Having a reliable third-party logistics provider (3PL) is vital for maintaining a smooth and efficient supply chain for any growing ecommerce business. A 3PL provider takes charge of warehousing, transportation, and delivery, so you can focus on the countless other aspects of running an online brand.
Choosing the right 3PL partner should not be taken lightly. It can significantly impact your business, affecting everything from customer satisfaction to your bottom line. An optimal 3PL partner should not only make financial sense but should ensure a seamless fulfillment process that bolsters your brand reputation and meets shoppers’ high expectations.
Whether you’re a seasoned ecommerce veteran or a newbie in the world of online retail, learn the eleven most crucial factors to consider when choosing a 3PL provider. Your ultimate goal should be to find a partner that not only meets your logistical needs but also contributes to your long-term growth and success.
1. Aligning Shipping, Packaging, and Marketing Strategies
Choosing the right third-party logistics (3PL) provider involves more than just logistics; it also includes aligning with your shipping, packaging, and marketing priorities. This alignment is crucial for maintaining brand consistency and improving customer satisfaction.
For instance, if you run a business that sells luxury goods, it’s essential to partner with a 3PL provider that can offer high-end packaging and shipping services. This collaboration enhances the brand’s premium image and reinforces customer perception of its value.
Conversely, a misalignment in these areas can be detrimental to both sales and the overall customer experience. Imagine an ecommerce business advocating for eco-friendly practices while collaborating with a 3PL company that uses non-recyclable packaging materials. Such inconsistency could discourage environmentally conscious customers from making purchases, leading to lost sales.
When trying to pick the right ecommerce fulfillment company, the initial consultation is a crucial time to voice your concerns and align your vision for the logistics process. Discuss custom packaging for products or product personalization offerings like Personalized-to-Consumer (P2C) fulfillment. Whether it’s ensuring your customer data platform can easily integrate with their fulfillment technology or offering call center services to cover additional customer support, always come ready for your consultation with a list of requirements you need to meet so your partnership is successful.
2. Evaluating Flexibility and Integrations
Choosing a new 3PL isn’t always a smooth move. Migrating your inventory can take 1-2 months and integrating your Order Management System (OMS) with your new partner’s Warehouse Management System (WMS) isn’t always as easy as advertised. OWD has a propriety WMS that is much more flexible than out-of-the-box warehouse management systems which can lead to issues during integration. Not only should your new partner be able to handle fluctuations in volume or changes in product lines, but they should also have the capacity to integrate seamlessly with your existing systems or platforms. This cross-functional integration can maximize the use of your data, reveal new ways to save on fulfillment costs, and save you a ton of money.
Consider the case of a leading ecommerce brand that partnered with a highly adaptable 3PL provider. The 3PL was able to integrate its system with the client’s ecommerce platform, ensuring real-time inventory updates and accurate order tracking information. This level of integration improved operational efficiency and provided a seamless customer experience by enabling efficient handling of calls, chats, and emails through call center services. Additionally, when the client launched a new product line, the flexible 3PL partner was able to adjust its fulfillment processes to accommodate these changes swiftly.
This scenario highlights the critical role of flexibility and integration capabilities in a 3PL partnership. When evaluating potential partners, ask about their experience in handling changing business needs and their ability to integrate with different systems or platforms.
3. Look for a Proven Track Record and Credible Experience
Selecting the right 3PL is crucial for navigating the rapidly changing landscape of ecommerce. With the industry’s constant evolution, the value of experience cannot be overstated. Newer 3PLs often lack a proven track record, making it challenging for them to adapt quickly to new developments or troubleshoot complex issues. They may not have the experience or fulfillment network in place to help you lower costs, ship orders quicker, and meet your customers’ high expectations.
Since 1994, OWD has not only witnessed but also contributed to the growth of ecommerce, spearheading advancements in technology and fulfillment methodologies that have set industry standards.
Here’s why experience should be a top priority when choosing your 3PL partner:
- Problem-Solving Prowess: Seasoned 3PLs have the infrastructure, platform, and team to improve your fulfillment operations and find practical ways to overcome your logistics hurdles. (Hear from Amber Fullerton, OWD’s Chief Customer Officer, as she reflects on her 15 years of experience working with a 3PL.)
