What is the difference between 2PL and 3PL?

If you are an e-commerce business owner, sourcing, packaging, warehousing, inventory management and forecasting, order fulfillment, freight forwarding, transportation and delivery of goods to your customers are an integral part of your operations.

But, as you grow your business, you may find that it is no longer possible to fulfill your customers’ orders with your own resources. At this point, you will need a tailor-made fulfillment solution that can manage parts of your process or the entire supply chain for your customers; for many companies this means outsourcing 3PL services(third-party logistics services).

However, if your organization needs a service provider or distributor who can perform some of the in-house logistics processes, such as deliveries using their transport, this is a 2PL service (logistics services part two).

It’s a good idea to research the important differences between 2PL and 3PL and find out what kind of logistics your business would need.

2PL services

2PL services, as mentioned above, have all the transport facilities and infrastructure necessary to meet the logistics needs of their customers. Here, no third party service is mandated and they alone cover all the service needs of their customers.

2PL service providers are mostly asset-based carriers and they rent or charter their own means of transport, such as trucks, ships or airlines. In other words, they are logistics providers who only transport goods to a certain part of the supply chain. They also provide international transport.

2PL services are suitable if you want one segment of your supply chain, such as transportation, to be managed externally, but you prefer to manage other parts of the supply chain, such as storage, packaging, etc., internally.

  • Advantages: Different modes of transport available
  • Cons: Not a full service logistics solution

3PL services

Companies that need a a service capable of taking charge of all the logistics of their supply chain require 3PL service. 3PL services are suitable for you if you want to focus more on other key areas such as business development, sales, marketing and other processes.

Examples of 3PL are freight forwarders and courier companies.

Advantages of 3PL

  • 3PLs are specialists in customs clearance and freight forwarding, rights management and other issues while trying to make complicated rules for different countries.
  • 3PLs are experts when it comes to negotiating prices based on order volume and frequency
  • Using a 3PL allows you to manage the ups and downs of your business without having to commit to capital.
  • 3PL’s extensive distribution network allows you to benefit from fast shipping, no matter where the order is sent.
  • With an international 3PL, you have the ability to enter new markets without having to invest in other infrastructure and manpower.
  • You don’t have to worry about unexpected situations as the 3PL service is responsible for making other arrangements to fulfill your orders as quickly as possible.
  • If you are a beginner, it would be best to use the services of 3PL to meet your logistical needs.
  • Save money on inventory holding costs.

Wondering if your business needs to use 3PL services or 2PL service providers? As a business owner, understanding how both work is essential in order to get the most out of your ecommerce execution strategy and to grow and scale your business.

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