Selling on Amazon involves several moving parts, including warehousing, product prepping, fulfilling orders, and handling returns. The typical FBA business doesn’t have the logistical capacity to handle all these tasks in-house, and that’s where 3PL for Amazon FBA comes in.
This post details how Amazon 3PL services can help your FBA business, gives examples of 3PL companies in the US, and lists the factors you should consider when evaluating the best 3PL for Amazon sellers.
How Getida Can Help:
3PL services take the burden of handling logistics off your hands, freeing up capital and time.
Another aspect of your FBA operations that can benefit from third-party services is FBA reimbursement recovery, an area where we excel at Getida.
You can optimize your FBA operations by using Getida to audit your Seller account consistently for discrepancies and uncover reimbursement opportunities.
Further, we’ll file the claims on your behalf and get you the first $400 in reimbursements free of charge. Register with Getida today.
Table of Contents
What Does 3PL Stand For in Logistics?
3PL stands for third-party logistics.
3PL companies offer logistics capacity to companies looking to outsource various components of the supply chain, such as:
- Storage and warehousing
- Transportation
- FBA product prep
- Quality control
- Order fulfillment
- Handling returns
3PLs are popular with e-commerce businesses as they allow sellers to outsource tedious, repetitive, and time-consuming tasks so they can focus on high-impact areas of their business, such as marketing and product development.
Most e-commerce businesses lack the financial and human resources to build elaborate logistics infrastructure. By piggybacking on the logistics capacity of 3PLs, e-commerce businesses can free up capital and other resources for other essential business needs, making it possible to scale rapidly.
What is 3PL for Amazon FBA?
3PL for Amazon FBA helps sellers deliver shipping-ready inventory to Amazon’s fulfillment centers.
Amazon requires FBA sellers to meet strict inventory guidelines, including precise packaging requirements. FBA sellers, therefore, need 3PL companies that understand these rules and have internal controls to ensure consistent compliance with Amazon FBA requirements.
Examples of Top Third-Party Fulfillment Companies
There are several good 3PL services in the US.
Below are examples of top third-party fulfillment companies:
- ShipMonk: With ten fulfillment centers in North America, including two in Mexico and one in Canada, ShipMonk is one of the notable 3PL logistics services for sellers in the United States. The company boasts a tech suite that can help you integrate various facets of supply chain management.
- Fulfillment-Box: In addition to its operations in the United States, Fullfillment-Box has warehouses in Canada, the United Kingdom, France, Germany, Austria, and Poland. It’s an excellent option for scaling your e-commerce business in the United States and Europe.
Did you know that Amazon offers 3PL services? By definition, Fulfillment by Amazon (FBA) is a third-party fulfillment service.
Further, Amazon has a 3PL warehouse service called Amazon Warehousing and Distribution (AWD). AWD offers bulk inventory storage services for e-commerce businesses and arranges transportation to FBA fulfillment centers and non-Amazon-affiliated distribution channels.
You’d also be interested to know that Amazon has an FBA prep service, one of the key services that draws Amazon sellers to 3PL companies. Amazon’s FBA prep service is available for new, used, collectible, and refurbished items, and the fees are charged per unit.
How 3PL Partnerships Work for Amazon Sellers
When you sell on Amazon and don’t have an established logistics capacity, it is best to outsource those functions to a third-party provider. Such a 3PL partnership will help you meet Amazon’s strict requirements and consistently provide a good customer experience.
Amazon third-party logistics providers help sellers in the following ways:
- Provide affordable storage services: Access to low-cost bulk storage is essential for sustaining an optimal inventory management policy. 3PL partners provide affordable and predictable storage terms, often on a per-bin, pallet, or unit basis.
- Provide an extensive network of warehouses: You should use a warehouse facility close to the markets you serve. 3PL partners have several warehouses across the United States and other markets, ensuring rapid inventory shipment to your target market’s Amazon fulfillment centers.
- Help with quality control: You want robust quality control to avoid violating Amazon’s order defect rules. This is important as an Order Defect Rate (ODR) above 1% may result in your Seller account being suspended.
- Packaging and FNSKU labeling: You can only send shipping-ready inventory to FBA warehouses. These products must be prepped according to FBA inventory requirements. 3PL partners offering FBA prep services can help you comply with these packaging and labeling requirements.
- Arranging transportation to FBA warehouses: 3PL partners ship inventory in their warehouses directly to FBA warehouses. They often use transportation companies such as FedEx, UPS, and DHL.
- Processing returns: Your ability to process returns is essential for your success as an Amazon seller. 3PL partners can help you accept, process, restock, or dispose of returns.
Doing all the above in-house would require significant investment in personnel and logistics. Leveraging 3PLs’ infrastructure and competencies will free up capital to fuel your Amazon business’s growth.
Pro Tip:
As an Amazon seller, logistics isn’t the only thing you can outsource. You can also outsource the entire FBA reimbursement recovery process, and we at Getida can help with that.
Getida audits Seller accounts consistently to uncover reimbursement opportunities occasioned by various FBA discrepancies. Our experts, including ex-Amazonians, will then manage the rest of the reimbursement recovery process on your behalf, getting better results than you might obtain independently.
In fact, on average, our customers see a 166% boost in Amazon FBA recovery. Register with us to get started.
The Role of FBA Warehousing in Amazon 3PL Service
To maintain an optimal inventory level for your FBA operation, you must get several things right, including ordering products from suppliers in optimal quantities to minimize ordering, storage, and stockout costs.
Sufficient warehousing capacity is the backbone for this. Otherwise, warehousing limitations would undermine your inventory control initiatives.
