Starting a business entails making the right choices in production and shipment of goods. Over the years, a lot of analysis of 3PL vs dropshipping has surfaced. Some entrepreneurs still need help making their decisions well. This post analyzes the strength and weaknesses of the two.
What is 3PL?
The 3PL means a third party logistic. The third-party logistics has the duty of distributing, warehousing, and delivering orders on behalf of businesses using their services. In the 3PL, clients outsource to get their demands fulfilled. The client drops a bulky set of goods at the 3PL company’s warehouse, and the 3PL receives the goods to their customers once there is an order.
What is Dropshipping?
Dropshipping is a fulfillment method where an entrepreneur does not keep any goods in his store. Once the entrepreneur gets an order, he orders from the product’s manufacturer to get it shipped directly to the customers. This supply chain can be said to be cheaper and best for small scale businesses.
Strengths Of 3PL
There are some specific areas in which 3PL is strong and has more advantages than dropshipping.
It Saves Time And Energy:Hiring a reliable 3PL keeps your mind at rest by getting your orders fulfilled for you. A reliable 3PL will give the customers faster services and help you save your energy from possible hassles of packaging and shipping orders.
It Reduces Shipping Costs:3PL companies usually work for a lot of businesses. The outsourced company will ensure a reduction in shopping costs due to the bulk of orders for shipment. Individuals take advantage of the competitive shipping prices 3PL charge for shipping.
Expertise:3PL companies have expertise in the packaging, sealing, and shipping orders. It helps customers grow trust for the brands they help.
Reduces Operating Costs:Operating a 3PL supply chain saves operating costs, such as rent for warehousing, staffing, and exorbitant shipping fees.
Weaknesses of 3PL
- You might risk sharing personal data with the 3PL companies.
- It can be expensive to operate
Strengths Of Dropshipping
Dropshipping has certain features that are noticeably different from the 3PL;
It Requires Very Little Capital:This type of supply chain, the manufacturer is responsible for packaging costs, staffing, and shipment. Dropshipping makes it easier to start as it involves little to no capital.
Fewer Risks and Investment: The amount of risk associated with dropshipping is significantly lesser.
Flexibility:Dropshipping is so convenient. You don’t have to own a physical store or website. You can fulfill orders from anywhere without spending time processing orders.
Weaknesses of Dropshipping
- You will have very little control over the goods you sell.
- Only retailers can use it.
- You have very little control over the quality of goods.
- It can only be used successfully by small businesses.
Choosing between the two supply chains solely depends on the entrepreneur. Large scale businesses will not be able to use dropshipping conveniently but must rely on a 3PL to fulfill their orders.