A 3PL’s Guide to Ecommerce Order Fulfillment

If you run an ecommerce business, or are thinking of starting one, one of the first things you’ll need to do is put together an order fulfillment strategy. To do so, you’ll need to consider several elements of the supply chain, including warehousing, picking orders for packaging, and getting those orders to your customers. If that sounds like a lot of work you’d rather not do, 3PL ecommerce fulfillment can prove invaluable.

Key Takeaways

• Third party logistics (3PL) companies perform logistics-related tasks on behalf of their clients such as: warehousing, picking, and packing merchandise for shipment.
• Experienced third party logistics services can help businesses scale their processes in real time to meet fluctuating customer needs.
• Many 3PLs offer specialized storage, including temperature-controlled or secure options for sensitive, fragile products.
• These services work with carrier partners to distribute shipments across the country.
• Asset-based 3PLs own parts of the supply chain, such as warehouses or semi trucks, in whole or in part. Non-asset 3PLs broker logistics arrangements between shippers and carriers.

Let’s start be defining the two key elements involved in this process: order fulfillment and third party logistics.

What is Order Fulfillment?

Order fulfillment starts when a business receives an order from a customer and stops when that order has reached the customer’s door. 

In the days before online shopping became common, fulfillment usually looked something like this:

• A customer calls to place an order
• Upon receipt of the order, the item(s) are packaged for shipping
• The item(s) are sent to the customer via the most cost-efficient mode of transportation

While some of these basics persist in the present day, the growth of ecommerce has led to increased expectations from customers and businesses across the world. From picking and packing to delivery and returns, these online businesses often partner with 3PLs for their logistics needs.

What Does a 3PL Fulfillment Company Do?

A 3PL specializes in every logistical aspect of ecommerce fulfillment. These steps include:

• Receipt and storage of goods
• Picking, packing, and kitting
• Arranging delivery to retailers and end users

These only sound like simple steps. In reality, they require third-party logistics professionals who are experts at scaling and adjusting these steps to create efficient storage and delivery solutions for their clients.

Providers of third party logistics services can be separated into two categories: asset and non-asset based. I’ve laid out the main differences and similarities between these two categories in the table below.

Here at Fulfillment and Distribution, we have our own warehouses and excellent relationships with partner carriers. In this regard, we offer asset and non-asset based 3PL services.

With these distinctions and definitions in mind, we can more closely examine the steps involved in ecommerce order fulfillment. 

Receiving and Storing Your Merchandise

When shipments arrive at a 3PL, workers check for accuracy, quality, and quantity. Each item is inspected to confirm it matches the purchase order and later verified with the shipper. This sets the foundation for trouble-free inventory management and order fulfillment.

Once they receive the shipment, the provider uses warehouse management systems (WMS) to assign products to their storage locations. These systems track inventory levels in real time, ensuring quick retrieval when customers place an order. 

Many 3PLs offer specialized storage for products with unique requirements, such as:

• Temperature-controlled storage for perishable or sensitive goods
• Custom racking systems to optimize space and accommodate oversized or fragile items
• High-security storage for valuable or heavily-regulated goods

For example, a fictional clothing retailer named Long Shorts, Inc sends a new shipment of clothing to their third-party logistics partner. The receivers verify the order’s accuracy once it arrives, then sort and store the goods in dedicated bins. For their client’s premium wool pants collection, the provider offers climate-controlled storage. This prevents fabric damage from excessive humidity. 

Using such a tailored approach ensures that the 3PL stores goods securely while awaiting customer orders.

Picking, Packing, and Distribution

When an order is placed, 3PL employees go to work getting it out the door and on the road to its destination. 

Common steps in the process include:

• Order Receipt: The WMS identifies the products to be picked, usually via an alphanumeric identifier called a stock-keeping unit (SKU). 
• Picking: Workers retrieve the items from warehouse storage.
• Packing: The workers pack the retrieved products using optimal packaging techniques, including the use of dunnage to prevent damage in transit. 
• Distribution: The order is shipped via a partnered carrier, using the optimal mode of transportation for the shipment’s size.

