Why Use a 3PL?

Like many small-business owners, Hanna and Mark Lim gave little thought to fulfillment until they had no choice.

For the husband-and-wife owners of Lollacup, a maker of specially designed sippy cups, the moment of truth came about 36 hours after a segment about their company was shown in April 2012 on “Shark Tank,” the ABC reality show. At the time, the Lims, parents of young daughters, were handling their own fulfillment — the packing and shipping of products ordered online — from their Pasadena, Calif., living room.

After the show was broadcast and their daily orders doubled to 800, the Lims decided something had to change. “We had boxes piled everywhere,” Ms. Lim said. “We were begging friends and family to come over and help, bribing them with wine, and we still couldn’t keep up.”

It was then that they made a choice common among early-stage e-commerce vendors: they decided to outsource their orders to a third-party logistics provider, known in the business as a 3PL, in exchange for a percentage of revenue. In this case, that was about 3.5 percent of each retail sale and 7 percent of each wholesale order, not including delivery costs.

Reprinted from NYTimes 09-25-2013

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