There's a lot that goes into starting a third-party logistics company. You must lease a space, buy all essential machinery, set up the area, and acquire specific technology solutions. For all of it, you need a hefty capital investment.
Even though you have the right amount of capital to make the investments, there will be times you will have to scale your business. Thus, proper guidance and understanding of all involved parameters are essential for starting a 3PL company.
This article gives you a clear insight into how to start a 3PL business without much hassle. Read along till the end.
What is a Third-Party Logistics Company, and What do They Do?
A third-party logistics company is a service partner for eCommerce merchants to help them manage the supply chain. A 3PL logistics company offers standard services: inventory management, shipping coordination, returns, exchanges, retail distribution, and warehouse management.
A 3PL company partners with the merchant to allow them to keep their focus on growing the business while the 3PL is fulfilling their orders. The eCommerce companies do not have to buy their warehouses or deal with distribution. As a 3PL company, they will leave their stock in your warehouse.
The orders will automatically be shipped from your warehouse when processed over the merchant's website or application. The process becomes simple and much demanding. Thus, the end customers are not concerned about where the stock was stored or from where it shipped.
The eCommerce merchants will have the enhanced capacity to scale their business while allowing your business to grow. As eCommerce evolves consistently, it's a great time to invest in starting a warehousing business or third-party logistics company.
Related: Why Should You Consider 3PL For Your eCommerce Fulfilment?
The Benefits of Using a Third-Party Logistics Company
To be sure about investing massive capital for opening a logistics company, you must get an insight into how it benefits the businesses and why they will invest in your services. The benefits include:
It saves a Lot of Time and Money
When businesses use third-party logistics services, they get an immense scope of reducing or eliminating major business expenses. They can invest in a warehouse, transportation, employees, and technology to execute their business's logistics needs. Moreover, they can focus on dealing with the business's core competencies.
Moreover, hiring a 3PL company also saves time for businesses. The process becomes more straightforward and faster as a dedicated team handles the operations. Apart from that, companies will be free from all sorts of supply chain mistakes that are expensive and adversely impactful. Therefore, the demand for third-party logistics is of utmost importance.
Provides Knowledge of Supply Chain
Entrepreneurs are looking out for the best 3PL for small businesses. And this is not just because of the service proficiency of their logistics needs, but also to understand the supply chain aspects. Understanding the supply chain as a new business or a budding entrepreneur is quite tricky, and there are significant challenges that one might need help with.
As logistics companies deal primarily with handling supply chains as their profession, businesses rely on a 3PL to understand it. Moreover, if a business sells products internationally, it becomes essential for them to know how the supply chain works and hand over the operations to professionals.
There are particular necessities, such as customs duties, documentation, shipping regulations, and other parameters, that 3PL and the business need to work out together. Therefore, using third-party logistics for information and knowledge on the supply chain is one of the crucial benefits for businesses.
Scaling of Business
With the logistics being dealt with by a 3PL, the businesses are now expanding their stocks and transportation options. They can rely on the 3PL companies for proper inventory management and order fulfillment when they intend to grow their business to a new city or state.
The businesses can invest in something other than modern tools and technologies for making the necessary logistics adjustments for the new expansion. Third-party logistics companies often use the latest tools and technologies to ensure their clients can save money on that part.
The logistics service providers will implement consistent improvements to earn the satisfaction of your customers. Thus, it will lead the merchant businesses to save and make more.
Related: 13 Important Questions to Ask 3PL Providers
How to Start a Third-Party Logistics Company?
So, you know how fruitful it can be for you to start a 3PL company. Now, it's time to get an insight into the steps to start a 3PL logistics company.
Check with Demand in Your Specific Area
You need to assess if there is a business room in your area. The demand often varies from location to location, and you must research to determine it for your site. You can do it by contacting some eCommerce businesses and talking to them about their logistic solutions.
If they prefer a 3PL, note their satisfaction with the services. Talk to the businesses who don't use a 3PL, and get some reasons to work on it. With this, you will not just get an insight into the demand in your area but will also be making potential room for marketing your services to those businesses.
Buy or Lease Warehouses
Depending on how much you want to invest and how big of a third-party logistics company you want to build, buy or lease your warehouses. Once done, you must add shelves and racks and make other arrangements to store the business inventories easily.
Add Technology to the Business
The next important thing is to introduce technology solutions in your 3PL company. You will need tech gadgets and software solutions to scan barcodes, process orders, connect carrier software, track inventory, maintain data, and fulfill orders.
