Things you need to know about 3PL for Amazon
Leveraging a Third-Party Logistics provider, 3PL for Amazon can be a game-changer for sellers.
Understanding what an Amazon 3PL company offers, its benefits for Amazon FBA (Fulfillment by Amazon) sellers, and how to choose the right provider is crucial for optimizing your fulfillment strategy.
3PL companies are essentially outsourced fulfillment partners that specialize in warehousing, inventory management, order picking and packing, and shipping your products directly to customers.
They can manage both Fulfillment by Merchant (FBM) orders, fulfilled by the seller themselves, and Fulfillment by Amazon (FBA) orders, leveraging Amazon’s fulfillment network.
This allows sellers to benefit from the convenience and scalability of FBA while also retaining more control over their inventory and fulfillment process.
What is a 3PL Company for Amazon?
A 3PL for Amazon company acts as an outsourced extension of your fulfillment operation.
They specialize in warehousing, inventory management, order picking and packing, and shipping your products to customers.
For Amazon sellers, 3PL providers can manage both Fulfillment by Merchant (FBM) orders, fulfilled by the seller themselves, and Fulfillment by Amazon (FBA) orders, leveraging Amazon’s fulfillment network.
How to Choose the Right 3PL Company?
Selecting the right 3PL partner for your Amazon business requires careful consideration.
Services Offered
Ensure the 3PL provider offers the specific services you need, including storage space, pick and pack capabilities, multi-channel fulfillment (fulfilling orders from other platforms besides Amazon), and integration with your existing sales channels and inventory management systems.
Seamless integration with your Amazon Seller Central account and other sales channels is essential for efficient order management and inventory tracking.
Amazon 3PL sellers pricing models can vary. Some providers charge per pallet stored, per pick and pack, or a combination of both. Clearly understand the pricing structure and ensure it aligns with your business needs and projected volume.
If you require fulfillment across multiple regions, choose a 3PL for FBA provider with a warehouse network that strategically covers your target markets. This can help improve delivery times and customer satisfaction.
Reliable and responsive customer service is crucial. Evaluate the 3PL’s track record in addressing seller inquiries and resolving issues promptly.
Research the 3PL Amazon company’s reputation within the Amazon seller community. Read online reviews and testimonials from other sellers to gain insights into their experience.
What are the Benefits of Using a 3PL Provider for FBA?
Even for sellers already using Amazon’s FBA service, a 3PL provider can offer additional advantages. 3PL providers often offer competitive storage rates and fulfillment fees, potentially reducing your overall fulfillment costs compared to relying solely on FBA.
As your business grows, a 3PL provider can easily scale its services to accommodate your expanded inventory and order volume. This allows you to focus on growing your sales without worrying about fulfillment limitations.
A 3PL provider often offers additional services beyond what FBA provides, such as kitting (assembling multiple products into a single unit) and custom packaging. This flexibility can enhance your brand presentation and customer experience.
With a 3PL provider, you retain ownership and control over your inventory, unlike with FBA where Amazon takes ownership of your products once they are shipped to their fulfillment centers.
A 3PL provider can fulfill orders from other sales channels besides Amazon, streamlining your fulfillment process and reducing complexity.
Does Your Business Need a 3PL Provider for Amazon?
If you are a high-volume seller with significant inventory needs, a FBA 3PL provider can offer cost-effective storage and efficient fulfillment solutions.
Amazon FBA 3PL has limitations on product size and weight. If you sell large or bulky products, a 3PL provider can accommodate these items and potentially offer more competitive fulfillment fees.
If your products require special handling, kitting, or custom packaging, a 3PL provider can offer these services to enhance your brand presentation.
If you sell on platforms other than Amazon, a 3PL provider can streamline your fulfillment process by managing orders from various channels.
What Types of Sellers Should Amazon Third-Party Logistics Providers Use?
While not every Amazon seller needs a 3PL provider, it can be a strategic advantage for specific business models.
