shipping times depend on various factors, including the 3PL’s location(s), your customers’ locations, and the shipping method chosen. Many 3PLs offer 3-5 day shipping to most U.S. locations. Almost impossible for a 3PL to provide 2-day shipping like Amazon.
6. What happens if a 3PL makes a mistake with my order? Reputable 3PLs have processes in place to handle errors, including order replacements and compensation for mistakes. Make sure to understand their error resolution policies.
7. Can I use a 3PL if I sell on multiple channels (e.g., my website and Amazon)? Yes, many 3PLs offer multi-channel fulfillment services, allowing you to manage inventory across various sales channels from a single location.
8. How does returns processing work with a 3PL? Most 3PLs offer returns management services. Returns are based on what the Standard Operating Procedure (SOP) you provide to the 3PL. They can receive returns, inspect items, and restock them if appropriate. Additional fees are typically charged by the 3PL for this service. As you would expect, you lose money on returns and Amazon’s lenient “no questions asked” return policy doesn’t help.
9. What if I want to change 3PLs in the future? It is expensive in the short term but hopefully will save you money in the long term. While changing 3PLs can be complex, most providers have processes to facilitate transitions. Be sure to understand any contractual obligations or transition fees beforehand.
10. Can a 3PL handle international shipping? Many 3PLs offer international shipping services. However, capabilities and costs can vary significantly, so confirm this if international sales are part of your business plan.
11. How do I track my inventory when using a 3PL? Most 3PLs provide real-time inventory tracking through their software platforms, which often integrate with your e-commerce system.
12. What if my business experiences sudden growth? Can a 3PL accommodate this? Good 3PLs are scalable and can accommodate growth. However, it’s important to discuss your growth projections with potential 3PLs to ensure they can meet your future needs.
13. Do 3PLs offer custom packaging or inserts? This is called Kitting and many 3PLs offer custom packaging and insert services, though these come at an additional cost. Always clarify what customization options are available.
14. How secure is my inventory with a 3PL? Reputable 3PLs have security measures in place, including surveillance systems and inventory insurance. Ask about their security protocols and insurance coverage.
15. Can I visit the 3PL’s warehouse? Many 3PLs allow warehouse visits for potential or current clients. This can be a great way to assess their operations firsthand.

Remember, these are general answers and may vary depending on the specific 3PL provider. Always clarify these and any other questions you have directly with potential 3PL partners before making a decision.

References

1. Flexport – Everything You Need to Know About Outsourcing Fulfillment, Part 1
2. Amazon FBA Low Inventory Level Fees – Everything You Need to Know, E-BusinessOnline by Fred McKinnon, fred@e-businessonline.com, Fred provides “Enhanced A+ Brand Content” for Amazon Brand Registered Sellers.
3. The Ultimate Guide To Fulfillment Center & 3PL Warehousing, My Wife Quit Her Job by Steve Chou.
4. How much should your 3PL cost? by Jesse Emia at KeepSpace.com.au, email sales@keepspace.com.au
5. How Ecommerce Fulfillment Works | Behind-The-Scenes of Order Fulfillment by ShipBob
6. ShipStation Partner Marketplace – Fulfillment and Logistics
7. Understanding 3PL Storage Costs by Brian Barry.
8. How Does 3PL Fulfillment Center Storage Pricing Work? by Alyssa Wolfe
9. How Much Does a 3PL Cost: Learn if 3PL Fees are Worth the Benefits by linnworks.
10. Fulfillment Services Costs & Pricing and 3PL Fees Explained: What You’ll Pay for Fulfillment by Warehousing & Fulfillment
11. Sell.Amazon.com.sg – 3PL order fulfillment process graphic
12. ShipHero – Best 3PL Providers for Small Businesses
13. The Warehouse Receiving Process: What You Need to Know by Alexandra Ortolani with EasyShip
14. Ultimate Guide to Amazon Barcodes: UPC, GTIN, EAN, ASIN, FNSKU by James Percival at The Selling Guys

References – Freight Carrier

1. What is a freight carrier, by Kevin McMaster: https://www.flockfreight.com/blog/what-is-a-freight-carrier
2. What is a freight carrier, by DHL Freight: https://dhl-freight-connections.com/en/logistics-dictionary/freight-carrier/
3. Everything You Need to Know to Transport Freight In and Out of a Port, by Kai Hagen: https://www.atsinc.com/blog/transport-freight-to-from-port
4. Drayage Service Explained: What Drayage is, How it’s Done and What it Costs, by Carl Verdon: https://www.atsinc.com/blog/international-drayage-service-explained
5. Get to Know Your Drayage Carriers: How Containers Move to Ports & Intermodal Ramps, by Coyote Logistics: https://resources.coyote.com/source/what-is-drayage-carrier
6. The Drayage Directory: https://www.drayage.com/directory/state.cfm
7. Top Intermodal/Drayage Carriers (2024), by Transport Topics: https://www.ttnews.com/for-hire/intermodal/2024

References – claude.ai content editor

Comments #1 – 8/14/2024

Thank you for sharing your detailed blog article on fulfillment for startup businesses. This is a comprehensive piece covering many important aspects of 3PL services and e-commerce logistics. I’ll provide some suggestions to improve and enhance the article:

1. Structure and Organization:
   • Consider adding a table of contents at the beginning to help readers navigate the long article.
   • Group related information under clear subheadings for better readability.
   • Use more bullet points and numbered lists to break up dense paragraphs.
2. Content Depth:
   • The article provides good depth on many topics. To further improve:
     • Add more specific examples or case studies of startups using different 3PL options.
     • Include more quantitative data on costs and savings when possible.
3. Writing Style:
   • Maintain a consistent tone throughout. Some sections are more formal, others more conversational.
   • Proofread for minor grammatical issues and typos.
4. SEO Optimization:
   • Your keyword list is comprehensive. Ensure these keywords are naturally incorporated throughout the article.
   • Add meta descriptions and alt text for images (when you add them to the web version).
5. Engagement and Readability:
   • Consider adding some infographics or charts to illustrate complex concepts.
   • Break up long paragraphs into shorter ones for easier reading.
6. Specific Suggestions:
   • In the introduction, briefly explain what “3PL” stands for before using the acronym extensively. (complete 8/14/2024)
   • The “Background” section could be shortened or moved to later in the article.
   • For EQ-1, consider adding a simple flowchart showing the process from manufacturer to 3PL.
   • In the “Conclusion” section, expand on why Amazon is the top recommendation despite discussing many other options. (completed 8/14/2024)
7. Additional Content Ideas:
   • Include a section on how to choose the right 3PL for your specific business needs. (completed 8/14/2024)
   • Discuss emerging trends in 3PL and e-commerce fulfillment. (completed 8/14/2024)
   • Add a FAQ section addressing common questions startups might have about 3PL services.

References – Search Engine Optimized (SEO) Keywords

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