3PL vs 2PL – Which Fulfillment Partner is Best?
If you are a growing eCommerce business that has been handling your fulfillment needs in-house, you might be wondering how to scale. Determining your needs, time constraints, and growth trajectory will be key in determining whether a 2PL vs a 3PL works best for you. The best fulfillment partner will be one that meets the needs of your business and your consumer. In this article, we will define and outline the pros and cons of utilizing a 2PL vs a 3PL partner. Which fulfillment partner is best for your eCommerce?
What is a 2PL
2PLs, second-party logistics, are asset-based carriers responsible for the method of transportation. This would include shipping lines, air freight providers, and van lines to name a few. 2PLs own the transportation assets that are responsible for delivering products from one place to another. Said another way, they are the airlines, sea-faring cargo ships, and rail transport companies that are contracted to fulfill product delivery. They are sometimes called “forwarders” due to the fact they mainly control one leg of the transportation journey. Whether the 2PL handles a portion of the whole delivery depends on the company and its resources. Some larger shipping lines like Maersk, handle primarily large, heavy, or wholesale deliveries. Other global 2PLs like FedEx can handle larger shipments and almost everything in between.
Pros
- They provide lower overhead than shipping the product(s) yourself.
- They offer simple contracts
- It is easy to track goods
- You have the freedom to choose the mode of transportation
Cons
- Provides a basic level of delivery
- Harder to scale
- Relationship is transactional
- Is not invested in your eCommerce success
What is a 3PL
3PLs, third-party logistics, are organizations that specialize in integrated fulfillment. eCommerce businesses outsource their supply chain and order fulfillment through these entities. 3PLs provide services that include: warehousing, receiving, storage, and shipping. Some 3PL companies provide value-added services that include: inventory management, kitting, assembly, and custom packaging options. eCommerce as an industry and been growing steadily over the past decade and so has the rise in 3PLs. In fact, most fortune 500 (86%) and 100 (96%) companies use a 3PL fulfillment partner. Here are a few reasons why.
Pros:
- They help simplify the fulfillment process
- Faster delivery, fewer mistakes
- Greater scalability
- Relatively low capital investment required
- Save money and time in the long run
Cons:
- You give up more control of the supply chain and fulfillment process
- Businesses can become dependent on their 3PL partners
- Higher upfront costs initially
If you are a growing eCommerce business and you are at the growth apex where managing the logistics has become a part-time gig. It might be time to consider outsourcing your fulfillment to an expert. Falcon Fulfillment specializes in high-volume eCommerce fulfillment. From receiving to final delivery, we can help to refine your supply chain process and create a workflow that will alleviate time constraints and still give you the insights to grow your business your way. Reach out to an agent today to discuss how we can help.
