The Ultimate Guide to Shopify 3PL
Unlocking the Power of Third-Party Logistics for Your E-commerce Business
The e-commerce landscape is evolving at a breakneck pace, and so are the challenges that come with scaling your business. One of the most critical aspects that can make or break your e-commerce venture is logistics. That's where Third-Party Logistics (3PL) comes into play. But what exactly is Shopify 3PL, and how can it revolutionize your e-commerce business? This comprehensive guide aims to answer these questions and more, providing you with actionable insights that are both valuable and credible for new and veteran Shopify sellers alike.
Table of Contents
What is Shopify 3PL?
Why Choose Shopify 3PL?
Common Misconceptions About 3PL
Types of Shopify 3PL Services
Choosing the Right 3PL Provider
The Shopify 3PL Cost Factor
Integrating 3PL with Shopify
Case Studies
FAQs
Parting Thoughts & Next Steps
What is Shopify 3PL?
Third-Party Logistics (3PL) is the outsourcing of various logistics and supply chain functions to an external service provider. In the context of Shopify, 3PL services can seamlessly integrate with your online store to handle everything from inventory management to order fulfillment.
Shopify 3PL Key Features:
Inventory Management: Real-time tracking of stock levels in the 3PL’s warehouse
Security: A solid 3PL will have multi-layered physical security measures in place to protect your inventory, as well as comprehensive data security policies.
Order Fulfillment: Efficient picking, packing, and shipping of your Shopify orders.
Shopify Returns Management: Hassle-free returns and exchanges.
Global Reach: Capabilities to ship worldwide via a network of global warehouses and/or via international shipping carrier partnerships.
Why Choose Shopify 3PL?
Scalability: As your business grows, so do the complexities of managing logistics. Shopify 3PL providers can easily scale their services to match your growth trajectory. Whether you're dealing with seasonal spikes or a steady increase in sales, a 3PL service can adapt to your needs without requiring you to invest in additional infrastructure or manpower.
Cost-Effectiveness: Outsourcing logistics can significantly reduce overhead costs, including labor and warehouse expenses. 3PLs often benefit from the very best shipping carrier rates and share those savings with you. By leveraging the expertise and resources of a 3PL provider, you can achieve economies of scale that would be difficult to attain in-house. This cost-saving advantage allows you to allocate funds to other critical aspects of your business, such as marketing and product development.
Focus on Your Core Business: Logistics can be time-consuming and divert your attention from core business activities like product development, customer engagement, and strategic planning. By outsourcing these tasks to a 3PL provider, you free up your time and resources to focus on what you do best—creating and marketing your products.
Enhanced Customer Experience: Today's consumers expect fast, accurate, and reliable delivery. A 3PL provider can help you meet these expectations by offering same-day fulfillment, affordable expedited shipping options, accurate tracking, and efficient returns processing. This not only enhances customer satisfaction but also boosts your store's reputation, leading to higher customer retention rates.
Technology Advantage: Modern 3PL providers offer advanced technology solutions that integrate seamlessly with your Shopify store. These technologies provide real-time tracking, inventory management, and data analytics, giving you valuable insights into your supply chain performance. This data can be instrumental in making informed business decisions that push your business forward and increase your profits.
Risk Mitigation: By relying on a 3PL provider's expertise in logistics and supply chain management, you can mitigate risks associated with inventory mismanagement, shipping delays, and compliance issues. Their experience in navigating complex logistics landscapes can help you avoid costly mistakes and legal complications.
Geographic Reach: Expanding into new markets often comes with logistical challenges, such as customs, taxes, and shipping regulations. A 3PL provider with international capabilities can help you navigate these complexities, making it easier for you to reach customers around the globe.
By understanding these benefits, you'll be better equipped to decide if a Shopify 3PL service is the right logistical solution for your store. Making this strategic choice can be a game-changer, setting the stage for scalable, sustainable growth.
Common Misconceptions About 3PL
"3PL is Only for Big Businesses"
Contrary to popular belief, 3PL services are not just for large enterprises. Many providers offer flexible plans suitable for businesses of all sizes. Some 3PL providers are indeed a better fit for large businesses, but many cater to the unique needs of startups and small businesses as well. Be sure to do your homework.
Forgetting for a moment which 3PL is right for you, here is our free resource to see if outsourcing to a Shopify 3PL should be considered at all.