- Regulatory Knowledge: Established 3PLs can anticipate and manage risks, reducing the likelihood of operational disruptions. Partnering with an experienced provider is essential if you are expanding into global operations because they are on top of the ever-changing laws and customs practices that impact your international operations.
- Scalability: Experienced 3PL partners can scale operations up or down based on your business needs, offering flexibility as your business evolves.
- Relationship Network: Long-standing 3PLs have extensive networks, including relationships with carriers and other partners, which can lead to better rates and smoother operations.
4. Extensive Fulfillment Network
Opting for a 3PL with a comprehensive global and national fulfillment network is not just an operational choice—it’s a strategic imperative. 3PLs with an extensive fulfillment network will allow you to ship products faster to your customers and lower fulfillment costs.
OWD exemplifies this by offering a variety of flexible shipping options, including same-day fulfillment, multiple shipping methods, and flat-rate shipping. With three fulfillment centers in the United States—located in California, South Dakota, and Ohio—OWD reaches 99% of the U.S. population within two days.
The Advantage of Multiple Locations:
- Speedy Delivery: Proximity to major markets through various warehouses translates into faster shipping times.
- Multiple Locations Mean Agility: Having multiple fulfillment centers across different regions can help streamline operations, reduce shipping costs, and improve delivery times. It also provides a safety net in case of disruptions or natural disasters in one location.
- Flexibility in Operations: A 3PL with facilities spread across various regions can quickly shift resources and operations to different locations based on market demands or operational challenges, providing a resilient supply chain.
More than half (54%) of US shoppers abandon online shopping baskets because of delivery costs, and nearly a quarter (24%) of shoppers have canceled orders due to slow delivery speeds. Make sure to partner with an experienced 3PL with multiple fulfillment centers to offer two-day or even same-day shipping without spending a fortune.
5. The Significance of Reputation for Cost Savings and Network Solutions
Choosing a reputable 3PL isn’t just for show. It’s a smart move that can bring significant cost savings and better network solutions. A well-respected 3PL has the power to negotiate lower shipping rates, thanks to its strong relationships with carriers. You can ensure quicker order fulfillment and improved delivery times by partnering with a 3PL with a wide distribution center network. This can lead to higher customer retention rates, positive reviews, and ultimately, increased sales.
Outsourcing your logistics to a 3PL allows you to forgo the hefty investment in your distribution center, fulfillment technology, and team. You’ll not only save on a partnership, but it will allow you to focus on other business initiatives, such as product development and marketing. With the burden of logistics management lifted off your shoulders, you can allocate more time and resources to areas that directly impact your business growth.
A growing business requires scalable solutions. A well-established 3PL can provide the infrastructure, technology, and expertise needed to support your expansion plans. Look for a 3PL that offers additional services aligning with fulfillment, such as customer support or product personalization, so your logistics operation is fully integrated and you’ll have fewer partners to manage. Whether you’re entering new markets or experiencing seasonal spikes in demand, a flexible 3PL partner can quickly adapt to your changing needs without compromising efficiency or quality.
6. Ensuring Safety and Security Certifications
When choosing a 3PL partner, it’s important to look beyond their services and costs. You should also prioritize finding a provider with the necessary safety and security certifications. This ensures they are committed to protecting your products and maintaining secure facilities throughout logistics.
A reliable 3PL provider understands the significance of product safety during transportation and takes proactive measures to prevent theft or damage in their warehouses. Here are two key aspects to focus on:
- Product Safety: Every step in the supply chain should prioritize product safety, especially for high-value or fragile items. Implementing a strong safety protocol minimizes product damage risk, leading to lower potential losses and higher customer satisfaction.
- Secure Facilities: The physical security of warehouses is equally important. Having robust security measures in place helps deter potential theft and ensures that your inventory remains protected.
7. Evaluating Customer Service Capabilities, Business Solutions, and Information Systems
In a strong supply chain operation, customer service is crucial. It’s essential to select a 3PL provider like OWD that prioritizes responsive and proactive customer support for their clients and extends these services to handle customer support on behalf of their ecommerce clients.
OWD provides comprehensive support services directly to your customers through phone, email, and live chat, ensuring a seamless experience that upholds your brand’s reputation. Simultaneously, they maintain open lines of communication with their clients, solving problems swiftly and efficiently to keep your operations running smoothly. This dual approach ensures that both you and your customers receive the highest level of service.
