Third-Party Shipping: Everything You Need to Know

Mastering the ins and outs of shipping can be overwhelming for new businesses, which is why many opt for third-party shipping. Third-party shipping involves outsourcing the handling and delivery of your products. Reliable third-party shipping services can provide you with access to a broader shipping network, save costs, and provide faster delivery. This article will walk you through some key concepts of third-party shipping, including how it works, its benefits, and its drawbacks.

What Is Third-Party Shipping?

Third-party shipping is a logistics solution where businesses outsource their shipping and delivery processes to reliable third-party logistics (3PL) companies. In addition to shipping, 3PL companies handle storage, inventory management, and order processing. The best third-party shipping services accommodate businesses of all sizes and simplify the order fulfillment process to provide a better experience for customers.

How Does Third-Party Shipping Work?

Outsourcing your shipping to a 3PL service provider is an effective way to manage your brand’s order fulfillment. Here is a step-by-step guide on how third-party shipping works:

Step 1: Inventory Reception

The process starts with a 3PL service provider receiving your products and storing them in their warehouses. They will carefully organize your inventory to ensure that it is easily accessible when the time comes to pick orders. Each item will be tracked in real-time to keep you up-to-date on stock levels. 

Step 2: Order Processing

When a customer places an order, your 3PL service provider will receive the order in their integrated warehousing system. This seamless integration allows them to process orders immediately and reduce delays.

Step 3: Picking and Packing

Warehouse staff will locate the ordered items and pack them carefully, following your brand’s packaging guidelines. Your service provider should use high-quality packing materials and personalized packaging inserts to ensure a memorable unboxing experience.

Step 4: Labeling and Shipping

After packing the products, warehouse staff will create shipping labels for them and have them collected by a shipping carrier. 3PL companies often have partnerships with multiple carriers and can ensure the best routes are selected for fast delivery and affordable pricing.

Step 5: Tracking and Communication

Most 3PL service providers will ensure that you and your customers are provided with real-time updates on delivery status. Some of them will also handle delivery queries to ensure your customers are satisfied.

Key Elements Involved in Third-Party Shipping 

If you’re thinking about outsourcing to a third-party shipping provider, it’s important to have an understanding of the services they offer. Below are some of the key operations these service providers handle:

Warehousing

Third-party shipping companies can provide reliable storage solutions for your products. After hiring them, you won’t need to worry about renting or maintaining a warehouse. They will handle everything related to warehousing using advanced warehouse management software. 

Inventory Management

Most third-party shipping companies use inventory management systems to keep track of existing inventory. This helps them monitor inventory levels in real time and avoid the risk of overstocking or understocking. 

Labeling and Packaging

Third-party shipping companies make sure your products are labeled and packed properly so that they arrive at their destinations safely and on time. They typically offer custom packaging tailored to your brand’s guidelines and sustainable packaging materials designed for environmentally conscious businesses and consumers.

Carrier Selection 

Third-party shipping providers have expertise in finding the best shipping carriers. They choose the most reliable, cost-effective routes to ensure timely delivery to customers.

Delivery Tracking

Most third-party shipping companies will provide tracking solutions for you and your customers. This will allow you to monitor the status of orders and resolve shipping issues quickly. It also keeps your customers informed, which can increase trust in your brand and, ultimately, enhance sales.

Returns Processing

When products are returned, third-party shipping providers can handle them efficiently. They will either restock or dispose of returned goods according to your brand’s return policy and update your inventory to reflect the changes.

Customer Service

Some third-party shipping providers will handle customer queries for you. They can provide customers with clear answers to any questions they may have about shipping and returns and ensure a positive customer experience for increased brand loyalty.

Industries That Can Benefit from Third-Party Shipping

Whether you’re the owner of an established enterprise or a startup, reliable third-party shipping can enable you to scale your business. Here are the main industries that benefit from third-party shipping services:

E-Commerce

Fast, reliable shipping is essential for e-commerce businesses, which is why many of them rely on third-party shipping providers. Third-party shipping providers can handle seasonal spikes in demand and ensure customers get their orders on time with the utmost accuracy. Using third-party shipping services, e-commerce businesses can attain global reach and stay ahead of competitors.

Retail

Retail companies rely on third-party shipping to meet the demand of customers across various purchasing platforms. Third-party shipping providers can integrate with multiple sales channels and provide accurate, efficient order fulfillment. Even for extremely large retailers, 3PLs can manage supply chain operations at affordable prices.

Healthcare

Healthcare businesses use third-party shipping services to deliver medication, medical devices, and supplements on time. Many service providers have temperature-controlled warehouses to store vaccines and other perishable medical products. Healthcare businesses can also ensure compliance with safety standards by outsourcing order fulfillment to reliable 3PL companies with experience handling healthcare products.

Manufacturing 

Third-party shipping providers can handle the storage and shipment of component parts and raw materials used in manufacturing. They can handle heavy items using specialized equipment to ensure safety and protect the items from damage. Suppliers for manufacturing companies can greatly benefit from outsourcing order fulfillment to 3PL companies. 

