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3PL Cost: A Merchant’s Guide to Getting the Right Numbers

efficiency is the name of the game

  • Written by Alex Dolce
  • Published on December 29, 2023
  • Time to read 9 minutes

Introduction

Efficiency is the game’s name in the bustling world of online selling. So, many of us turn to third-party logistics (3PL) providers to make our lives easier. Today, we talk about the nitty-gritty – understanding those 3PL costs is critical to making the most of our shipping and logistics processes. So, by reviewing what 3PLs are and going over the breakdown of 3PL costs and how to calculate them, we will help you with this part of your e-commerce journey. That way, you can get the biggest bang for your buck when choosing a 3PL!

A Quick Review

Before we jump into the costs, let’s get the basics down. 3PL stands for third-party logistics. So, it’s like having a logistics sidekick – they handle things like shipping, warehousing, and distribution so we can focus on what we do best: selling excellent products.

Now, let’s get to the good stuff

The Money Talk: 3PL Costs Breakdown

When it comes to choosing a 3PL, there are a ton of factors to consider. It’s no different when it comes to 3PL cost; there are a lot of different things that contribute to each 3PL. So, let’s go over what those are:

  1. Getting Stuff from A to B (Transportation Costs): Ever wonder what it costs to move your products around? That’s freight charges. Plus, 3PL providers might work with different carriers, each with their own pricing.
  1. Home for Your Products (Warehousing Costs): If you’re storing your goods, then that’s where storage fees come in. Also, when your storage place moves your things around, there are handling fees. Basically, it’s where they’re getting products from the shelves to the shipping boxes.
  1. Tech Magic (Technology and Systems): Setting up tech solutions for tracking inventory, processing orders, and ensuring everything runs smoothly has its own price tag. The costs to cover these are known as implementation and integration costs.
  1. People Power (Labor Costs): People power doesn’t come free. Therefore, employee wages and training costs for tasks like order packing and managing inventory add up.
  1. Global Adventures (Customs and Duties):  If you sell internationally, brace yourself for cross-border fees, customs, and duties.
  1. Oops, It’s Coming Back (Returns Management): Products coming back? That’s return processing costs and maybe restocking fees for putting things back on the shelves.
  1. Insurance Matters (Risk Management): When protecting your goods from the unexpected, that’s insurance. So, though it has its own cost, it’s worth it when things go south.
  1. Behind the Scenes (Administrative Costs): Finally, running an office and paying staff are all part of the game. Overall, that’s overhead expenses.

So, even though there are a lot of different costs that go into the overall 3PL cost, there’s also a ton of benefit in using a 3PL. 

The Good Stuff: Why 3PLs Rock

While we’re crunching numbers, don’t forget the perks:

–  Scalability: Flexibility to grow or scale down based on demand.

– Expertise: Tapping into the know-how of 3PL pros.

– Focus on the Fun Stuff: Letting us focus on our products while logistics experts handle the rest.

Crunching Numbers Like a Pro: Resources for Merchants

Now, let’s talk about how to tackle these costs like a pro:

1. Ask the Pros (3PL Providers’ Quotations): Hit up different 3PL providers for detailed quotes. Breakdowns galore to understand what’s what.

2. Learn from the Best (Industry Reports and Publications): Dive into industry reports for benchmarks. See what others in the e-commerce game are paying for similar services.

3. Online Tools FTW (Online Cost Calculators): Online tools are our friends. Use cost calculators designed for e-commerce to get a grip on potential expenses.

4. Tech Wizardry (Supply Chain Management Software): Invest in supply chain management software. Simulate different scenarios to see how factors affect overall costs.

5. Connect and Learn (Industry Associations and Conferences): Network with fellow merchants and attend conferences. Get the scoop on trends and strategies for managing 3PL costs.

6. Talk to the Gurus (Consultation with Experts): Engage with logistics consultants who speak e-commerce. Tailored advice for your unique needs.

7. Stories Tell a Lot (Case Studies and Success Stories): Learn from the experiences of others. How did they manage costs? Stories hold valuable insights. eHub has a few of them to share if you want to take a peek right now! 

8. Government Intel (Government Agencies and Trade Associations): Government agencies might have guidelines and tools, especially for international shipping.

Remember, the key is tailoring this info to your unique biz. Regular reviews and updates keep you on top, ensuring your 3PL game stays cost-effective and competitive.

Wrapping It Up:

With this knowledge, you’re ready to conquer the next steps in the logistics realm! Understanding 3PL costs is not just about numbers; it’s about empowering ourselves to make informed decisions and keep our businesses thriving. Go forth and ace the logistics game!

eHub Has Your Back

If you need help finding the perfect 3PL match for your business, eHub has your back. You can even hop on a call with us today to see how we can help your business with your shipping and fulfillment needs!

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