Understanding 3PL Storage Cost

3pl-storage-cost3PLs play an integral part of many ecommerce and wholesale distribution supply chains. But if your company has ever researched costs, you will find that no two vendors have similar models when it comes to storage fees. Understanding how vendors charge for storage can be difficult, especially if you are starved for data.  

At a high-level 3PL storage costs follow one of two pricing models, on demand type storage, and dedicated space models which are more fixed cost. To understand which model is more advantageous for your ecommerce business or whole distribution, we need to look at each option further.  

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27 Point Checklist for Third-Party Logistics (3PL) Contracts

After months of working with prospective third-party logistics (3PL) vendors, you likely received hundreds of pages of selling materials, email correspondence, and many verbal promises. The 3PL contract is important as it will record for you:

  • the statement of work (SOW) and the 3PL services you are contracting for
  • the standards of performance
  • the pricing of various 3PL services
  • the payment terms
  • a host of legal clauses such as warranty and guarantees, and termination of the agreement

This blog acts as a checklist of contractual considerations to assist you in negotiating a 3PL contract that is fair and a win/win for the client and the 3PL provider acting as your outsource fulfillment provider. 

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10 Considerations for Transitioning from a 3PL to Internal Fulfillment

Companies that utilize third party fulfillment (3PL) services sometimes reach a point where they consider transitioning from the 3PL services to internal warehousing and order fulfillment. Some of what drives these decisions is to control costs, whereas others have had a bad experience with 3PLs and now only trust themselves with their product. Using a 3PL isn’t for every company.

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How to Control Rate Increases in 3PL Contracts

Reviewing contracts for third party logistic (3PL) providers can be a daunting task – especially for those not familiar with the process.  One of the most critical aspects in any 3PL contract is the language surrounding pricing and rate increases.  It is vital to ensure that the language is fair for both the customer, as well as the 3PL.   

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How To Analyze If Third Party Fulfillment Is Right For Your e-Commerce Company

There are hundreds of competent third part fulfillment (3PL) facilities in operation today. Many have multiple facilities, which allows clients to be closer to the customer and save shipping costs. Additionally, private equity investors have acquired many major 3PL companies and consolidated them into 3PLs with dozens to hundreds of facilities. Many of these have specialized fulfillment for different channels like retail fulfillment or direct to consumer.

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Third Party Warehousing - How to Get the Most Out of Your Relationship

As 3PL consultants, in our experience assisting multichannel companies with deciding on whether to utilize third party logistics (3PL), we have found that many companies have been able to grow their businesses profitably by outsourcing.  Our blog post, 10 Ways Companies Can Profit from Ecommerce Fulfillment Services, shows how many of our clients use third party fulfillment advantageously. 

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Using 3PL Solutions Successfully in Your Supply Chain

For many companies, using 3PL solutions for warehouse and distribution functions can be the best way to support growth. There are many options for utilizing third party logistics, both in supporting kitting and light assembly, to order fulfillment and reverse logistics.

Whether you have an online store, or wholesale distribution, choosing a 3PL for parts of your supply chain can provide cost savings. These cost savings come from reduced labor and management, elimination of capex and reduced shipping costs by using the 3PLs rates. In addition, 3PL solutions can provide improved customer service and customer satisfaction.

Working with a 3PL can have many benefits, which typically include the following aspects.

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Is Third Party Warehousing (3PL) Right for My Company?

Problems:

  • You’re a start-up company with limited financial resources; or a company where fulfillment is not a core competency, but you have the need to upgrade your infrastructure (website, order management system, call center and or fulfillment operations) means an increase in expenses or requires new capital.
  • You have seasonal spikes that run 10:1 or higher (peak vs. average sales week) and wish you could service these peaks in another way.
  • You’re trying to build your business, and know fulfillment and customer service are critical to getting and growing sales—but fulfillment is not your core competency.
  • Internal fulfillment costs continue to increase, impacting the bottom line.

In all of these situations,third party logistics might be the answer.

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Ecommerce Fulfillment: How One Client Evaluated Options

As companies grow and expand, ecommerce fulfillment services is an option that more of our clients are evaluating. This is a case study of how one client made its decision to implement and ecommerce fulfillment solution rather than manage their own operation. It is a small apparel company with 125,000 orders with 50%+ ecommerce orders. Product offering is 24,000 active SKUs and 75,000 calls annually. They needed to replace an outdated, ineffective, non-PCI/DSS compliant order management system, and they had no space for expansion. “People were sitting on top of each other” and the company had a huge assortment of core product to offer.

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How Our Clients Use 3rd Party Warehousing

I fully understand and mostly agree that many multichannel companies want to control and provide internal fulfillment to their customers.  However, I am increasingly impressed with the way companies are objectively evaluating how to use third party logistics (3PL) vendors to serve their fulfillment needs.  

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