How Third Party Logistics (3PL) is disrupting the wholesale distribution model

Our recently published white paper: 5 trends disrupting the wholesale distribution model explores how to create a leaner, more profitable wholesale operation.

Here we look at one of the ideas in the white paper: Third Party Logistics (3PL)

As multi-channel retail expands retailers’ reach, and online commerce continues to break down national and international borders, the wholesale and distribution are having to serve a wider network of customers, more frequently.

In order to address this, an increasing number are outsourcing operational logistics – from warehousing to delivery – in the form of third party logistics (3PLs).

Opting for a 3PL has a number of advantages for wholesale companies. These include:

• Instant access to expertise – working with companies that have years of industry experience and best practice
• Cost-effective – reduces the volume of warehousing space needed, and also the staff and vehicle costs associated with running a distribution network in-house
• No drain on resources – a 3PL can take care of trading logistics such as managing customs regulations and documentation for international deliveries, leaving the wholesaler free to concentrate on building their business

Such is the lure of 3PLs that the standard bearer for customer-centric delivery, Amazon, is increasing investment in its own third party network. In late 2015, analyst Robert W/ Baird & Co created a report outlining the advantages of Amazon expanding its presence in the global 3PL market, warning that the influence of third party logistics on wholesale should not be underestimated.

However, this approach is not flawless. Outsourcing will always mean relinquishing some level of control to an external party, and placing a greater distance between the wholesaler and the product, which isn’t ideal for quality control purposes. It can also involve greater up-front investment.

Do you want the full 5 trends? Click here to download our white paper.