Whether you are a brick and mortar retail store or an e-commerce business, managing inventory is a fundamental part of your operations. In fact, it’s the single largest asset that your business is actively promoting, managing and selling.

In the process of acquiring or renting your own warehouse, it’s definitely challenging to manage your orders effectively when you don’t have an order fulfilment setup. Think of the additional overheads and labor costs that you’ll have to incur! This is especially true for businesses who are new to the market or businesses who want to expand into new geographical territories. At this stage, you might want to consider outsourcing your inventory management to a 3PL service provider. This service is also known as third-party logistics.


The term 3PL stands for “Third Party Logistics” it’s an outsourced provider or “third party” logistics service company that handles part or sometimes all of the supply chain management function for another company. These companies offer any number of services in the domain of supply chain and logistics. It includes but not limited to warehousing, transportation, picking and packing, order fulfilment, inventory forecasting and freight forwarding.

A 3PL company provides specialized integrated transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

Note that as different 3PL providers specializes in different areas; choose one who is experienced with your inventory and geographical location. For example, some 3PL providers have cold rooms to store products that require to be kept under a certain temperature. Some 3PL companies specialize in medical equipment while others in retail or fragile goods.

Having a strong understanding of you 3PL service provider before making a decision allows you to select the ideal company that knows how to handle your products. Whether you are a small eCommerce business or a large retail outlet, these concepts will certainly help you with making a right decision.


Because of the various available options, choosing the best 3PL service provider can be an overwhelming process. Here are some tips, you should check before hiring any freight service provider.


Do some research before making your decision about a third party logistic company – Once you find a few companies that meet your needs, request a free quote from each one. Most customers will be happy to give you a quote without pressure. It’s always a good idea to get some sample quotes so you can compare the different costs involved.


Ask questions about their insurance policies as well as the property damage policy of the third party logistic company you are considering. Make sure you know what insurance coverage you will have if anything happens to your shipment. For instance having fire insurance would definitely help you sleep in peace knowing that your products are insured from such risks.


You want to hire a company that knows what they are doing. They should be able to provide you with a written log shipping contract and a written invoice on time and under budget. Always make sure that your shipment is insured, and that your shipment is paid for in full. Also, check if they have a good track record online. This can be done easily via reviews on Google or other platforms.

Factors to consider when engaging a 3PL service provider:


Technology is revolutionizing the 3PL industry year to year, from order processing to tracking. An effective 3PL service provider must have a strong technical setup by which they can keep you updated via their logistics tracking system. With online logistics management systems that are accessible anywhere, clients can receive daily reports or check the progress of their packages.

Clients can also select their delivery dates using logistics technology. This cuts down on liaising, allowing a smoother process without the need to communicate via email or phone all the time. A good logistics management system ensures that all your stock is accounted for when it reaches the 3PL warehouse all the way to your destination, whether this is your own retail outlets, or your client’s address.


A good 3PL service provider would keep checks and balances while executing their 3PL services for your company. They would have to conduct a regular check of their warehouse to monitor your inventory on a regular basis. This ensures that the actual inventory matches with the stock recorded in their system. In this way, your clients feel trusted and secure that their personal information is safe. Make sure, you regularly update your warehouse inventory so that your client has a clear picture of their stocks, deliveries and productions.


Hence, outsourcing your logistics to a 3PL service provider could an efficient solution for your business. Since you are able to scale your business according to your inventory size, versus renting or purchasing a warehouse which adds to your fixed overheads. This scalability is what gives 3PL companies their competitive edge.

As mentioned above, you are able to optimize your business with experts in the field by hiring a good 3PL service provider that understands your geography and products well. Choosing the wrong 3PL provider could cause greater inconvenience as you’ll have to migrate your products out of their warehouse.