The Ultimate Guide to Choosing the Best 3PLs for Small Businesses

Selecting the right third-party logistics (3PL) partner for your small business can often feel like my experience of buying my first smartphone. Years ago, when I was fresh out of college, I was looking for my first smartphone to enter the business world. Faced with a myriad of choices, I was initially drawn to the most feature-packed, high-end models of the most popular brand (Apple). They were all the rage, boasting the latest technology and capabilities that, admittedly, were impressive.

However, after careful consideration, I realized that many of these features were more than I needed for my daily use. Furthermore, as someone fresh out of college, I didn’t have the budget for the high-end models available. They came with a hefty price tag and complexities that didn't necessarily enhance my user experience. It was then that I found the perfect fit: a mid-range smartphone that not only met my essential needs but was also user-friendly and cost-effective. It was tailored to my lifestyle, without the overwhelming bells and whistles.

This experience mirrors the process small businesses go through when choosing a 3PL partner. Like being tempted by the high-end and fancy brand smartphones, it's easy to gravitate towards large 3PL providers with their extensive list of services and impressive client portfolios.

However, for a small business or startup, these options may not be the most practical choice. They could offer more than is necessary, leading to unnecessary expenses and operational complexities. The key is to find a specialized 3PL partner, much like choosing the right smartphone, that aligns perfectly with the specific needs and scale of your business: a partner that offers the essential services you need, the flexibility to adapt to your growth, and the simplicity to integrate seamlessly into your operations.

Why Small Businesses Need a Specialized 3PL

Now another consideration when navigating finding the best 3PL for your small business, it’s important to remember that one size does not fit all. The distinction between specialized and generalized 3PL services becomes evident when considering the unique demands of smaller operations.

Here's a deeper look into why specialized 3PLs are often a better fit for small businesses compared to their generalized counterparts:

Tailored 3PLs vs. One-Size-Fits-All Approach

Specialized 3PLs: They offer bespoke solutions that align with the specific needs of small businesses. This could include handling unique product types, providing storage solutions for smaller inventory, or offering flexible pricing structures. Their services are often more adaptable to the ebb and flow of small business demands.

Generalized 3PLs: Typically, these providers are structured to serve large-scale operations, often leading to a one-size-fits-all approach. This can be less than ideal for small businesses, as they might end up paying for services they don't need or missing out on the specific services they do need.

Niche Expertise

Specialized 3PLs: They often possess expertise in specific industries or types of 3PL services. For small businesses in niche markets or with unique products, this expertise can be invaluable for ensuring the right handling and shipping methods.

Generalized 3PLs: While they may have a broad range of knowledge, they might lack the depth of expertise in specific areas, potentially leading to less optimized logistics solutions for niche small businesses.

Scalability and Flexibility

Specialized 3PLs: Understanding the growth trajectory of small businesses, specialized 3PLs are adept at scaling their services up or down. They are more likely to accommodate seasonal fluctuations or sudden changes in order volumes, which are common in small businesses.

Generalized 3PLs: Larger 3PL providers may not be as flexible when it comes to scalability. They are often geared towards steady, high-volume demands and might not be as responsive to the variable needs of a smaller business.

Cost-Effectiveness

Specialized 3PLs: They often provide more cost-effective solutions for small businesses. This includes lower minimum requirements and pricing models that are more favorable for smaller order volumes, thus avoiding the financial strain of over-committing resources.

Generalized 3PLs: With a focus on larger clients, generalized 3PLs might have higher minimum requirements and less flexible pricing models. Small businesses may find these terms financially burdensome, especially when order volumes are low or unpredictable.

Reasons to Transition from In-House Warehousing to Outsourcing to a 3PL

For small business or startup owners, there comes a pivotal moment when you need to decide whether to continue handling logistics in-house or to partner with a 3PL provider. This decision is crucial and can significantly impact your business's efficiency, scalability, and overall success.

Here are key factors to consider when determining if it's time to make the transition to a 3PL partner:

Scaling Your Small Business

Growth Limitations: If your business is growing at a pace where you're struggling to keep up with order fulfillment, warehousing, or distribution, it's a clear sign that you might need a 3PL. Rapid growth can quickly overwhelm in-house capabilities, leading to delays, errors, and customer dissatisfaction.

Focus on Core Competencies: As your business expands, your core team should focus on growth strategies and core activities like product development and marketing. If logistics is consuming a significant portion of your time and resources, consider a 3PL to streamline order fulfillment services and take this load off your shoulders.

