What is a Logistics Service Provider?
Behind every hero is a sidekick who helps guide them to success. Batman had Robin, Simon had Garfunkel, Hercules had Phil, and Frankenstein, had, well, Igor. Not all of those examples are exactly illustrious, but they do (for the most part) prove that two heads really are better than one.
In the world of eCommerce, that proverb certainly holds true. If you’ve ever thought about expanding your business, chances are that you’ve run into the term “logistics service provider.” But what is this mysterious entity in the eCommerce world? And how much can you really gain from joining forces with them? That’s what we’re here to find out.
To get the basics on logistics service providers, and learn how they can take your eCommerce business to the next level, keep reading!
Logistics Service Provider Definition
In the simplest of terms, a logistics service provider provides logistics services! These services can include transportation, warehousing, distribution, and overall supply chain management.
Another way to look at a logistics service provider is to think of it as the before, during, and after of order fulfillment. Each of these stages comes with specific processes, from storing inventory to arranging carrier pickups. A logistics service provider takes over all those processes (an action otherwise known as “outsourcing”) to hopefully make your life a whole lot easier.
A question we get asked all the time is if logistics service providers are the same as third-party logistics partners, or 3PLs. The answer is: It depends! You can technically go all the way up to a 5PL—it’s all a matter of what services you’re looking for and how comprehensive you want your outsourcing solution to be.
We’ll get into some examples of the different types of “PLs” later, so hang on to your hats!
Is Outsourcing to a Logistics Service Provider Right for My eCommerce Business?
If you’re reading this article, chances are that outsourcing to a logistics service provider is right for your eCommerce business. But, to dot our i’s and cross our t’s, let’s run through some scenarios of when partnering up just makes sense. Are you struggling with any of the following symptoms of eCommerce entrepreneurship?
- A lack of time and resources that hinder your ability to sell your products globally
- In-house fulfillment costs that are causing a serious dent in your wallet
- Limited time to actually focus on growing your business
- No physical space left to store inventory and pick and pack orders
- Inexperienced fulfillment talent and expensive warehouse setups
- Spikes in order volume that leave you scrambling for more products, manpower, and hours in the day
- Unhappy customers due to issues with order accuracy and/or slow shipping times
If you can check off most or all of these boxes, consider yourself an excellent candidate for outsourcing your logistics management.
Benefits of Partnering with a Logistics Service Provider
Skeptical about handing your eCommerce business to a bunch of strangers? We get it. Part of easing that anxiety is finding the “perfect” match and the other part is fully understanding how much you’d be benefiting from the extra helping hands. Partnering with a logistics service provider could mean:
- Access to cutting-edge technology and warehousing services
- Big savings on everything you would be spending money on in-house, including warehouse leases and hiring employees
- Exclusive discounts on shipping and packaging rates
- Assistance with reverse logistics and returns processing
- Kitting and assembly capabilities for crowdfunding and subscription boxes
- Less time spent worrying about receiving, storing, distributing, picking, and packing your inventory
- More time to grow your business by focusing on sales and marketing as well as product sourcing and development
- Multiple warehouse locations for cheaper, faster shipping
- Software integrations with your favorite shopping carts and marketplaces
- B2B capabilities including wholesale fulfillment and retail distribution
- Support for international order fulfillment
- The ability to go above and beyond customer expectations
- Transportation management and help with coordinating freight shipments
Sounds like a dream come true, right? Of course, not all logistics service providers are created equal, which leads us to . . .
How to Choose a Logistics Service Provider
Are any of the above benefits tickling your fancy? Jot down your needs and wants for the ideal logistics service provider and use that as your compass during the selection process. While you’re at it, consider some other pivotal factors like years of experience, references, reviews, and contract terms.
When it comes to finding the top logistics service providers, the most important thing is to be discerning. While perfection is impossible, “settling” for a company that misses some key components from your list of must-haves will only lead to dissatisfaction. Ask questions, try to look beyond the sticker price (if it’s too good to be true, it probably is), and think about your long-term goals and how your new logistics service provider could facilitate them. There’s no such thing as being too cautious, especially now in this competitive eCommerce day and age.
Oh, and if this isn’t your first rodeo, be extra careful and strategic when switching 3PLs. Here are some resources that could aid in making that transition a little smoother:
- 3 Strategies for Migrating Inventory to a New 3PL
- Is There Ever a Good Time for eCommerce Brands to Switch 3PLs?
- Ready, Set, Migrate! A Checklist for Migrating eCommerce Fulfillment to a New 3PL
We hope that this brief introduction to logistics service providers can inform your next major decisions and support your business as it scales to new heights. The sky is the limit, after all!
Speaking of scaling, ShipMonk is here to help. Contact us today for a demo of our proprietary 3PL eCommerce fulfillment platform and get a feel for how we help eCommerce businesses Stress Less and Grow More.