How a 3PL Can Help Your Dropshipping Business
The dropshipping business model has become increasingly popular for businesses as it doesn’t require them to physically keep products in stock. Instead, they sell the product through an online platform (like Shopify) and pass the order along to a third-party supplier, who ships the order to the customer. Paired with a robust 3PL and simple website, dropshipping can be very profitable.
3PL providers have been around for years, working with companies and improving their supply chain operations, but as technology has improved, so has the services they can offer. Typical 3PL services today include inventory storage, picking, packing, and shipping to direct to customers. Dropship businesses never have to touch the products they sell, leaving the legwork to their 3PL who can process the orders at a fraction of the cost of operating their fulfilment center.
This blog will outline a few reasons how a 3PL provider can help your dropshipping business. But first, what exactly does a 3PL provider do?
What do 3PL Providers do?
Third-party logistics (3PL) providers handle your outsourced logistic, warehouse, and transportation activities. 3PL providers focus on logistics services like inventory storage and management, order fulfilment (eCommerce/Dropshipping), and shipping/distribution.
How 3PLs Can Help Your Dropshipping Business
3PL providers offer services that are scalable and add-value to your business. Not only do they pick, pack and ship your orders, but they can also help with streamlining the process and negotiating rates to keep your costs down. Here’s how this translates into benefits for your company.
1. Reduced Costs
Many eCommerce businesses operate on low-profit margins due to competition, pricing and rising shipping costs. 3PL providers have a vested interest in your success and are actively looking at ways to cut your costs. Whether it’s saving on packaging supplies or negotiating better carrier rates, 3PL providers are always looking for ways to reduce costs.
2. Improved Customer Service
3. Finding the Right Carriers for Better Margins
Shipping costs are one of the biggest expenses for dropshipping businesses. 3PL providers maintain an extensive network of resources and relationships with many different carriers that can help. They can use their resources to negotiate for better rates on your behalf, reducing their overhead expenses and improving profitability for both.
However, the most important benefit provided by a 3PL provider is their flexibility and ability to scale. 3PL services can be scaled back or expanded based on your demand and needs. If your business has a busy holiday season and slow spring, your 3PL provider can allocate its resources to accommodate.
Interested in learning more? Contact us today to see what we can do for your supply chain.