Buy the Important Machinery
Once your foundation of the 3PL business is set, get along with buying the industrial equipment for managing the warehousing services. Depending on your business needs, you will need forklifts, computer workstations, hand carts, industrial scales, and others.
Hire the Right People
The final step before you go out and pitch your services to eCommerce businesses, you must hire the right people for your management and warehouse teams. Bring in a mix of experienced and fresher employees to maintain a balanced employment culture.
Make sure you hire an HR manager for good hiring and seamless operations. Hiring a legal compliance and logistics expert will also be helpful in the long run.
How Simpl Fulfilment Got Started?
Simpl Fulfillment was born from the need to find an ideal fulfillment solution for small online businesses. After experiencing the difficulties of finding a reliable, affordable, and efficient way to manage their orders, Simpl Fulfillment's founders saw the opportunity to create a company that provided a simplified approach to order fulfillment.
Today, Simpl Fulfillment offers a comprehensive suite of solutions designed with small business owners in mind. From helping customers select the best shipping options for their needs to providing robust reporting and tracking capabilities, Simpl Fulfillment offers an end-to-end solution that ensures clients can easily keep track of all aspects of their orders while ensuring they're sent out promptly and accurately every time.
Simpl Fulfillment aims to provide an easy and cost-effective solution for small businesses, allowing them to focus on what matters most - growing their business and delighting customers with timely deliveries. Whether selling products online or fulfilling orders from a brick-and-mortar store, Simpl Fulfillment will provide the solutions you need to streamline your order fulfillment process. Their comprehensive suite of services makes it easy for any business owner to find the right solution for their needs.
With Simpl Fulfillment, businesses can rest assured that their orders are handled quickly, accurately, and professionally every time. They strive to provide unmatched customer service and support so clients can focus on growing their businesses and delighting customers. With Simpl Fulfillment, you can be confident that your orders are handled with the highest level of care, leaving you free to focus on delivering exceptional products and services.
Related: 3PL Services in Austin, Texas: A Better Way to Ship
Things To Consider When Starting A Third-Party Logistics Company
You are now aware of the steps you need to follow to start your own logistics company. But, before executing these steps, make sure you consider these essential factors:
Learn about the Types of Warehousing Client Needs
You need to assess the market and determine the type of warehousing the businesses need. Do the companies need basic inventory stocking and shipping solutions or added services such as order fulfillment and processing returns?
You need to understand it before you buy dedicated technologies and include these services under your 3PL.
Understand the Competition
It would help if you looked out for the existing companies offering third-party logistics to the businesses. Please take note of your competitors' services and what they charge for them. Depending on the data you collect, you can present your company as different from others by adding unique service benefits.
Consider Offering Unique Services
You need to add unique and value-added service solutions, such as 24/7 customer service, weekend delivery & pickups, and other new features for the merchants in your area. Considering this, you will attract more business partners than ever.
Price the Services Right
Pricing is quite essential for your business to thrive. Too high a price will repel away the clients, whereas too low a price will affect your profitability. Study the competitive market rates, and decide on fair pricing for your services without compromising quality.
How to Market Your New Third-Party Logistics Company?
Once you have launched your 3PL business, the next thing is to market your services to attract more potential clients. So, here are a few ways you can use to deal with your quality logistics solutions proficiently:
State Your Market Positioning
Determine the areas where you are more successful and have a quality track record. You should then invest in marketing those services on the upper hand while slowly introducing other services.
Try Inbound Marketing
Instead of contacting your prospects through cold calling or emailing, trying inbound marketing to attract their attention is better. You can do it by creating content to give solutions to your prospects' pain points. You can release the content through blog posts, eBooks, articles, videos, etc. Share them across channels where your chances spend the most time.
Implement Paid Marketing and SEO Techniques
By implementing paid search, online advertising, and SEO practices, you can come to the attention proximity of your prospects. People searching online for solutions to their logistics problems will find your website or platform on the top and might consider you for the services.
In conclusion, running a 3PL business can be incredibly rewarding. With the right resources and an understanding of the legal requirements, operational best practices, market research, and budgeting considerations involved, you set yourself up for success. Take the time to do your research and turn to experienced professionals for advice when needed. You will quickly discover that launching a successful 3PL services business can be easy. You have all the necessary information now, so all you have to do is start! Moving forward with your 3PL industry plans could only mean bigger client reach and more good profits, so why not take advantage of this great opportunity? If you are looking for help fulfilling eCommerce orders, contact Simpl - they specialize in offering white glove 3PL solutions. This blog post has given you a comprehensive rundown on launching a successful 3PL business. Good luck!
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