What is 3PL (Third Party Logistics)? Benefits, Process, and Services Explained

According to the CAGR 2024-2028 projections, the 3PL (Third Party Logistics) industry is anticipated to grow at 2.39% annually and eventually reach a market volume of US$1.44 trillion by 2028.

Wondering the reason behind the tremendous growth of this sector? 

3PL partners help businesses with many facilities, such as storage, packaging, deliveries and more. Additionally, most eCommerce sellers and MSMEs do not even actively want to get involved in the logistics of their business. As a result, they look for a third party to handle the supply chain for them. 

Today, we will understand how it is done and how it can benefit an eCommerce business. Also, we will explore the 7 best 3PL companies available in the market for you to pick from. 

Core Services of a 3PL 

Before you start your search for 3PL party logistics, it is important to understand how they can help you and your business. Let’s explore the core services that a 3PL partner provides:

Warehousing

Established businesses with huge inventories require some sort of warehousing. However, only some people own or are ready to rent a place on their own in order to do so. This is where a 3PL company puts forward a helping hand. 

These companies have tie-ups or, at times, self-owned warehouses that they provide to their clients as part of their logistics support. 

Inventory Management

Logistics providers ensure that they offer inventory management and warehousing so that you don’t have to worry about it. While doing so, these partners advise you on supply chain management, restocking needs, and ensuring standard seasonal inventory availability. 

As a result, their enterprise helps a business ensure timely deliveries and reduce the risk of order cancellations. 

Order Picking

Once an order is placed, it reaches the fulfilment centre. This is where a concerned person picks up the idea that has been ordered from the inventory. This process of bringing together everything ordered in one place so that it can all be packed and shipped is order picking. 

Shipment Packaging 

After the item is picked from the inventory, it is time to pack the shipment and prepare it for shipment. A third-party logistics partner helps sellers choose the best product packaging. The motive here is not only to ensure that the product is secure but also to make it presentable and prevent any unnecessary weight discrepancies. 

Order Tracking

Order tracking is the backbone of the logistics process. Not just the buyer but even the seller is required to know the whereabouts of the shipment. This is where 3PL partners offer branded tracking pages, such as RapidShyp’s Xperience Suite. This is a place where a seller can know where the parcel has reached and also use it as a mini-website for his business. 

Benefits of 3PL on eCommerce Businesses

3PL significantly affects eCommerce businesses. They not only assist them in the delegation but also offer several other services. 

With these services, your business can reach greater heights. Let’s explore the benefits of having a 3PL company on board:

Resource Saving

A 3PL partner works with many clients in one go and, therefore, has bulk shipment deliveries available. This helps them leverage better shipping rates than an individual might get. As a result, this helps reduce costs, which can be used in other parts of the business to grow. 

Along with that, 3PL also helps in saving a lot of time as it takes care of your supply chain. This gives the seller an advantage in focusing on the rest of the business operations and functions. 

Enhanced Customer Experience 

Customers today demand faster, effortless deliveries of their orders. This is why 3PL partners now offer same-day and next-day delivery options. With such services, you can have a satisfied customer base. 

Along with faster deliveries, 3PL also offer branded communication via several channels, key account managers to handle any escalations, and a support team available 24/7. 

Reverse Logistics Management

One of the biggest struggles of an eCommerce business is handling the reverse logistics of a shipment. This is when a customer decides to return a parcel after it has been delivered. 3PL companies offer reverse logistics management. From picking up the parcel from the buyer’s location to delivering it at the warehouse, they handle it all. 

With experts in place, you don’t have to worry about getting a parcel back and handling its finances.

Experts At Work

There is no doubt that you are giving the best that you have to offer. However, handling logistics can be a little tricky and overwhelming at times. 3PL experts come with years of experience and expertise in shipping. 

Onboarding a 3PL can let you focus on other deliverables for your company rather than worrying about shipments. 

3PL vs 4PL 

eCommerce businesses often face the choice between 3PL and 4PL providers. While both offer valuable services, they differ significantly in scope, approach, and integration level. Understanding these differences is crucial for companies to make an informed decision. Let’s explore the key characteristics of 3PL and 4PL services.

3PL (Third-Party Logistics):

1. 3PL providers focus on specific logistics functions such as warehousing, transportation, or distribution.

2. They offer operational logistics services, handling the physical aspects of supply chain management.

3. 3PL companies often own assets like warehouses, trucks, and other transportation equipment.

4. The relationship with clients is typically transactional and service-focused.

5. They use technology primarily for managing their specific operations and services.

6. 3PL providers usually operate on a fee-for-service cost structure.

7. They are ideal for businesses looking to outsource specific logistics functions without giving up control of their entire supply chain.