OWD has a call center integrated with its fulfillment network and US-based agents handle all customer concerns. They work closely with brand partners to develop scripts that align with each brand’s personality so their agents can speak in an accurate brand voice. They also offer virtual assistance to help you run a more efficient business. Whether it’s chargebacks, returns, or coordinating customer claims, partnering with a 3PL that offers customer support will give your shoppers the ultimate fulfillment experience.
8. Scalability and Customization as Key Considerations
Scalability and customization capabilities are two key factors in selecting the right 3PL partner for your business. It’s important to choose a 3PL provider that can adjust its services based on your business needs. This prevents any issues or problems in your supply chain that can harm your finances or reputation.
Why Scalability Matters
Your chosen 3PL provider should be able to scale services up or down in response to changes in your business size or demand patterns. This flexibility prevents bottlenecks or overextension in your supply chain, which can lead to both financial and reputational damage.
The Value of Customization
Additionally, a partner offering tailored solutions ensures your unique requirements are met. A one-size-fits-all approach may not always serve the best interests of your operations, so a provider who takes time to understand and cater to your specific needs is invaluable.
The Consequences of Ignoring Scalability
For instance, let’s say a mid-sized ecommerce company chose a 3PL provider without considering scalability. As their business grew rapidly, the provider could not handle the increased volume of orders and failed to expand its services accordingly. This resulted in delayed order fulfillment, leading to customer dissatisfaction and damaging the company’s reputation for reliable service. Remember, when it comes to logistics, adaptability is indispensable for long-term growth and success.
9. Assessing Accuracy Rates and Responsiveness to Disruptions
Being precise and timely are two of the most important factors for logistics success:
- Data accuracy rates: This refers to how reliable and correct your inventory information is. When your data accuracy is high, you can confidently manage your stock levels and fulfill orders without any issues. Logistics companies with a sophisticated WMS can help guide your merchandising strategies while helping to manage expenses.
- Responsiveness to disruptions: This refers to how well a logistics partner can adapt and handle unexpected events that can disrupt the supply chain, such as natural disasters or labor strikes. A logistics provider’s ability to respond quickly and effectively to such disruptions can mitigate risks and ensure minimal disruptions to your operations.
Why Data Accuracy Matters
High data accuracy ensures that your business has a reliable understanding of available stock, resulting in smooth order processing and customer satisfaction. Here’s why it’s important:
- Avoiding mis-stocks: If your inventory data is inaccurate, there’s a higher chance of mistakenly showing products as available when they’re actually out of stock. This can lead to dissatisfied customers and lost sales.
- Preventing back orders: Back orders occur when you accept orders for items that are currently out of stock. This can happen if your inventory data hasn’t been updated in real time, causing customer delays and frustration.
- Minimizing lost sales: When customers find out that the products they ordered are no longer available, they might choose to cancel their order or look for alternatives elsewhere. This can result in lost sales opportunities for your business.
The Role of Contingency Plans in Maintaining Service Levels
Unpredictable events like natural disasters or labor strikes can really mess up supply chains. It’s important to have a 3PL partner who is ready for anything. This means they should have plans ready to handle both problems and sudden opportunities.
For example, imagine an influencer posts a video of your product and it goes viral, causing a huge spike in orders. A good 3PL partner can quickly manage this surge by bringing in more inventory fast, adding staff, and approving overtime. This helps make sure your products are stocked and orders are shipped out quickly, keeping customers happy during busy times.
Whether it’s a challenging event like a strike or a positive one like a sales spike, a capable 3PL partner should be able to adjust fast. They need to be able to speed up their processes or grow their capacity quickly to keep your supply chain running smoothly.
With the right plans in place, businesses can reduce the impact of disruptions and keep serving their customers, no matter what happens.
10. Leveraging Enterprise-level Technology and IT Support
Choosing a 3PL partner with a strong technology stack and comprehensive IT support ensures your supply chain runs smoothly. A capable 3PL partner should have the following key technological features:
- Warehouse Management Software (WMS): This helps with effective inventory management and improves the efficiency of picking and packing processes.
- Real-Time Tracking Tools: These tools offer visibility into your logistics operations, allowing you to track shipments and monitor inventory levels accurately.
