3PL Companies for Ecommerce in 2020
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Fulfillment will always be a time-consuming and costly process for ecommerce businesses. With rising shipping costs, increasing warehouse ownerships costs, and expectations rising as customers demand faster shipping, third-party logistics (3PLs) companies have become valuable partners for ecommerce businesses.
With a 3PL’s expertise in warehousing, fulfillment, and technology, ecommerce brands can effectively improve their logistics performance while reducing overall costs by outsourcing order fulfillment. Customer expectations continue to rise as shipping becomes faster and more expensive for your business.
Working with a 3PL offers serious benefits to ecommerce businesses that have seen some measure of success. 3PLs:
- Work with major shippers and carriers to negotiate better shipping rates
- Have a network of warehouses specifically designed to store your inventory
- Help reduce overall logistics costs
With the number of 3PL options rising every year, one question remains: Who is the best 3PL for my business? In this post, we’ll take an in-depth look at the top five 3PL providers for ecommerce businesses in 2020 and beyond.
What matters most to ecommerce owners?
Picture this: Your ecommerce business recently made more sales beyond your expectations, and you’re now unsure of how to fulfill the orders coming in. You need to negotiate for more warehouse space (or find a new one), move your inventory, hire workers and train them to properly fulfill orders.
This will take a significant time, while you try to fulfill orders with your current team and customers are wondering where their products are. Not to mention other business needs, such as marketing, accounting, products, and customer service.
This is where a 3PL comes in.
With their focus on retail fulfillment and logistics, they improve operations as your business scales and grows. Instead of having to spend time planning and staffing up for logistics, 3PLs provide the resources needed for you. With their easy to use technology, you can get real-time insights into your performance.
A great 3PL should be able to check off all of these boxes:
One of the biggest benefits of using a 3PL is being able to place your inventory in their warehouses. They take on the costs of warehouse management, while you only pay a fee to use their services.
When researching 3PLs, you will want to consider the size, scale, and locations of their fulfillment centers. One might be good enough for you now, but what about where you hope to be in a year from now — or three years from now?
To better serve customers across the US, you will want your ecommerce inventory stored closest to where your customers reside. With a coast-to-coast warehouse network, you can ensure coverage across the US to provide faster, cheaper shipping options. However, they need to be fulfillment experts. Unlike on-demand warehousing solutions, a 3PL should actually have experience managing fulfillment centers.
A 3PL not only needs multiple warehouses, but they should help you identify the locations that make the most sense for your customer base. If a customer in California places an order, the order should be fulfilled at a warehouse in or closest to California — not the East Coast. This reduces shipping costs and allows orders to reach customers quicker.
Ease of use for 3PL software is key. Since you’re outsourcing fulfillment to another company, you should be able to get real-time updates on your orders, inventory, shipping costs, and more.
We’re not just talking about a basic integration and screen with a few details — find a 3PL that provides in-depth order and inventory management, data and analytics, and easy-to-understand software that powers their network of fulfillment centers.
A vast partner network
Ecommerce fulfillment is a complex beast that affects other areas of your business. Your 3PL should have partners in a handful of industries that can help you with custom packaging, inventory, finance, marketing, branding, and more.
Pre-vetted recommendations can go a long way especially when the 3PL has thousands of customers that have already faced similar challenges and used these solutions.
A 3PL shipping millions of packages a year will negotiate shipping discounts on your behalf. Since you will likely ship through major carriers like FedEx, UPS, USPS, and DHL, a well-prepared 3PL will have better shipping rates than if you were to ship by yourself. These bulk discounts help merchants reduce shipping costs (from expedited or 2-day to international shipping).
It’s also recommended to do research to understand your total fulfillment cost. Some 3PLs will nickel and dime every little fee, where others only charge for basic line items like receiving inventory, warehousing, shipping, and then any other additional services like kitting.
Integrations and APIs
Integrations are important because they automatically send order information to the 3PL and its warehouses. Between ecommerce platforms (Shopify, BigCommerce, WooCommerce, etc.) and marketplace (Ebay, Amazon, and more), a tech-savvy 3PL will be building up its third-party integrations and host open APIs to allow you to build something custom.
Everyone is unique when it comes to your choice of customer service. With your options including email, live chat, and phone support, look for a 3PL that provides support in a way that makes sense for you and your team. Customer service should be available to help and if you’re shipping a large volume of orders, see what options you have for a dedicated point person, like an account manager.
The best way to stay ahead of the competition while reducing cart abandonment is by providing 2-day shipping on orders. Some 3PLs offer 2-day ground shipping for orders being shipped close to where inventory is stored. With this solution, ecommerce businesses can add a 2-day shipping option to their store’s shopping cart. This option can be made dynamic by only displaying once a customer enters their zip code.
A 3PL can make ecommerce returns easier. By automating inventory management, you’re able to speed up the returns process. You can provide customers with prepaid return labels and share return tracking information.
Some 3PL’s technology even support integrations that automatically text returns updates to customers. Find the option that works best for you — whether the 3PL provides advanced services such as ironing or refurbishing or simply lets returns be mailed back to you so you can inspect them yourself.
