Hey guys, this is Neil Waterhouse. On last week’s video, Leigh Lacava
left a comment saying “Hi Neil, thank you for your insights, however, for a newbie like me it would be helpful if you would explain terms like 3PL and not assume everyone knows what that is. I assume it is a third party shipper? Not sure what the L stands for.” Well My apologies Leigh for not explaining what a 3PL was in the video so here now is the explanation of exactly what a 3PL is and also, why many small eBay sellers as well as larger eBay sellers are now choosing to use 3PLs. choosing to use 3PLs. 3PL is an acronym for “third party logistics”. In other words, you are using a third-party
to handle your logistics. The term “logistics” in the industry refers to the warehousing and shipping of your inventory to your customers to fulfil the customers orders. In the past, this service was normally reserved only for large companies however over the last few years there has been a ton of new 3PLs entering the
market, which has increased the competition tenfold. A lot of very very small home businesses are taking advantage of using third-party
logistics as there are many many advantages. By the way, another name used in the industry for third-party logistics companies is “fulfilment” houses. In other words, a company which “fulfils”
customer orders, for you. This is how a 3PL/ fulfilment company works. Let’s say you have say 20 widgets in your
garage and you have these listed on eBay. If you are “not” using a 3PL and you are using the local postal system, Every time one sells, you have to wrap up
one widget, drive to the post office, stand in a queue and then finally post the item. As you grow, you can get the postal companies and couriers to come to your house. Instead, if you choose to use a 3PL, you simply send the 20 widgets to your chosen
3 PL, and they warehouse the 20 widgets for you. Every time one sells you simply forward the name and address of
your customer and they do the rest. They pick the item, wrap it for you and ship it for you direct to your customer. Most 3PLs have accounts with all the major shipping companies and the postal service and because of their volume they can normally
offer discounted rates. which is normally cheaper than a small eBay seller can do. Obviously the first question that comes up
now is how much does it cost for you to use a
3PL as supposed to doing it yourself? The costs vary of course depending on the
size of your products and also the volume that you send out. And the only way to get an exact cost is to the contact 3PLs requesting a quotation based on what you sell and how often you sell them. Always get three quotes from three different
3PL companies. As a rough guide, warehousing costs from $2.50 per pallet. The pallets are 1 foot 5 meters high But obviously the more volume you have , the cheaper it is. And then there is the picking fee, wrapping fee and then the cost of the courier. Yes this can mount up however, 3PLs normally have very good rates with shipping companies and they send, simply as they send several parcels everyday. And this savings can offset the costs of the warehousing and packing. As well, there are a lot of other savings
using 3 PLs. As you grow your eBay business, you’ll start needing to bring in staff to
pack and of course if you’re using a 3PL, you will not need to bring in packing staff. As anybody who employs staff knows, there are a lot of additional costs and headaches with employing staff. Insurance, superannuates, sick days, holidays blah blah blah. Just these alone can be enough to consider using a 3PL. Also, as eBay businesses grow, storage quickly becomes a problem. By using a 3PL, it is very simple to scale
up and down as inventory levels able to flow. You no longer ever need to get a warehouse. If I start from scratch again, I wouldn’t get a warehouse. When using a 3PL, you only pay for the
space you use. Another huge bonus of using 3PLs is you can very easily outsource the labour to manage it. By manage, I mean copying the names and addresses of your customers from eBay to the 3PL. You can then go one step further and use software to automatically send the details of each sale to the 3 PL so it is fully automated. Another advantage of using a 3PL is you can get all your orders from your suppliers send direct to your 3 PL so you no longer have to stay home waiting for couriers to
arrive. By combining low cost outsourced labour and a 3PL, you can automate the whole logistics part of your business which is a massive timesaver and it also enables you to live anywhere as you do not require any inventory or staff
in your house. When choosing a 3 PL, I highly recommend you use one which is central within your country in respect to where the majority of the population is. For example in Australia, Sydney is the most central area based on population. The majority of orders come from Sydney, Brisbane
and Melbourne. This way, if your inventory is warehoused
in Sydney, the cost of shipping to your customers is
the lowest, which gives you an edge. When looking for a 3PL in Sydney, the cheapest ones are normally always just out of the city i.e. for Sydney, the
western suburbs. This is due to the fact the cost of real estate is much lower on the outskirts of the city as opposed to the coast and the savings can be passed on to you. In the USA, UK, Europe and the rest of the
world, we use Amazon as our 3PL. Amazon is of course another huge marketplace to sell your goods however, Amazon is also
a brilliant 3 PL. Amazon has over 400 fulfilment houses scattered all over the world. FBA is the term used by Amazon. FBA means, it’s an acronym for”fulfilment by Amazon”. Well Leigh, I hope that has answered your
question. That’s all for this week. If you are watching this video anywhere else besides my blog, please come on over to Neil Waterhouse.com, that’s where the goodies are, that’s where the action is. Please give me a thumbs up or a thumbs down. Please leave a comment below, it would be
great to hear your thoughts, I always read all the comments and I always do my best to reply to all of them. Please click on the share buttons below, everybody
loves a share. Until next week guys, list more, sell more, this is Neil Waterhouse