If you’re in the business of transportation and logistics, you may be considering starting your own third party logistics (3PL) company. A 3PL is a company that provides service to other businesses, handling all or part of their warehousing and shipping needs.
It’s a growing industry, and there’s good potential for profit in it – but it’s also a very competitive field. You’ll need to have a strong business plan and some experience in the industry before you can hope to succeed.
Here’s a brief overview of what you’ll need to do to start your own 3PL company:
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1. Check Warehousing Demand in Your Area
The first step is to make sure there’s actually a market for your services in your area. The demand for 3PL services can vary widely from place to place, so it’s important to do your research before you invest too much time or money in starting up your company.
You can start by talking to other businesses in your industry and finding out whether they use a 3PL, and if so, whether they’re happy with the service they’re getting.
It’s also a good idea to talk to businesses that don’t currently use third party logistics, and find out why. This will give you some insight into whether there’s a potential market for your services.
If your area is near Amazon Warehouse, your area may have a high warehousing demand because of the high number of e-commerce seller shipments to Amazon Warehouse as FBA. If your area is near a lot of distribution centers for large retailers, there may also be a good market for your services.
2. Learn the Types of Warehousing Services Clients Are Looking For
The next step is to learn about the types of warehousing services that businesses in your area are looking for. Do they need basic storage and shipping? Or do they need more specialized services like order fulfillment or returns processing?
This research will help you determine what type of 3PL company you should start, and what services you should offer. It will also give you some ideas about how to differentiate your company from other 3PLs in your area.
3. How About Competition in Your Region?
It’s important to understand your competition before you start your own 3PL company. What 3PL companies are already operating in your market? What services do they offer? How do their prices compare to what you’re planning to charge?
You’ll need to be able to offer something that sets you apart from the competition, or else you’ll have a hard time attracting customers.
If you see there are many 3PL companies in your area, it’s a good sign that there’s a strong demand for these services. On the other hand, you should worry if it’s hard to find a 3PL company in your location as it could be a sign of a weak market.
4. Differentiate Your Services
Sets you apart from the standard warehousing service already there. It will be price competitive if you just do the same business with others, like standard warehousing of palletized products in racks.
Price is important, but not the only thing. Other things to consider are the quality of your service, your customer service, and your ability to handle special requests or needs that your clients may have.
One way to stand out from the competition is to look for unique and value-added services. And that will be profitable. For example, you could offer 24/7 customer service, or you could offer to pick up and deliver orders on weekends.
Another way to differentiate your company is by offering a unique service that your competitors don’t offer. For example, you could specialize in handling returns for e-commerce businesses, or you could offer storage for hazardous materials.
5. How You Price Your Service and the Way of Charging
Pricing is very crucial to your business. Therefore take a close look at the competition and consider how you’ll charge your services.
Clients may not choose you if your price is a little higher than your competitors if you provide the same standard warehousing service. They will choose you if your price is lower and/or your services are better.
Take a deep look at all the expenses related to offering that warehouse service and then think of a way that is suitable for your service.
There are a few ways you could price your services:
- Charge by the pallet
- Charge by the square footage
- Charge by the type of service provided
You could also charge a monthly or annual fee, or you could offer discounts for long-term contracts.
Another important consideration is how you’ll invoice your clients. Will you invoice them monthly, or will you charge them per order?
6. Do Value-Added Services
To make your company more attractive to potential clients, you could offer value-added services. These are services that go beyond the basic storage and shipping that most 3PL companies offer.
Some examples of value-added services include:
- Order fulfillment
- Returns processing
- Inventory management
- Consolidation service
- Packaging and labeling
- Quality control
These services can help you stand out from the competition and make your company more attractive to potential clients.
Try and think beyond the standard warehousing service will increase your chance of success as a third-party logistics provider.
When you offer unique services that meet the needs of your clients, you’ll be able to differentiate yourself from the competition and attract more business. And don’t forget to pay attention to how you price your services so that you can remain competitive while still making a profit.