You likely don’t have the capital or personnel to run a warehouse that consistently meets all of Amazon’s stringent requirements. Therefore, using 3PL services offering FBA warehousing is the way to go.
FBA warehousing services play a critical role in the FBA ecosystem by:
- Offering predictably priced bulk storage services: You pay for storage per unit/bin/pallet, making it easy for even small FBA businesses to benefit from world-class storage infrastructure.
- Receiving shipments from suppliers on your behalf: To receive shipments from suppliers, you need a reliable address with offloading tools. FBA warehouses take such burdens off your hands.
- Ensuring order fulfillment: You must always have sufficient shipping-ready inventory, especially when you want to boost seasonal sales on Amazon. FBA warehouses give you an inventory buffer, making this possible.
- Helping keep costs down: Amazon fulfillment centers are not designed for bulk storage. You’ll face storage limits and high storage fees. Using FBA warehouses for storage helps keep costs down.
- Allowing you to take advantage of bulk discounts: Suppliers often give price breaks based on order quantities. An FBA warehouse gives you the storage capacity to take advantage of bulk discounts.
Also, because of the scale of operations of the typical FBA warehouse, many of them offer custom Amazon inventory management software to help you have complete visibility of your inventory data, including real-time inventory levels.
Factors to Consider in Selecting 3PL Services in the USA for Amazon
Several 3PL companies exist in the United States, each offering a mix of services tailored to specific business needs.
When evaluating whether a 3PL provider is right for you, you want to have the following factors in mind:
- Warehouse distance to FBA fulfillment centers: The distance to Amazon fulfillment centers will determine shipment times and transportation costs. The closer a 3PL warehouse is to an Amazon fulfillment center, the better.
- Amazon FBA Compliance record: Non-compliance with FBA inventory requirements will lead to delays and additional fees. You want a 3PL service with established systems and controls to ensure high compliance rates.
- Storage, processing, and transportation costs: Warehousing and product processing costs will determine your final product prices and profit margins. You want to keep costs low to be competitive on Amazon and protect your margins.
- Range of FBA services: You want all FBA services under one roof to increase efficiency and reduce costs. Your chosen Amazon 3PL service should be able to receive inventory from suppliers on your behalf, inspect for defects, package products, label them, arrange for transportation to an Amazon warehouse, and manage Amazon FBA returns.
- Allowance for scalability: The 3PL service should be big enough to support rapid expansion. If you plan to expand to markets outside the United States, such as Europe, Mexico, or Canada, you should go for a 3PL company with warehouses in those markets.
- Technology integration: Your selected provider’s software should integrate with your inventory management tools to help you fully visualize your inventory data, including the quantity on hand, outbound shipments, and adjustments due to defects, damage, and FBA returns.
Ultimately, the best 3PL company is one that can meet your unique business needs. Evaluate your current and future needs to make an informed decision.
How to Build Effective 3PL Partnerships
A long, beneficial partnership with a 3PL company depends on your ability to build and manage the relationship.
Below are some valuable tips on how to build effective 3PL partnerships.
- Use inventory forecasting tools: Constant stockouts or overstocking that lead to the need to ask for concessions from the 3PL can strain your relationship. Employ inventory forecasting best practices so you know exactly how much inventory you need.
- Set clear expectations from the start: You want clarity on key issues, such as how your products will be labeled, how they should be stored (especially if they are perishable), and the quality of packing.
- Be an effective communicator: Effective communication is essential to any relationship. You want to foster open communication, provide helpful feedback that can lead to better service, and reply to all communications from the 3PL promptly.
A 3PL partnership should be mutually beneficial. 3PLs provide a valuable service to Amazon sellers, and you pay good money in exchange. Nonetheless, you can provide more than money by being easy to work with and offering meaningful feedback that can help improve operations.
Frequently Asked Questions (FAQs)
Looking for more information about 3PL for Amazon FBA? Find answers to some of the commonly asked questions below:
What is a 3PL Warehouse?
A 3PL warehouse is an inventory storage and management facility operated by a third party.
If you don’t want to commit resources to leasing or building a warehousing facility, you can use a 3PL warehouse to store, process, and manage inventory. You’ll be sharing the 3PL warehouse’s resources with other businesses.
What is the Difference Between FBA Warehousing and Third-Party Fulfillment Companies?
FBA warehousing companies’ core offering is bulk inventory storage services. Many offer add-on services such as quality control and FBA product prep. They also arrange for transportation to FBA fulfillment centers, with final order fulfillment being handled by Amazon itself.
On the other hand, third-party fulfillment companies offer order fulfillment as a core service. They process and deliver orders to your customers directly. Some of these third-party fulfillment companies also offer bulk inventory storage services.
How Can 3PL Partners Help with Amazon Fulfillment?
3PL partners offering FBA services receive inventory from suppliers, prep them according to Amazon’s guidelines, and store them in shipping-ready condition, ready for deployment to Amazon fulfillment centers when needed.
Further, 3PLs can handle returns management, which is an unavoidable part of selling on Amazon. They can process and restock returns in sellable condition and dispose of or donate unsellable returns.
Conclusion
Amazon sellers outsourcing non-core FBA functions have a tremendous competitive advantage on the platform.
3PL for Amazon FBA makes outsourcing logistics functions easy and efficient. They also give small sellers who don’t have significant capital a fighting chance, as they can access world-class logistics infrastructure from the start.
Given their significant benefits, consider taking advantage of reasonably-priced third-party FBA services to improve operations.
For instance, if you’d like to outsource FBA reimbursement claims management, you can sign up with Getida. We specialize in auditing Seller accounts to identify FBA reimbursement opportunities.
Our experts will also file the claims for reimbursements on your behalf, and the first $400 in successful reimbursements will be free of charge.