4PL (Fourth-Party Logistics):

1. 4PL providers manage the entire supply chain, including overseeing 3PL providers.

2. They offer strategic oversight and coordination of the complete logistics process.

3. 4PL companies are usually asset-light, focusing on information management and coordination rather than owning physical assets.

4. They act as strategic partners, deeply integrated with the client’s business operations.

5. 4PL providers leverage advanced technology for end-to-end supply chain visibility and optimization.

6. Their cost structure may include performance-based pricing in addition to service fees.

7. They are suitable for businesses seeking comprehensive supply chain management and strategic logistics expertise.

Choosing between 3PL and 4PL depends on your business needs, scale, and long-term strategy. While 3PL offers targeted logistics solutions, 4PL provides comprehensive supply chain management. 

5 Best 3PL Companies in India

India’s logistics sector has several notable players, each offering unique strengths in the 3PL space. Let’s explore 5 key players in the Indian logistics market:

1. Delhivery

Delhivery, founded in 2011, is a technology-first logistics company that has rapidly become a major player in India’s logistics sector. The company offers a wide range of services, including express parcel delivery, PTL and TL freight, and cross-border and supply chain services. 

Delhivery primarily serves the e-commerce, consumer goods, and retail industries, leveraging its extensive network to optimize operations. With its pan-India coverage and strong last-mile delivery capabilities, Delhivery has established itself as a reliable partner for eCommerce businesses of all sizes.

2. Ekart

Ekart, the logistics arm of Flipkart, one of India’s largest e-commerce platforms, has become a powerhouse in e-commerce fulfilment and last-mile delivery. Catering primarily to online retailers and marketplaces, Ekart has developed an infrastructure to handle the complexities of e-commerce logistics. 

The company leverages advanced technology to track and ensure efficient and timely deliveries. With its widespread presence across urban and rural India, Ekart has played a crucial role in expanding e-commerce reach throughout the country.

3. BlueDart

BlueDart, a division of the global DHL Group, has been a part of India’s logistics industry since 1983. The company provides a comprehensive suite of services, including air and ground express, freight forwarding, and supply chain solutions. 

BlueDart serves various industries, including healthcare, automotive, and consumer electronics, and is renowned for its reliable, time-definite delivery services. With an extensive domestic network and international shipping capabilities, BlueDart continues to be a trusted name in both B2B and B2C logistics.

4. Shadowfax

Shadowfax, a tech-enabled logistics platform founded in 2015, has quickly made a name for itself in the last-mile delivery space. Specializing in deliveries for e-commerce, food, and grocery sectors, Shadowfax is known for its innovative crowdsourced delivery model and quick turnaround times. 

The company utilizes AI and machine learning for efficient route planning, ensuring optimal resource utilization. While Shadowfax has a strong presence in urban areas, it is rapidly expanding into tier-2 and tier-3 cities, contributing to the growth of e-commerce in smaller Indian towns.

5. RapidShyp

RapidShyp, a venture of OM Logistics, is an eCommerce shipping company helping D2C and MSMEs with their logistics needs. Operating in more than 26,000+ pin codes across India, partnering with 10+ local and national courier partners, RapidShyp takes care of all your logistics needs.  

It offers AI-based carrier allocation for optimized shipping, COD remittance, branded communication, real-time order tracking, and a lot more. It also provides 1-step integration with marketplaces such as Shopify, WooCommerce, and Unicommerce. 

While each of these logistics providers offers valuable services, navigating multiple partnerships can be complex and time-consuming. RapidShyp, on the other hand, offers a unique advantage by partnering with numerous courier services. This allows us to provide a comprehensive, one-stop solution that combines the strengths of multiple providers, streamlining your logistics needs and offering unparalleled flexibility and options.

Wrapping It Up

As the eCommerce space shifts, efficient logistics have become a critical differentiator for success. We’ve explored how 3PL providers offer a range of essential services, from warehousing to reverse logistics, bringing significant benefits like resource optimization and enhanced customer experiences to businesses of all sizes.

Today, the market boasts several top-tier 3PL companies, each with its own unique strengths. From tech-driven solutions to extensive networks and specialized services, these providers cater to diverse business needs across various industries.

Picking the right 3PL provider depends on specific business requirements, scale, and long-term objectives. However, a comprehensive logistics solution that integrates multiple services can offer unparalleled advantages.

Ultimately, the right logistics strategy can be a powerful catalyst for growth and customer satisfaction. By carefully selecting a partner that aligns with your needs and offers multiple options, businesses can transform their supply chain into a true competitive advantage. In the world of e-commerce and retail, efficient logistics isn’t just a necessity; it’s an opportunity to excel.