Managing Fluctuating Demand

Seasonal Spikes: If your brand experiences seasonal surges like many ecommerce businesses do, managing these fluctuations and forecasting demand without external support can be challenging. A 3PL can efficiently handle these ups and downs, ensuring that you meet customer demand without overinvesting in warehousing resources during off-peak times.

Fulfillment Service Cost Considerations

Analyzing Costs: Compare the costs of in-house logistics—including storage, labor, shipping rates, technology, and inventory value—with the fees of a 3PL. Often, the economies of scale that a 3PL offers can lead to significant cost savings like cheaper and faster shipping, especially when factoring in the avoidance of long-term leases and staffing flexibility.

Expanding in New Geographic Locations

Domestic Expansion: If you're considering expanding your market reach so that you can fulfill orders cheaper and more efficiently, a 3PL can be instrumental. They often have the necessary experience, resources, and network to navigate the complexities of order management and inventory management, while also negating the cost to set up new warehouse locations in the desired location. Furthermore, if your inventory is strategically located in different areas of the country, the decreased distance between the warehouse and order destination will reduce shipping costs and ship time.

Enhancing Customer Experience

Efficiency and Speed: In today's fast-paced market, consumers expect quick and reliable delivery with updates made in real-time. If meeting these expectations is becoming a challenge, a 3PL can offer advanced logistics solutions to create excellent customer service through faster, more reliable delivery services.

The 4 Best 3PL Providers for Small Businesses

Of the thousands of 3PLs around the country, here are four third-party logistics providers that specialize in catering to the unique needs of smaller enterprises.

1. Hatch Ecommerce Fulfillment

Hatch Ecommerce Fulfillment is a great choice for small businesses, especially those selling on ecommerce platforms. Their strength lies in their ability to offer scalable solutions, making them ideal for businesses experiencing rapid growth or seasonal fluctuations. They provide a comprehensive range of services, from warehousing to reverse logistics, and their technology integration of shopping carts like Shopify to their warehouse management system (WMS) software makes inventory management of your business’ SKUs a breeze. Their focus on customer experience and tailored solutions makes them a go-to for small businesses looking for a growth partner in logistics.  

2. KPM Logistics Partners

KPM Logistics Partners is known for its personalized service. This provider shines in its ability to offer custom logistics solutions tailored to the specific needs of each small business. They are not just a fulfillment company but a fulfillment partner, offering in-depth consultations and support. Their attention to detail and commitment to understanding the unique challenges of their clients set them apart, making them ideal for small businesses that value a more personalized approach.

3. Viable Shipping

Viable Shipping excels in its cost-effectiveness and efficiency. This is particularly beneficial for small businesses operating on tighter budgets. They offer competitive pricing without compromising on service quality, ensuring that even the smallest businesses can afford top-tier logistics services. With a strong carrier network (FedEx, UPS, and USPS) and extensive fulfillment services like kitting, labeling, and freight forwarding, Viable Shipping ensures timely and reliable delivery in both domestic and international shipping, which is crucial for maintaining customer satisfaction and trust.

4. APS Fulfillment

APS Fulfillment works with businesses of all sizes and offers a wide array of 3PL services with a focus on speed and accuracy. They are renowned for their rapid order processing and dispatch times, which is essential for businesses that prioritize quick delivery times using UPS, USPS, DHL, and FedEx. Their state-of-the-art warehousing technology and strategic location ensure that inventory is managed efficiently and that products are shipped out swiftly. For startups looking to impress their customers with fast delivery, APS Fulfillment is an excellent choice.

Find Your Ideal 3PL Fit with Extensiv

While Hatch Ecommerce Fulfillment, Viable Shipping, APS Fulfillment, and KPM Logistics Partners stand out for their fulfillment solution offerings tailored to small businesses, it's important to remember that the world of third-party logistics is vast and diverse. To ensure you find the perfect match for your business's specific needs, I highly recommend exploring Extensiv’s Fulfillment Marketplace.

This comprehensive fulfillment network offers a wide range of fulfillment providers, each with its strengths and specialties. By delving into this marketplace, you can compare various options, read reviews, and get a clearer understanding of what each 3PL can do for your logistics needs.

Remember, the right logistics partner can be a game-changer for your business growth and customer satisfaction. So, take your time, research well, and choose a 3PL that aligns perfectly with your business objectives and values.

Need help finding the perfect 3PL for your business? Talk to one of Extensiv’s experts today for advice on developing the right strategy for outsourcing your logistics operations.