01 Aug 2023 / 6 min read

The Strategic Importance of 3PL Service Providers in eCommerce Logistics Management

3PL Service Providers

Did You Know? India's Logistics Market was estimated to be valued at USD 435.43 Bn in 2023 and expected to increase at an average annual compound growth rate of 8.36% up until 2028.

 

As online shopping becomes ever more popular, logistics management becomes even more crucial to timely deliveries and customer satisfaction. Third-Party Logistics (3PL) service providers in India play a vital role in streamlining various aspects of supply chains while meeting these challenges effectively. Their expertise and resources offer strategic importance in eCommerce logistics business  management. The following image shows the crux of 3PL; 

 

What is 3PL (third-party logistics)?

Third-Party Logistics (3PL), or outsourced logistics services, involves outsourcing logistic activities to external service providers who specialise in various forms of services like transportation, warehousing, inventory management and order fulfilment. By leveraging their expertise and resources, 3PL providers streamline operations and enhance efficiency in the best eCommerce logistics supply chain. The following image shows the growth of 3PL in India

 

 

What are the basic types of 3PL companies?

1. Transportation-based 3PLs

These providers primarily focus on transportation services. They handle freight forwarding, carrier management, and route optimization to ensure smooth and efficient movement of goods.

2. Warehouse-based 3PLs

These companies specialise in warehousing and distribution services. They provide storage facilities, inventory management, and order fulfilment solutions to efficiently manage product storage, handling, and shipping.

3. Integrated 3PLs

Integrated providers offer a comprehensive suite of logistics services. Providers that specialise in logistics operations for eCommerce businesses offer end-to-end solutions, guaranteeing smooth operations and meeting diverse demands from eCommerce businesses.

 

How do logistics work in ecommerce?

Logistics plays an integral part in the success of eCommerce businesses. Logistic is the practice of planning, executing and controlling the flow of goods, information and resources from their point of origin to consumption. Here's how eCommerce logistics work:

  1. Order Processing: Order processing is at the core of logistics operations. When customers place online orders via an eCommerce platform, their details are transmitted directly to a logistics system for fulfilment, such as shipping address information and product and quantity information.

  2. Inventory Management: Once an order has been placed, our logistics system uses inventory levels monitoring software to ensure there are enough products in stock for you. It updates the inventory in real-time, keeping track of stock levels to avoid overselling or stockouts. Inventory management systems enable efficient stock replenishment and optimization.

  3. Picking and Packing: After confirming product availability, the logistics system generates pick lists for warehouse personnel. They gather the ordered items from the shelves and pack them securely for shipping. Advanced warehouse management systems optimise the picking process to minimise errors and improve efficiency.

  4. Shipping and Carrier Selection: Once the products are packed, the logistics system determines the most suitable shipping method and carrier. It considers factors like the customer's location, shipping preferences, delivery timeframes, and cost-efficiency. The system generates shipping labels and communicates with the selected carrier to initiate the shipment.

  5. Tracking and Visibility: For every step in the transport process, our logistics system offers real-time tracking and visibility. Customers receive tracking numbers so they can track the progress of their shipments as they travel; customers also gain visibility into order status, location, estimated delivery date and estimated delivery time - further increasing transparency and customer satisfaction.

  6. Last-Mile Delivery: Last-mile delivery refers to the final step in transporting packages directly from their distribution centre to their customer's home address. Logistics providers or courier services handle this crucial step. They optimise routes, schedule deliveries, and employ various strategies to ensure prompt and accurate delivery to customers.

  7. Returns and Reverse Logistics: eCommerce logistics India also includes handling returns and managing reverse logistics. When customers initiate returns, the logistics system generates return labels and facilitates the process. Reverse logistics involves managing returned products, assessing their condition, restocking them, or processing refunds or exchanges.

  8. Technology and Integration: Best eCommerce logistics heavily rely on advanced technologies and systems for efficient operations. Integration between eCommerce platforms, warehouse management systems, transportation management systems, and other tools streamlines processes and enables seamless data sharing. Automation, machine learning, and artificial intelligence are used to optimise routing, forecasting, and inventory management.

  9. Customer Service: Logistics also plays a vital role in customer service. Efficient and timely delivery, accurate tracking information, and effective communication contribute to a positive customer experience. Logistics providers collaborate closely with best eCommerce businesses to ensure prompt resolution of any delivery issues or customer queries.

  10. Continuous Improvement: Successful eCommerce logistics involve continuous improvement. By analysing data, monitoring key performance indicators (KPIs), and gathering customer feedback, logistics processes can be optimised. This includes identifying bottlenecks, enhancing efficiency, reducing costs, and improving overall customer satisfaction.

