Hey guys, this is Neil Waterhouse.
On last week's video, Leigh Lacava left a comment saying
"Hi Neil, thank you for your insights,
however, for a newbie like me
it would be helpful if you would explain terms
like 3PL and not assume everyone knows what that is.
I assume it is a third party shipper?
Not sure what the L stands for."
Well My apologies Leigh for not explaining
what a 3PL was in the video
so here now is the explanation of
exactly what a 3PL is and also,
why many small eBay sellers
as well as larger eBay sellers
are now choosing to use 3PLs.
choosing to use 3PLs.
3PL is an acronym for "third party logistics".
In other words, you are using a third-party to handle your logistics.
The term "logistics" in the industry
refers to the warehousing and shipping
of your inventory to your customers to fulfil the customers orders.
In the past, this service was normally reserved only
for large companies however
over the last few years there has been
a ton of new 3PLs entering the market,
which has increased the competition tenfold.
A lot of very very small home businesses
are taking advantage of using third-party logistics
as there are many many advantages.
By the way, another name used in the industry
for third-party logistics companies is "fulfilment" houses.
In other words, a company which "fulfils" customer orders, for you.
This is how a 3PL/ fulfilment company works.
Let's say you have say 20 widgets in your garage
and you have these listed on eBay.
If you are "not" using a 3PL
and you are using the local postal system,
Every time one sells, you have to wrap up one widget,
drive to the post office, stand in a queue
and then finally post the item.
As you grow, you can get the postal companies
and couriers to come to your house.
Instead, if you choose to use a 3PL,
you simply send the 20 widgets to your chosen 3 PL,
and they warehouse the 20 widgets for you.
Every time one sells
you simply forward the name and address of your customer
and they do the rest.
They pick the item, wrap it for you
and ship it for you direct to your customer.
Most 3PLs have accounts with all
the major shipping companies
and the postal service and
because of their volume they can normally offer discounted rates.
which is normally cheaper than a small eBay seller can do.
Obviously the first question that comes up now
is how much does it cost for you to use a 3PL as supposed to doing it yourself?
The costs vary of course depending on the size of your products
and also the volume that you send out.
And the only way to get an exact cost
is to the contact 3PLs
requesting a quotation based on
what you sell and how often you sell them.
Always get three quotes from three different 3PL companies.
As a rough guide, warehousing costs
from $2.50 per pallet. The pallets are 1 foot 5 meters high
But obviously the more volume you have , the cheaper it is.
And then there is the picking fee,
wrapping fee and then the cost of the courier.
Yes this can mount up however,
3PLs normally have very good rates
with shipping companies
and they send, simply as they send several parcels everyday.
And this savings can offset
the costs of the warehousing and packing.
As well, there are a lot of other savings using 3 PLs.
As you grow your eBay business,
you'll start needing to bring in staff to pack
and of course if you're using a 3PL,
you will not need to bring in packing staff.
As anybody who employs staff knows,
there are a lot of additional costs
and headaches with employing staff.
Insurance, superannuates, sick days, holidays blah blah blah.
Just these alone can be enough to consider using a 3PL.
Also, as eBay businesses grow, storage quickly becomes a problem.
By using a 3PL, it is very simple to scale up and down
as inventory levels able to flow.
You no longer ever need to get a warehouse.
If I start from scratch again, I wouldn't get a warehouse.
When using a 3PL, you only pay for the space you use.
Another huge bonus of using 3PLs is
you can very easily outsource the labour to manage it.
By manage, I mean copying the names and addresses
of your customers from eBay to the 3PL.
You can then go one step further
and use software to automatically send the details
of each sale to the 3 PL so it is fully automated.
Another advantage of using a 3PL is
you can get all your orders from your suppliers
send direct to your 3 PL so you no longer
have to stay home waiting for couriers to arrive.
By combining low cost outsourced labour and a 3PL,
you can automate the whole logistics part
of your business which is a massive timesaver
and it also enables you to live anywhere
as you do not require any inventory or staff in your house.
When choosing a 3 PL, I highly recommend
you use one which is central within your country
in respect to where the majority of the population is.
For example in Australia,
Sydney is the most central area based on population.
The majority of orders come from Sydney, Brisbane and Melbourne.
This way, if your inventory is warehoused in Sydney,
the cost of shipping to your customers is the lowest, which gives you an edge.
When looking for a 3PL in Sydney,
the cheapest ones are normally always
just out of the city i.e. for Sydney, the western suburbs.
This is due to the fact the cost of real estate
is much lower on the outskirts of the city
as opposed to the coast and the savings
can be passed on to you.
In the USA, UK, Europe and the rest of the world,
we use Amazon as our 3PL.
Amazon is of course another huge marketplace
to sell your goods however, Amazon is also a brilliant 3 PL.
Amazon has over 400 fulfilment houses scattered all over the world.
FBA is the term used by Amazon.
FBA means, it's an acronym for"fulfilment by Amazon".
Well Leigh, I hope that has answered your question.
That's all for this week.
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Until next week guys, list more, sell more, this is Neil Waterhouse