"You Lose Control Over Your Inventory"
A reliable 3PL provider will offer real-time tracking and analytics, ensuring you have complete control over your inventory. If anything, a 3PL should enhance the controls available to you.
"Using a Shopify 3PL Means Sacrificing Customer Service"
Some Shopify store owners worry that outsourcing logistics will result in a decline in customer service quality. In reality, a reputable 3PL provider aims to enhance customer satisfaction by ensuring timely and accurate order fulfillment. Many 3PLs also offer value-added services like customized packaging and product configurations, which can improve the overall customer experience.
"Shopify 3PL Providers are Only About Warehousing and Shipping"
While warehousing and shipping are fundamental aspects of Shopify 3PL services, these services often extend far beyond that. Modern 3PL providers offer a range of services including inventory management, kitting, returns processing, and even data analytics to help you make informed business decisions. Therefore, 3PL can be a comprehensive solution that covers multiple facets of your supply chain.
"Switching to a 3PL Provider is a Complicated Process"
Many business owners hesitate to switch to a 3PL service because they think it will be a complex and time-consuming process. In reality, most 3PL providers aim to make the transition as smooth as possible and have proven strategies in place to do so. At Rush Order, we offer dedicated support teams and easy integrations with e-commerce platforms like Shopify to ensure a seamless transition.
Types of Shopify 3PL Services
Not every 3PL is a fit for every Shopify seller. In fact, finding the right fit is critical for an e-commerce brand. Think about your Shopify 3PL selection like a potential marriage. This 3PL will become nearly, if not entirely, as important as your product supplier / contract manufacturer and any other vendors you work with. Get it wrong and you’ll end up with angry customers and an unprofitable business. Selecting the right 3PL for your Shopify store can yield smooth, cost efficient operations that keep your customers happy, your own time & attention focused on growing your business, and higher profits.
Starting at the highest
Full-Service Providers: Offer end-to-end logistics solutions, including freight forwarding of bulk inventory from your suppliers, warehousing, fulfillment, and maybe even some last mile delivery. These providers are typically industry-niche in their strategies.
Warehouse-based 3PLs: Specialize in storage, inventory management, and order fulfillment. Typically, this type of 3PL (like Rush Order), is focused on handing orders over to shipping carriers like FedEx, UPS, USPS and others for last mile delivery.
Transportation-based 3PLs: Focus on shipping and transportation.
Choosing the Right 3PL Provider
No single article, blog post, or checklist will help you identify the perfect 3PL fit for your business. To help narrow your focus, try our 3PL Match Scorecard. This scorecard will walk you through a series of questions and, within about 5 - 7 minutes of effort, will help narrow your choices to a very small segment of the crowded 3PL landscape.
In the meantime, here is the short list of categories we find successful Shopify brands use to evaluate a potential fit across a shortlist of Shopify 3PL companies.
Track Record: Look for a Shopify 3PL provider with a proven track record in your market or industry.
Technology: Ensure the 3PL offers real-time inventory tracking, order status, service level agreement (SLA) reporting, and analytics.
DTC versus B2B: In addition to your DTC Shopify order fulfillment, decide if B2B fulfillment and other sales channels are important to you as well.
Compliance: If you operate in a high compliance environment or market that requires government oversight or tight compliance, be sure your new 3PL is up to the task and can demonstrate the competence you need. For example, medical / health devices are often FDA regulated and may require the 3PL to capture device serial numbers or lot numbers. Products containing lithium batteries may also require a 3PL that is trained and certified in how shipping of these items.
Reverse Logistics / Returns: Understand exactly how a 3PL handles open box and sealed returns. Understand how these processes will impact your customer experience and costs.
Customer Service Integration: Customers will reach out to you with questions. Understand how you’ll be able to execute order change requests, cancellations, lost tracking number requests, lost / damaged shipment claims, etc. At Rush Order, we leverage the latest technology and creative best practices to enhance the customer experience.
Account Management Style: Your need for proactive, consultative help from your Shopify3PL, or not. Both hands-on and hands-off approach are viable options for the right situation.
Geographic Coverage: If you are selling internationally now or plan to do so soon, you will want to find a Shopify 3PL with fulfillment centers in-country. It sounds easy to ship internationally from the US, for example, but the customer experience is often very poor. For example, if needed, Rush Order has a global fulfillment center footprint.