 

Benefits of using 3pl service providers in India for ecommerce logistics

  1. Expertise and Specialization: Third party logistics service providers bring extensive knowledge and expertise in logistics operations. They stay updated with the latest industry trends and best practices, allowing eCommerce businesses to benefit from their specialised services. This expertise ensures efficient and effective logistics management.

  2. Scalability and Flexibility: Best eCommerce businesses often experience fluctuating demands and seasonal spikes in order volumes. 3PL providers offer scalability and flexibility in operations, allowing businesses to scale their logistics capabilities as per demand. This eliminates the costs and complexities associated with maintaining in-house logistics infrastructure.

  3. Cost Savings: Outsourcing logistics services to 3PL providers helps eCommerce logistics India save on various costs. These include infrastructure costs (warehouses, vehicles, etc.), labour costs, technology investments, and transportation expenses. Leveraging their network and volume discounts, 3PL providers optimise costs and provide cost-effective solutions.

  4. Enhanced Efficiency and Performance: 3PL providers employ advanced technologies and systems to streamline logistics operations. They have established processes for order processing, inventory management, and fulfilment. This leads to faster order processing, reduced lead times, and improved customer satisfaction, resulting in increased repeat business.

  5. Focus on Core Competencies: Outsourcing logistics management to 3PL providers allows eCommerce businesses to concentrate on their core competencies. They can focus on product development, marketing, and customer acquisition while leaving logistics to the experts. This allocation of resources and efforts leads to business growth and innovation.

 

What services do 3pl providers offer?

1. Transportation management

3PL providers handle transportation activities, managing carrier relationships, optimising routes, and ensuring timely and cost-effective deliveries. They leverage their network and expertise to find the most efficient transportation solutions.

2. Warehousing and distribution

These providers offer warehousing facilities, including storage, inventory management, order picking, packing, and shipping. They optimise warehouse layouts and processes to maximise efficiency, ensuring accurate and timely order fulfilment.

3. Order fulfilment

3PL partners manage the entire order fulfilment process, starting from receiving orders to picking, packing, and shipping products to end customers. They ensure accurate order processing, efficient inventory allocation, and on-time delivery, enhancing customer satisfaction.

4. Inventory management

3PL providers employ advanced inventory management systems to monitor stock levels, track inventory movements, and implement efficient replenishment strategies. They help eCommerce businesses maintain optimal inventory levels, preventing stock outs or overstocks.

5. Value-added services

Some 3PL providers offer value-added services such as kitting, labelling, product customization, reverse logistics, and customer support. These services add value to the overall logistics operations and cater to specific business requirements, ensuring a seamless customer experience.

 

How to streamline operations with third party logistics provider?

1. Select the right 3PL partner

Assess your eCommerce logistics business needs and choose a 3PL provider that aligns with your business requirements. Consider their expertise, track record, capabilities, and technological infrastructure. A compatible partnership is crucial for seamless integration and effective collaboration.

2. Collaborative planning

Establish clear communication channels and collaborative planning processes with your 3PL provider. Align your goals and strategies to ensure seamless integration between your business and the logistics provider. Regularly communicate updates, expectations, and changes in demand to optimise operations.

3. Data sharing and integration

Enable data sharing and integration between your systems and the 3PL provider's systems. This facilitates real-time visibility into inventory levels, order status, and other key logistics metrics. Sharing data ensures transparency and enables quick decision-making.

4. Performance measurement

Define key performance indicators (KPIs) and regularly monitor the performance of the 3PL provider. This helps in identifying areas of improvement and maintaining service level agreements (SLAs). Regularly review performance metrics to ensure the 3PL provider meets your business requirements.

5. Continuous improvement

Foster a culture of continuous improvement by regularly reviewing and optimising logistics processes. Collaborate with your 3PL provider to identify efficiency opportunities and implement necessary changes. Encourage open communication and feedback to drive ongoing enhancements in logistics operations.

 

Conclusion

In the dynamic world of eCommerce, third party logistics company play a strategic role in logistics management. Their expertise, specialised services, and advanced technology solutions offer numerous benefits to eCommerce logistics businesses. By leveraging the services of 3PL providers, companies can enhance efficiency, reduce costs, and focus on core competencies, ultimately leading to improved customer satisfaction and business growth in the competitive eCommerce landscape. Collaborative partnerships with third party logistics provider enable seamless integration and streamlined operations, ensuring timely deliveries and a superior customer experience.

As a best logistics service provider in India, we help businesses of all sizes optimise their operations and increase profitability. We understand that 3PL supply chain management can be complex and time-consuming, which is why we offer a comprehensive suite of services to streamline the processes to redefine the future of 3PL Supply chain efficiency. Ethics Group provides a comprehensive IT ecosystem including software, fulfilment centres, and warehouses, all integrated into a single database system. This streamlined processes and facilitated real-time monitoring, ensuring transparency, efficient order processing, and quality control.