Entrepreneurs experiencing rapid sales growth often struggle to keep pace with fulfillment demands. A 3PL provider can seamlessly scale its services alongside your business growth, eliminating the need for upfront investment in warehouse infrastructure and staffing.
This allows you to focus on core business activities like product development and marketing while the 3PL handles the fulfillment legwork.
If your products require special handling procedures, kitting (assembling multiple products into single units), or custom packaging beyond FBA’s capabilities, a 3PL provider can offer these specialized services. This can be particularly advantageous for sellers dealing with fragile items, oversized products, or those requiring specific labeling or bunding.
For businesses selling on platforms other than Amazon, a 3PL provider can act as a centralized fulfillment hub. They can integrate with your various sales channels and manage order fulfillment across different platforms, streamlining your operations and reducing complexity.
Businesses experiencing significant sales fluctuations throughout the year can benefit from a 3PL provider’s flexible storage options. They can scale storage space up during peak seasons and down during slower periods, optimizing storage costs and eliminating the need for permanent warehouse space that might sit underutilized for extended periods.
For new businesses or those with limited resources, a 3PL provider can offer a cost-effective way to outsource fulfillment operations. This frees up capital and allows you to focus on growing your business without the burden of warehouse management and staff recruitment.
How Does Amazon 3PL Pricing Work?
Amazon 3PL service providers employ various pricing models, and the specific structure will vary depending on the provider and the services you require.
Storage Fees
This typically refers to the cost per pallet or per cubic foot of storage space your inventory occupies within the Amazon 3PL warehouse.
Storage fees can vary depending on the location of the warehouse, with warehouses in prime locations typically costing more per square foot. National averages can range from $4 to $12 per pallet per month, and $0.75 to $1.50 per cubic foot per month.
Pick and Pack fees
These fees are charged per unit for picking your products from storage, packing them for shipment, and preparing them for shipping carriers. Pick and pack fees can range from $1 to $4 per unit, depending on the complexity of the picking and packing process.
Value-Added Services
Costs for additional services like kitting, custom packing labeling, or specific handling procedures are often charged separately.
These fees can vary depending on the specific service and the complexity involved.
Minimum Monthly Fees
Some 3PL providers have minimum monthly fees to cover their operational costs, regardless of your storage or fulfillment volume.
Minimum monthly fees can vary depending on the provider, but typically range from $100 to $500 per month.
It’s crucial to understand the specific pricing structure of a potential 3PL partner before signing a contract. Carefully assess your projected storage needs, order volume, and anticipated usage of any value-added services to ensure the pricing aligns with your business model.
Many third party logistics Amazon providers offer quote calculators on their websites, allowing you to estimate your potential costs based on your specific requirements.
FAQ
What is the difference between 3PL and a freight forwarder?
While both 3PL and freight forwarders deal with logistics, their core functionalities differ.
3PL providers manage their entire fulfillment process, including warehousing, inventory management, order picking and packing,m and even some value-added services like kitting or custom packaging.
Freight forwarders specialize in the international movement of goods, focusing primarily on customs clearance, freight consolidation, and arranging transportation between different countries.
They typically wouldn’t handle warehousing or fulfillment within a specific country.
When should you use a 3PL?
When your business experiences rapid growth and your in-house fulfillment capabilities are strained.
If your products require special handling or fulfillment processes beyond what FBA offers.
When you sell on multiple sales channels and require a centralized fulfillment solution.
If your business experiences seasonal fluctuations in sales and requires flexible storage options.
For new businesses or those with limited resources who want to outsource fulfillment operations.
Is Amazon 3PL?
While Amazon offers its Fulfillment by Amazon (FBA), Amazon itself isn’t a traditional 3PL provider.
FBA focuses on storage and fulfillment within Amazon’s warehouse network.
Traditional Amazon 3PL companies offer a broader range of service, including multi-channel fulfillment (fulfilling orders from other platforms besides Amazon), value-added services like kitting or custom packaging, and potentially more flexible storage options tailored to your specific needs.