Kitting, Assembly and Value Added Services: Identify how important these capabilities are for your business and the 3PL’s capabilities.
Cost: When considering your logistics options, it's important to look at the overall costs involved. This includes comparing the expenses of managing your logistics in-house versus outsourcing it to a third-party provider, as well as comparing the costs among different 3PL providers that integrate with Shopify. Take into account all the associated expenses from factory (supplier) door all the way to your end customer’s doorstep. We’ll elaborate further on Shopify 3PL costs in the next section…
The Shopify 3PL Cost Factor
Be aware of the various costs involved, such as:
Transportation Costs (e.g. FedEx, UPS, USPS, etc.). For additional resources, check out:
The first installment of our comprehensive mult-part series on shipping 101 in the US
A detailed overview of carrier service levels
Understanding the difference between residential and commercial deliveries
Warehousing & Storage Fees
Pick & Pack Fees
Account Setup Fees
Integrating Your 3PL with Shopify
Most 3PL services offer easy integration with Shopify, often requiring just a few clicks to sync your store.
This integration allows you to streamline your e-commerce operations seamlessly. Once your Shopify store is synced with a 3PL provider, you can automate order fulfillment, inventory management, and shipping processes in a few simple steps. Additionally, data such as tracking numbers and stock levels can be synchronized between the two platforms, ensuring accurate and up-to-date information. This integration helps you save time, reduce errors, and provide a better customer experience by efficiently managing your order fulfillment through a reliable 3PL service. Learn more about Rush Order’s Shopify 3PL integration here.
Case Studies
June Life: From e-commerce startup through scale and acquisition
Vogmask: Scalable integrations create scalable businesses
Shopify 3PL FAQs
Is outsourcing to a Shopify 3PL Secure?
Yes, most 3PL providers adhere to stringent security protocols to protect physical inventory and sensitive customer data.
How Do I Track My Inventory?
Most modern 3PLs offer real-time tracking and analytics through a web dashboard and open APIs.
Can I Customize My Packaging with a Shopify 3PL?
Many Shopify 3PL providers offer customizable packaging options, allowing you to maintain brand consistency.
What Happens If an Order Is Incorrectly Fulfilled?
- Most 3PL providers have robust quality control measures in place. If an error occurs, they typically correct it at their expense. This is a great question to ask when evaluating each 3PL. Listen carefully to their answers and understand how any guarantees are called out in their contracts / terms & conditions.
How Quickly Can a 3PL Provider Scale with My Shopify Business?
A well-equipped 3PL provider can scale rapidly to meet the demands of your growing business, often within a matter of hours or days.
Do Shopify 3PL Providers Offer International Shipping?
Yes, many 3PL providers have the capabilities to handle international shipping, including customs clearance and documentation. Rush Order’s approach is to help its clients fulfill domestically by operating fulfillment centers all over the world, or at least in each client’s key markets. This reduces international shipping expenses, avoids delivery delays, and enhances the end-customer experience.
What Are the Payment Terms for 3PL Services?
Payment terms can vary by provider but often include monthly billing cycles, with additional fees for extra services like kitting or expedited shipping.
Can I Use Multiple 3PL Providers?
Yes, it's possible to use multiple 3PL providers to handle different aspects of your logistics, although it may complicate your operations. Most brands in this predicament find themselves there as a result of sporadic growth or have simply not yet found a single provider who can handle all their needs.
How Do 3PL Providers Handle Returns?
Many, but not all, offer a streamlined returns process, including inspection, restocking, and even refurbishing items as needed.
Is There a Minimum Volume Requirement for Using Shopify 3PL Services?
This varies by provider. Some 3PLs cater to smaller businesses and have no minimums, while others may require a certain volume to justify the cost.
By addressing these frequently asked questions, you'll be better equipped to make an informed decision about whether 3PL is the right solution for your Shopify store.
Parting Thoughts & Next Steps for Your Shopify Fulfillment Needs
Choosing the right 3PL provider can be a game-changer for your Shopify store. It not only helps in scaling your business but also allows you to focus on your core competencies. Make an informed decision and take your e-commerce business to new heights. Take Rush Order’s 5-minute self evaluation to help narrow down your search. There’s no obligation and we respect your privacy.
Or, contact us today for a free consultation with one of our Shopify 3PL experts.
