Understanding the Differences Between Drop-Shipping and Third-Party Logistics
Building Your E-Commerce Shipping Business Without Your Own Warehouse
If you’re starting an e-commerce business or looking to build one you already own, then you’re likely considering whether you should purchase and store your own inventory in a leased warehouse, or if you should choose an alternative method of warehousing and shipping logistics.
If you’re looking for autonomy over your products, then there’s an obvious choice between third-party logistics and drop-shipping. When you understand both, you can make a smart decision that not only builds your brand, but also makes managing your supply chain as simple and affordable as possible.
What is Third-Party Logistics?
Also called third-party fulfillment, third-party logistics, or 3PL, this process outsources your warehousing, picking, packing, and shipping of e-commerce orders. Third-party logistics utilizes a separate company’s storage facility and team to handle all the non-brand and business development aspects of your business.
Working with a 3PL company, you still oversee your inventory ordering; the 3PL company handles everything else, including receiving and storing, however. This partnership allows you to keep a large, bulk inventory without having to deal with the hassle of storage, packing, or fulfillment.
A shipping logistics company prioritizes your customers’ orders and can shorten shipping times and decrease overall shipping costs thanks to their expertise and bulk shipping service buys. You also do not need to rent warehouse space to store your inventory or overfill your existing office space with your stock. All you need is to focus on marketing your products and getting them visible to your target demographics. But you do maintain ownership of the products you sell.
What is Drop-Shipping?
Drop-shipping is an alternative fulfillment process that is a little more complex than 3PL, but can be helpful to those just starting out in the e-commerce space. In drop-shipping, the seller offers items for sale online, but hasn’t yet purchased them for their inventory. Instead, they join forces with a manufacturer who delivers the products directly to customers.
This is another outsourcing option that cuts out building and storing inventory. The manufacturer, in turn, can charge a higher wholesale cost to the seller, and the seller can still meet their margins. In short, the seller – that’s you – performs all marketing and customer service functions with zero handle on inventory, packing, or shipping.
Although drop-shipping can jump-start your business without much financial backing, you have no say in how shipments are handled and must take the fall for any issues that may arise during the shipping process.
Shipping Pilot Handles Your Inventory Logistics
Before you opt to start your e-commerce company with drop-shipping because you don’t have a warehouse, consider the fact that there’s a far better way to handle inventory, picking, packing, and distribution.
Shipping Pilot offers the expertise, staff, and warehouse space you need to manage your inventory and process and fulfill e-commerce orders. And if you sell monthly subscription boxes, Shipping Pilot can even handle kitting for you, too.
For a fraction of the cost of maintaining a warehouse lease and hiring a team, Shipping Pilot will take care of it all so you can focus on business and brand development.
Visit our contact page to request more information.