In this article I will describe 3PL (Third Party Logistics) and tell you why you should hire one, what should you be aware of, the recent 3PL Facebook Online Boom, 3PL vs. Oberlo and the Pros and Cons of using 3PLs. I will also tell you about the difference between Legit,/Non-Legit 3PLs, and a few cultural insights regarding China.
What are 3PLs or Third-Party Logistics, and why many businesses opt for using their services?
When it comes to dropshipping, a 3PL or Third-Party Logistics, also known as ‘sourcing agent’ is a company or an individual that fulfills your store’s orders for you. They’re in charge of purchasing inventory, processing purchase orders, packing them, and shipping them to your customers. Same as Oberlo and the Aliexpress sellers, but you do it through a real person. These agents (like us, for example) normally use an ERP software that connects to your store and keeps track of your orders, inventory and is also connected to the 3PLs Shipping and Logistics account. They’re very common within China as well. Five years ago it was really hard to find one, especially a trustworthy one.*When working with shipping companies in China such as YunExpress or Yanwen, if you are to use their services you need to create an account (face to face with one of their agents) in order to process orders, get tracking numbers, and pay for the shipping.
Why would you need a 3PL?
Many stores scale their sales to a point that Aliexpress service is not good nor fast enough. They need faster responses, transparency, and finding better suppliers that also give customization options such as private labeling and brand packaging. What a 3PL does is contact suppliers directly within the Chinese market while Aliexpress is most likely to be just a reseller who makes a margin on the product and the shipping costs. You might need a 3PL because 30 days shipping to the USA is not normal, despite many seller’s conformities with it. You might need a 3PL because Aliexpress might be answering your questions too late, or not addressing any of your issues… perhaps not even understanding what you’re saying.
Aliexpress stores, 3PLs, and Oberlo:
China’s dependence on exports has made it extremely easy for anyone to open a copy/paste store and while you need a business license to open an Aliexpress store, the lack of regulations regarding this allows anyone to borrow a business license and go forward with it. Aliexpress does not demand accountability for stock numbers, nor the store’s reviews. Even more, you can purchase these reviews within the Chinese market. More often than not you will hear or see dropshipping store owners complaining about the service, lack of communication, orders not arriving, or simply being scammed out of their money. Many 3PLs and/or sourcing agents are also accused of this and very rightly so.
Just like you can (and many others who have) developed a good or bad relationship with an Aliexpress seller, the same can happen with a 3PL or Sourcing Agent.
3PLs, or as I mentioned earlier, ‘Sourcing Agents’ have literally plagued Facebook dropshipping communities in 2020 since lots of people are not able to come to china to do business due to the Covid Situation and also because there is a high demand for personalized service, something that Aliexpress fails to provide more often than not. Many of these agents work in the same way as the Aliexpress stores, many of them are the same Aliexpress store owners. The problem with these people on Facebook is that they don’t provide any value to the communities and spam every single post with the same message “Hello, Friend. We are the best agent in China we have warehouses all around the world and we ship to the USA in three days” absolutely absent from responding to whatever was posted or trying to help with any issues. And these comments and spam as I call it, come from profiles with fake names and fake pictures. I can only wonder how many people have trusted in these strangers and later get scammed out of their money. Some of these people do work well, though. We, for example, look to provide value in each and every of our answers, with being helpful as our priority. *Below I wrote about Legit and Non-Legit Agents.
Oberlo is a very useful tool that Shopify made to help stores fulfill their orders directly from Aliexpress. However, it is made in Canada under the naive assumption that Chinese businesses and business practices are transparent and regulated when they are actually, in their majority, very far from being anything close to that. In all fairness though, China has been cracking down on some of these practices.
*It’s obvious here but not so obvious to those in the west: When I say “Chinese” I mean Chinese from within the People’s Republic of China and not your nice first-world suburb neighbors in North America or Europe who were born in the same country as you and share your same values. This still does not mean there aren’t professional and well-prepared business owners in China, otherwise, they wouldn’t have made all the money they’ve made in the last 30 years or so.
3PL vs. Oberlo
You can get the best of both by importing your product pictures and descriptions with Oberlo but actually fulfilling them with your agent. Oberlo simplifies that part, like, if you own a store and you are using woocommerce, loading products can take ages. But not with the aforementioned. As many of you might already know, working with Aliexpress past the friendly chat with a supplier can be a real nightmare and I wouldn’t recommend it to anyone. Even Chinese here in China will be saying “don’t use aliexpress, too unprofessional”. It all comes down to the fact that you can’t have cheap, good and fast all together; you can only have two of them. Cheap and fast is not good, good and fast is not cheap, and cheap and good is not fast.
Oberlo is good for starters but as you scale your business you will need more detail of what happens with your product.
If you use a 3PL or sourcing agency, it might seem a little too complex at the beginning but trust me, in the long run, it’s for your own good. DO NOT trust agencies that say “yes just pay we take care”. Lots of things happen from the moment a product leaves a supplier until it reaches its final destination and if you are a professional businessman, you deserve to know what it is.
What’s a legit 3PL and what is not?
Even though all legit 3PLs have websites, not all of them will provide the service you need. See, cultural and linguistic barriers can become a recurrent problem. Chinese common business practice is to purchase everything… that is, the website, the reviews, the case studies, and even their videos with the friendly guy who says this company is awesome but you can clearly see he’s reading a script. And they do all that to show you how cool and awesome they are but that doesn’t mean they do the job you paid them to do. It is just the way it’s done here in China, a big restaurant with a big door with all the lights and fireworks, but sometimes the food is as good as the tiny restaurant next door.
Then you have all the spammers on facebook. For someone like me (I’ll tell you more if you keep reading) it’s impossible to be noticed and offer proper help when each and every single post in the facebook dropshipping communities gets spammed by thirty or forty comments from fake profiles.
Then there are the truly legit ones… how can I notice, you might ask. Focus on their communication level. If they’re addressing your concerns instead of pushing to get you to pay their fees, then they might be the right one. Communication is key in this business and more often than not, lack thereof is the dealbreaker.
I have been living in China for over 12 years (I’m not Chinese, nor Asian), and making business with Chinese, in general terms, can be a blessing or a curse… Why? Well, it’s simple: In China, Scamming people is not frowned upon, but instead, being scammed is. The awesomeness that chinese have implemented to all things convenient is making locals more aware of what good customer service is, and it will get better, but things take time to happen in China. This is not just my opinion, the Chinese also say this, in fact, their natural reaction to any good business offer is “this is a scam”. However, in the last few decades, they’ve come a long long way into becoming more professional with their business practices, so there are lots of transparent suppliers and resellers, and now, agents too.