3PL or third-party logistics refers to the practice of a company outsourcing its logistics needs to a company that is dedicated to performing supply chain functions. 3PL companies can tap into economies of scale that can cut costs for shipping, warehousing, packaging, and much more.
Many small to mid-sized businesses find it more economical to work with one rather than to build their own logistics infrastructure from scratch. This is a popular option for businesses that are trying to scale quickly or face highly variable demand throughout the year. The main types of 3PL eCommerce fulfillment centers for local small businesses are as follows:
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A standard 3PL provider offers basic services such as storage, transportation, pick and pack, and delivery of goods. A 3PL may ship to international, national, regional, or local customers. Standard 3PLs offer a small range of services and lower prices than more sophisticated providers.
In addition to the basic shipping services offered by a standard 3PL, a service developer will offer sophisticated technological services, including tracking and security options, to ensure the timely and accurate delivery of products. Service developers are more expensive than a standard 3PL and offer more of the services businesses need and customers expect.
Customer developer 3PLs offer the closest relationship with their partner businesses, fully integrating with them and assuming all roles of their logistics department. As an active participant in the growth and development of the partner company, a customer developer 3PL makes hiring decisions and shapes the company itself.