Top 3PL companies compared
Here’s how several 3PLs stack up against one another at a glance.
|US Warehouses||Simple Software||Partners||Shipping Discounts||Integrations||Customer Service||Best for Type of Business|
|ShipBob||4||Yes||Many||Yes||Many||Chat and Phone Support||Small and Medium Businesses|
|Red Stag||2||Yes||No||Yes||Many||Phone Support Only||Small Businesses|
|FedEx||17||Yes||Many||Yes||Limited||Phone Support Only||Large Businesses|
|Rakuten||5||Yes||Many||No||Many||Phone Support Only||Large Businesses|
|Fulfyld||1||Yes||Limited||Yes||Many||Phone Support Only||Small Businesses|
|FBA||73||Yes||Yes||Yes||Yes||Phone Support Only||Amazon Merchants|
Here is a more in-depth comparison:
2. Red Stag
Red Stag Fulfillment is a US-based ecommerce order fulfillment services provider. They specialize in shipping heavy items that require special handling.
Red Stag has two warehouse locations in the central United States.
Like most leading 3PL services, Red Stag has software that’s a cloud-based system, allowing you to access your data and reports from any device at any time.
Red Stag works with several leading ecommerce platforms. They also have a deal with FedEx to slightly reduce the cost of shipping heavier items.
Red Stag has shipping discounts available for different carriers, especially specializing in oversized shipping.
Red Stag integrates with leading ecommerce platforms including Shopify, Amazon, eBay and more. Custom integrations are available via an API.
Red Stag offers phone support with some limited email support.
Who does Red Stag works best for?
Small businesses that ship heavy packages. Due to the care and costs involved with managing heavier products, Red Stag is good for businesses selling products that are outside of a small or lightweight scope.
FedEx is the largest company on this list. As one of the major shipping carriers in the US, they own and operate a network of warehouses to help you get orders to customers quickly. They mainly work with large enterprises due to the size of their network. Small and medium-sized businesses likely won’t work with FedEx.
FedEx’s warehouse network is the most diverse in the US. With a large array of warehouses spread throughout the country, FedEx uses both their warehouses and carrier sorting facilities to their advantage.
FedEx’s software is fairly easy to use and is more of a large enterprise platform.
FedEx has a large network of partners to choose from in addition to their in-house transportation services.
FedEx offers discounts on shipping done through FedEx’s network. There are no discounts available for other shipping carriers.
FedEx has only limited integrations available for ecommerce merchants. You will need to have a developer involved who can help you work with FedEx’s API to integrate with your ecommerce platform.
FedEx provides phone support only through specific working hours. Email support is available, but limited in how they can help you out. Overall, if you want customer service from FedEx, phone support is really your only option.
Who does FedEx work best for?
Very large businesses, including Fortune 500 companies. Unless you’re making billions of dollars of revenue a year, FedEx is not the most cost-effective logistics solution for small to mid-sized merchants.
Rakuten Super Logistics service offers a cloud-based inventory management system with one to two-day delivery to almost any location in the US through ground shipping.
Rakuten has five warehouses throughout the US spread coast to coast.
Rakuten’s software is fairly easy to use like most 3PLs in this list. It’s cloud-based, so you can access your data from any device.
Rakuten has a large network of partners for your business. The Rakuten Marketplace also offers additional partner opportunities for ecommerce businesses who want to sell through a new channel.
Discounts are available for different carriers. Rakuten has negotiated shipping discounts with USPS, FedEx, UPS, and DHL.
Rakuten integrates with most ecommerce platforms including Shopify, eBay, Amazon, BigCommerce, and more.
Rakuten has phone support with limited email support.
Who does Rakuten work best for?
Rakuten is a good choice for large businesses that want an alternative to FedEx. They offer a slightly more personal touch because they aren’t as large as FedEx.
Fulfyld is a newer 3PL with a focus on ecommerce fulfillment to help you fulfill orders in a cost-effective manner.
Fulfyld has just one location in the US in Alabama.
Like most third-party logistics companies, the software is fairly easy to use and integrates with your ecommerce platform.
Fulfyld is still relatively new, so their partner network is limited. With their focus on small businesses, they still need time to work with potential partners.
Discounts are available for different carriers like FedEx, UPS, USPS, and a few other carriers.
Fulfyld integrates with most top ecommerce platforms including Shopify, Magento, BigCommerce, eBay, and others.
Phone support is the main support option. Limited email support is also available.
Who does Fulfyld work best for?
If your ecommerce business is just starting out, Fulfyld could be a good option for you. With affordable pricing, you can work out a deal to help make fulfillment manageable. But as you grow, partner with a larger 3PL who specializes in growing and established businesses.
6. Fulfillment by Amazon (FBA)
Amazon also offers a fulfillment service for their marketplace sellers to help ship products as they’re sold.
With over 70 fulfillment locations, Amazon has the largest warehouse network through the US and it’s growing every year.
Amazon’s fulfillment software is fairly easy to use.
Amazon has a large partner network to work with. They recently cut ties with FedEx for their shipping network, and are now building their own shipping service which relies on contract drivers. Expect some growing pains with this service as the drivers may not be kept to high standards like the other carriers.
Discounts are available for different carriers including FedEx, USPS, UPS, DHL, and other carriers. In addition, Amazon’s focus on creating their own carrier network should lead to more manageable shipping costs in the future.
Because of Amazon’s large partner network, some companies have built out integrations for the FBA platform to make it even easier to manage.
Amazon offers phone, email, and live chat support.
Who does FBA work best for?
Merchants focused on selling through Amazon and wanting the Primed badge. While there is support for other platforms, Amazon’s FBA is focused on providing the best services to merchants that heavily prioritize them. If you want to make your own website the main source of sales for your business, Amazon is not the best fit.
ShipBob: a 3PL that ecommerce businesses deserve
Now that you know about the top third-party logistics providers, which one is best for you? As a growing ecommerce business, you need a 3PL that can manage fulfillment for your growing business.
Learn how ShipBob has helped thousands of ecommerce businesses and how they can help you. Request a quote today.
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