E-retailers spent $15.3 billion on third-party logistics firms in 2018, almost 11% of their entire $141.6 billion in logistics costs—things like shipping and warehousing that affect the flow of merchandise through a supply chain and to the consumer—for the year, according to Armstrong & Associates Inc., a 3PL consulting and market research firm. Armstrong expects spending on 3PLs to increase at a 14.4% compound annual growth rate through 2022.
That growth stems from retailers calculating that it makes sense to buy rather than build such capabilities. Outsourcing logistics to 3PLs can help startups, direct-to-consumer brands and other merchants get a quick start in ecommerce without the expense and risk of setting up warehouses of their own and doing their own fulfillment.
However, 3PLs aren’t cheap. And using a 3PL requires relinquishing control over part your business.
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