With all of this explained, you might still wonder how 3PL fulfillment differs from warehousing. The terms are sometimes used interchangeably, but there is one key difference that separates the two.

Related: Picking and Packing Best Practices for Streamlined Order Fulfillment

How Do Third-Party Logistics Differ from Warehousing?

Fulfillment is the total process from receiving an order to distribution. Warehousing is only part of third party fulfillment services. 

That’s not to say that a 3PL can’t solely offer warehousing services to clients who aren’t interested in other services. However, to receive the full benefits of working with a third party partner, it’s best to let them handle ecommerce fulfillment from start to finish. 

Speaking of benefits of outsourcing fulfillment…

5 Ways a 3PL Fulfillment Center Can Help Your Ecommerce Business

The many benefits of third-party logistics for ecommerce businesses can be consolidated into the following five categories.

1. Managing Inventory: They can help ecommerce clients track their inventory with advanced management software. These systems provide real-time updates on stock levels, product movement, and can even forecast inventory needs.
2. Fast and Easy Order Processing: By automating key steps, from picking and packing to labeling and shipping, these services can quickly retrieve items from inventory, package them, and send the order out for delivery.
3. Secure Packing Processes: 3PL workers are experts in packing items based on the type of product, using appropriate materials to safeguard fragile or delicate goods.
4. Cost-Effective Shipping: Because of their established carrier partnerships, 3PL providers often have access to discounted shipping rates that ecommerce businesses may not be able to negotiate themselves.
5. Scaling Business Needs: When your business sees a surge in orders, 3PLs have the infrastructure, labor, and systems in place to handle unexpected increases in order volumes.

By managing inventory, optimizing packing and shipping, and providing scalable shipping and storage solutions, 3PLs let ecommerce businesses focus on growth and customer satisfaction instead of complex logistics operations.

How Do I Choose a 3PL Company for My Ecommerce Business?

If you like the idea of a third party handling the logistics end of your ecommerce business, keep these factors in mind while selecting a 3PL:

• Location, Location, Location: Many business owners prefer to deal with 3PLs close by when possible. This facilitates face-to-face interactions and makes it easier to build a business relationship. It’s also wise to choose a provider with warehouses and/or distribution centers near busy points of entry like LAX and the ports of New Jersey and New York.
• Do They Understand Your Business Needs and Goals?: Consider your product types, order volumes, and projected growth over the next few years. Your provider should be able to scale operations as your business grows to meet the needs of new markets.
• Technological Capabilities: Tools such as a WMS track orders in real-time. Our warehouses use the Deposco system, which easily integrates with the most popular ecommerce platforms. 
• Client Reviews: Do your due diligence. Check references, preferably from businesses similar to yours in size and industry. This will help you gauge the 3PL’s reliability, customer service, and flexibility.

The right 3PL can be instrumental to the growth of your enterprise. Conversely, choosing a provider without the experience, technology, or facilities necessary to meet your expectations and those of your customers could prove disastrous in the long run.

3PL Ecommerce Fulfillment Services From Fulfillment and Distribution

The growing pains of business ownership can create stress and aggravation for even the most seasoned entrepreneurs. Outsourcing fulfillment is an easy way to minimize those issues and let you concentrate on manufacturing, marketing, and selling a great product or service. That’s where we come in.

Fulfillment and Distribution partners with businesses like yours to store, package, and distribute merchandise to customers across the United States. With facilities located near major U.S. points of entry, including the nation’s busiest port in Los Angeles, we can provide scalable fulfillment services that meet your unique needs.

Does managing logistics leave you feeling unfulfilled? If so, call us today at (866) 989-3082 or submit a contact form online. We’re standing by to help you grow your ecommerce business.