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A Handbook on Third-Party Logistics

Third-Party Logistics

Take any successful business, and you’ll see its success mostly depends on the customer relationships it has built. When your customers are happy and satisfied, your business is certain to last a long time.

However, it is not so easy to make someone happy now, is it? It takes a lot of effort and has many variables. One of those essentials that help build customer loyalty is the fast and efficient delivery of products and services. 

No matter how many discounts you offer, your customers will still be dissatisfied if your delivery system isn’t up to the standard. Thus, it forms a vital operation in your business. As your business grows, staying on top of the deliveries becomes especially challenging. 

One efficient way to solve this problem is to outsource your logistics operations to a 3PL. What’s a 3PL service, what are its types, and how does it benefit your business? Let’s learn all of it in this blog post! 

Definition of 3PLs

3PL stands for third-party logistics. It is outsourcing the operations and logistics of your supply chain. In simple terms, it is having a partner to get your products to your customers efficiently. 

These 3PLs primarily offer receiving, storing, packaging, and shipping services. Some 3PLs also provide value-added services such as inventory management, kitting and assembly, etc. Outsourcing all such crucial services to an efficient provider makes your process faster, simpler, and cost-saving. 

Difference Between 1PL, 2PL, 3PL, and 4PL

We have different models of logistics to satisfy our business needs. 3PL is only one aspect of it. The others include 1PL, 2PL, and 4PL. 

  • In a 1PL model, the company handles all aspects of apparel fulfilment, including planning, storing, and shipping their items. It will have a warehouse or fulfilment facility to store all its inventory, distribute goods to retailers, and handle customer service.
  • 2PL is an asset-based carrier in charge of transportation. Examples of 2PLs are shipping lines that manage ship operations, airlines that manage plane operations and hauling firms that manage vehicle operations. A 2PL is sometimes referred to as a forwarder since the majority of its operations revolve around a mode of transportation. 
  • A 3PL  handles the logistics operations while the company retains the logistics management responsibility. The 3PL provider controls the operations, inventory, and storage space at the 3PL warehouse.
  • Fourth-party logistics is known as 4PL. A 4PL structure sees the organisation outsourcing all or the majority of its logistical functions. When this occurs, the 4PL frequently serves as the seller’s single point of contact with several logistics companies, deciding on all facets of the supply chain. It is common for a 4PL to collaborate with other 3PLs to handle some of the logistics or logistics services.

Services of 3PLs

Every 3PL provider offers various services. However, some 3PLs may offer specialised services, which are their expert areas. The common services you will find are explained below. 

1. Transportation

3PLs specialising in transportation services handle inventory shipments from manufacturers to your warehouse or your business to your clients. 

These include small package carriers like FedEx and freight forwarders, who frequently move bulky items from one nation to another.

2. Warehousing, e-Commerce Fulfilment, and Distribution

It offers fundamental fulfilment services, including storage, fulfilment, pick-and-pack, shipping, and refunds. It is the most prevalent kind of 3PL. 

Sellers use such 3PL to outsource all or most of their fulfilment and storage requirements. Also, the majority of these 3PLs handle the seller’s transportation, choosing the best shipper, maintaining the vendor’s connection with the shipper, and optimising the shipment plan.

3. Financial and Information

Some 3PLs optimise your logistics network by offering services like accounting and cost control, freight forwarding, inventory tracking and management, and other related tasks.

Big e-commerce businesses typically use these 3PLs. 

Process of 3PL

Now let’s look at the things a standard 3PL handles for a seller. 

  • Receiving: This is the first step of the process. Your 3PL will receive your inventory and store them in a warehouse.  It is better to go with a 3PL with warehouse management software as it makes the process simpler and faster. It will identify where a particular product is and when the manufacturers placed it in storage.


  • Picking: This is when a customer places an order. The fulfilment process begins as soon as the order is placed. The order is sent to the warehouse where the inventory is stored. Then the items are picked out.  Remember that order sizes vary depending on your business type. For instance, the order sizes a B2C receives are different from that of a B2B. So, make sure your 3PL can support your type of order.


  • Packing: After picking the order, the products will be organised and prepared for packing. Initially, your 3PL will work with you to find the ideal way to pack your products to ensure they are secure and presentable. 
  • Shipping: This is the most costly aspect of eCommerce fulfilment in Australia. A 3PL would create a layout of the shipping strategy and help you save money on shipping. Thus ensuring speedy shipping and a better overall experience. 
  • Returning: Some customers might want to return the product for some reason. For example, the product might have been damaged during transit. If the return process is complicated, it will leave the customer feeling dissatisfied. 

A good 3PL will also streamline the return process and ensure hassle-free returns for both the customer and the seller. 

Final Say

Outsourcing a crucial part of your business to a third-party provider can be intimidating. However, with the right partner, this step can add significant value to your business operations. 

Our recommendation is Efficient Group. With years of experience in eCommerce fulfilment services in Australia, it can prove helpful to your business. Take a look at their work and if you like, connect with their representatives directly for further discussions. 

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