B2B and B2C

Many business-to-business (B2B) and business-to-customer (B2C) companies prefer third-party shipping services due to their seamless inventory management and delivery. 3PLs have expertise in handling single and bulk shipping with enhanced visibility that ensures buyer satisfaction. In addition, reverse logistics can be made easier by the streamlined approach of a third-party shipping provider. 

Cosmetics and Skincare

Cosmetics and skincare products are fragile and need to be handled with care. Third-party shipping companies can provide personalized packaging solutions to protect fragile products. By outsourcing order fulfillment, beauty brands can focus solely on product development and marketing while a team of experts handles the logistics. 

Benefits of Third-Party Shipping

Choosing third-party shipping offers the following benefits:

• Cost Savings: Outsourcing your shipping helps you eliminate the cost of expensive warehouses and warehousing staff. You only need to pay for the services you choose, which reduces your overhead expenses.
• Scalability: Third-party shipping providers can adjust their operations to accommodate new product lines and spikes in demand.
• Improved Customer Satisfaction: Third-party shipping providers ensure timely and accurate delivery for improved customer satisfaction. Friendly customer service and efficient return handling also contribute to an enhanced customer experience.
• Better Time Management: A third-party shipping company handles logistics so you can focus on other areas of your business, such as product development and marketing. 
• Faster Delivery: Third-party shipping providers have established shipping networks that enable them to provide faster delivery at the most affordable prices. 
• Adaptability: Third-party shipping providers can adapt to unexpected circumstances and minimize their effect on your business. For example, if products are damaged in transit, a 3PL can assume responsibility and provide customers with compensation or a new product. 

Limitations of Third-Party Shipping

Although third-party shipping has a number of benefits, you may face certain challenges if your provider is inexperienced or negligent, including:

• Limited Customization: When it comes to customized packaging and specific delivery needs, third-party shipping may not always align with your brand’s preferences.
• Communication Issues: A lack of transparent communication with third-party shipping staff can delay deliveries and inconvenience your customers. 
• Difficulty Tracking Orders: Some third-party shipping providers may fail to track orders, which detracts from customer satisfaction and negatively impacts your ability to resolve shipping complications. 
• Data Breaches: When partnering with third-party shipping providers, you will need to share sensitive customer data. Poorly protected warehousing systems can be hacked, resulting in a breach of your customers’ privacy. 
• Inconsistent Service Quality: Some third-party shipping providers may not be able to deliver consistent results on an ongoing basis. This can lead to a decrease in customer satisfaction and contribute to dwindling sales.

Third-Party Shipping vs. In-House Shipping

Businesses that use in-house shipping manage their own logistics, whereas businesses that use third-party shipping outsource their logistics to another company. Here are the key differences between third-party shipping and in-house shipping:

• Control: With third-party shipping, you do not have direct control over the way orders are fulfilled. With in-house shipping, you have full authority and can decide on routes, timing, customization, and warehousing protocol.
• Cost-effectiveness: Third-party shipping services are cost-effective since you only pay for the services you require. In-house shipping can be costlier, as you need to invest separately in logistics staff, transport vehicles, and warehouses.
• Scalability: Managing in-house shipping during high-demand seasons requires additional planning and resources. However, third-party shipping service providers can easily adapt to fluctuating order volume and eliminate the need to hire additional staff. 
• Specialization: Third-party shipping providers have the expertise, technology, and connections to optimize order fulfillment for your company. It can take longer to build up the same level of expertise and efficiency when opting for in-house shipping.
• Responsibility: When using in-house shipping, you are responsible for every aspect of order fulfillment. This can be time-consuming and take your attention away from other aspects of your business. With a third-party shipping company, you are not directly responsible for logistics, meaning that you have more time to focus on growing your business. 

When to Use Third-Party Shipping

If the following apply to your business, you should consider outsourcing your shipping services:

• High Order Volume: When your business scales up, managing large amounts of orders can be overwhelming for an in-house logistics team. A third-party shipping company can handle high-volume orders efficiently and ensure your customers receive products on time, even during peak periods.
• International Customer Base: A third-party shipping service can help your business fulfill international orders while maintaining compliance with international shipping regulations. Many of these companies have expertise in global shipping and can enable you to deliver products worldwide with minimal obstacles.
• Seasonal Fluctuations: Third-party shipping service providers have experience handling seasonal spikes in demand. They can ensure timely delivery for your customers to maintain your brand’s reputation.

Let Encore Fulfillment Handle Your Shipping Needs 

Handling the complexities of shipping and logistics can be overwhelming, but the right service provider can make it manageable. Third-party shipping can allow you to focus on business growth by managing every aspect of order fulfillment. Encore Fulfillment provides scalable and innovative third-party shipping services for businesses of all sizes. Our team manages inventory and provides fast, accurate delivery to ensure unparalleled customer satisfaction. Partner with us to streamline your logistics!