What’s 3rd-party Logistics?
This is when you partner with an order fulfillment company to control certain elements of the packaging and shipping process. Your company buys a safe quantity of products to store in a warehouse. This warehouse is owned by a third-party logistics company, and you pay a fee for the services instead of a warehouse lease.
The products stay in the store until people start buying them. Then, the logistics corporation packages the items and sends them.
The benefits of third-party logistics
The main benefit of 3pl logistics services is time. You release all kinds of time to spend on marketing, sales, web design and more. In addition, these companies can generally incorporate systems such as Shopify and Big commerce. Every time an order arrives, the logistics company sees it and goes to work. Therefore, you do not have to do anything.
When to consider third-party logistics
This compliance alternative works well for e-commerce stores that sell their own exclusive products. Think of brands that invent something new, like almost everything you would see in Shark Tank.
As long as you do not have to modify the products for each client, all you have to do is send lots to the logistics company and they will take care of the rest.
Many of the expanding brands choose to go with a 3pl logistics companies when they reach a point of too many sales. In general, you are waiting until you have the labor or resources to complete the shipment yourself.
What is Dropshipping?
Dropshipping allows you to focus on acquiring customers, leaving storage and shipping to the manufacturer or supplier. Compared to third-party logistics, dropshipping does not require you to purchase inventory. The manufacturer makes an invention, stores it and only sends it when he sees that you have made a sale on his website.
The benefits of Dropshipping
Direct shipping allows you to quickly start a business, which makes it easy for beginners. The costs are almost nothing, since you do not have to pay for the list or storage. Not to mention that you have access to a wide range of products, since you can compare prices when you look for suppliers.
The benefits of Dropshipping
Dropshipping allows you to quickly start a business, which facilitates beginners. The costs are practically nothing, since you do not have to pay for inventory or storage. Not to mention that you have access to a wide range of products, since you can compare prices when you look for suppliers. For example, Oberlo is a service that integrates with your store and connects you with several AliExpress providers. You choose the products, and they all fill up in your store and ship when necessary.
What is Self-realization?
The self-realization model works exactly as it sounds. You do all the work. This includes shipping, storage, and packaging and customer relations. In general, your company must lease warehouse space, since it is most likely that it is not an owner or does not want to buy. Some new companies run the entire operation out of a garage or basement, but the ideal situation is to end up in a warehouse that serves as their distribution center. In fact, most of the time this distribution center ends up being its main office.
The benefits of Self-realization
Self-realization puts you in complete control. Smaller companies like to use this method when they try to save some money. Just keep in mind that personal fulfillment can end up costing you more money in the long term. Larger brands are interested in personal fulfillment, as they can monitor the shipping and branding process. You can paste the labels you want on the packaging and, if the customer does not receive the package on time, you are the only one at fault.
When to Consider Dropshipping
The shipping costs per shipment are so low that it makes sense for small businesses trying to enter electronic commerce. It is particularly useful for established companies that do not want to mess with any shipping or storage. For example, a retail hardware store might want to start testing the waters with ecommerce. Dropshipping makes sense for that. A popular travel blogger might want to sell swag like t-shirts and hats. Instead of starting their own operation it’d be more prudent to consider dropshipping.
Which One Will You Choose?
When comparing self-fulfillment, 3rd-party logistics and dropshipping, it’s important to take cost, quality and control into account. Where is your business at right now? Are you running out of resources? Do you only need a small online shop without the hassle of order fulfillment?
The good news is that you can change your fulfillment process whenever you want. It takes a bit of time, but most of these partner companies are streamlined enough to accommodate you.