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1PL 2PL 3PL and 4PL Logistics, What is the Difference?

Many people ask me what the best solution to their company’s order fulfilment needs are. The answer is always ‘it depends!’. Based on your type of company and its needs, your requirements will vary. This article aims to answer all of your burning questions about which order fulfilment solution is best for you – 1PL, 2PL, 3PL or 4PL logistics. Click through to find out!

Shipping your products to customers is a pretty straightforward process for a small business. You only get a few orders a week, so it’s easy enough to fill them and pop down to the post office to send them out to customers. It’s when your company starts getting bigger that this process can quickly become overwhelming to keep up with. That’s why many eCommerce businesses decide to outsource this side of their operations.

If you’re thinking of outsourcing logistics for your company, there are many considerations to take into account. One of the first, most important decisions to make is whether to go with third-party logistics (3PL) or not. First, you’ll need to find out what the difference is between 1PL, 2PL, 3PL, and 4PL logistics.

What is Outsourced Logistics?

Let’s not overcomplicate it – logistics outsourcing simply refers to finding external experts to deal with the supply chain side of your business. This frees up the time of you and your employees so that you can focus less on admin and more on new product development, marketing and more. It can enable you to spend more time growing your business than completing the day-to-day tasks that go along with logistics or order fulfilment.

How to Choose Between 1PL, 2PL, 3PL and 4PL Logistics?

Choosing the type of logistics that suit your company’s needs will be crucial to your success. You can either spend a great deal of time on shipping your products to customers or let someone else deal with it entirely. If you’ve been wondering what the difference between 2PL and 3PL is or how to decide, you’re in the right place.

1PL Logistics

First party logistics means that you only have one external entity involved in your order fulfilment process – the customer. You are the creator or distributor of the goods you sell, and your company is the one to deliver them to your customer.

This option is best for two very different types of businesses:

  • Those who don’t have many orders yet and can still keep up with the demand. For example, a florist who employs a delivery driver within the company to deliver orders.
  • Those who have gotten so enormous that they can create an entire logistics and freight division, like Amazon, for example.

2PL Logistics

The majority of businesses are already using 2PL logistics to ship their goods. It’s pretty rare for most small businesses to deliver their own products. Instead, they might use Australia Post, FedEx, or another shipping provider.

Now, there’s the customer and the shipping provider – so two other entities involved, hence why it’s called 2PL. This choice is best for when you or your staff still have plenty of time free to spend on fulfilling orders.

3PL Logistics

3PL providers are an excellent choice for eCommerce businesses that are getting too busy to keep on top of all their orders. People choose to outsource to a 3PL company that can pick and pack and fulfil orders.

This option works really well if you have a supplier, as the supplier will simply ship your products to the 3PL provider. They will then be the ones to keep track of orders coming in and fulfilling them for you. This can save you a lot of time and also money spent on storage space, as you will no longer be responsible for housing all of the goods you sell.

There are three parties in this situation; the customer, the shipping provider, and the 3PL logistics company that fulfils the order.

4PL Logistics

Finally, we have 4PL logistics. These companies act as project managers and advisors to create the best supply chain strategy for your business. They may outsource parts of the process, creating a strategy that involves four different entities.

Premium 3PL Services in the Heart of Sydney

Stop debating between 1PL, 2PL, 3PL and 4PL – after reading the above article, hopefully, you should be able to now identify which option makes sense for your business. If you’re interested in 3PL services, Fulfilment Australia aims to offer one of the most comprehensive solutions in Australia.

Sure, we offer pick and pack options, eCommerce fulfilment, and will meet all of your basic needs, but we do so much more than that! We also provide 3PL marketing services; delight your customers with personalised packaging, digital printing, and more. We have graphic designers who can work to create unique materials just for your business – brochures, posters, and logo design are just a few of the things they can do for you!

Even better, we are proud to offer same-day click and collect in the heart of Sydney! Many customers want their goods right now, and we are here to make that happen. Experience more satisfied customers when they can come and pick up their items from our warehouse right after ordering them.

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