- Automation Technologies: By using automation, fulfillment services can be faster and more accurate, reducing the chances of human error.
- Integration Capabilities: It’s important for a 3PL partner to seamlessly connect with your existing systems such as ERPs to ensure smooth data synchronization.
Having advanced systems is not only crucial for optimizing operations but also essential for quickly adapting to market changes and maintaining uninterrupted service. Keep an eye out for innovative solutions like AI-powered analytics for demand forecasting or IoT devices for monitoring cargo conditions; these are signs of a forward-thinking 3PL partner that prioritizes the future success of your supply chain.
11. The Advantage of Fulfillment Solutions Over In-house Logistics Management
Choosing between outsourced fulfillment solutions versus in-house logistics is a critical decision. Outsourcing fulfillment to a specialized 3PL provider can offer substantial cost savings through shared resources and expertise. It also allows you to concentrate on core business activities, leaving logistics in the hands of experienced professionals.
Addressing Concerns about Outsourcing
It’s natural for businesses to be concerned about outsourcing their supply chain processes. Common misconceptions include the fear of losing control over key operations or compromising service quality. However, partnering with a reputable 3PL can actually enhance control and visibility, thanks to state-of-the-art technologies and dedicated account management.
Collaboration for Success
The right 3PL partner will work closely with your team, ensuring seamless integration and smooth operations, all while safeguarding your brand reputation and customer satisfaction levels. So, it’s not about relinquishing control but rather about gaining an extended team of logistics experts committed to your success.
Selecting the right 3PL partner is crucial for efficient supply chain management. Your business thrives when logistics operations are smooth, allowing you to focus on growth and innovation. As mentioned earlier, finding a 3PL that aligns with your shipping, packaging, and marketing strategies is important to maintain brand consistency and ensure customer satisfaction.
Key Considerations:
- Flexibility, Technology, and Adaptability: Evaluate potential 3PLs based on their ability to adjust to your changing needs, integrate with your existing systems, and leverage technology for improved visibility and efficiency.
- Industry Experience and Warehouse Network: Look for a 3PL with knowledge and expertise in your specific industry and a well-established network of strategically located warehouses. This can greatly help manage inventory effectively and speed up order fulfillment.
- Cost-Effective Shipping and Network Optimization: A reputable 3PL should have the bargaining power to negotiate competitive shipping rates on your behalf and provide access to a wide range of transportation options. This can help you optimize your logistics costs while ensuring timely deliveries.
- Safety and Security: Verify that your potential 3PL partner has proper certifications and measures in place to maintain safety and security standards for your products throughout the supply chain.
- Customer Service Excellence and Value-Added Services: Consider the level of customer support offered by the 3PL and any additional services they can provide such as reverse logistics or value-added packaging solutions. Partnering with 3PLs that offer customer support, product personalization, and other capabilities is best so you can opt into additional services without switching fulfillment providers.
It’s also important to keep in mind two specific factors:
- Scalability and Customization: Assess whether the 3PL has the capability to scale their operations alongside your business growth, while still being able to tailor their services according to your unique requirements.
- Inventory Management Accuracy and Disruption Response: Look for evidence of the 3PL’s ability to maintain accurate inventory records and swiftly respond to any disruptions or changes in demand. These capabilities directly impact customer satisfaction and retention.
Before making your final decision, here are two additional steps you can take:
- Seek Recommendations: Reach out to other businesses in your industry or professional network and ask for their recommendations or experiences with different 3PL providers. This can provide valuable insights and help you narrow down your options. Review potential 3PLs’ customer testimonials and 3rd party directories to find the right partner.
- Conduct In-Depth Consultations: Schedule meetings or calls with the top contenders on your list to discuss your specific requirements, ask detailed questions about their capabilities and processes, and assess whether there is a good fit between your organizations. We offer a free initial consultation to assess your business needs, review your current logistics operation, and discuss ways to reduce fulfillment expenses and extend your capabilities with offerings such as P2C fulfillment.
Ultimately, the ideal partnership should strike a balance between cost-effectiveness, service quality, and utilization of advanced technologies – all working together to drive your business forward.
Remember, the 3PL you choose will essentially become an extension of your own company. Therefore, establishing a strong working relationship based on collaboration and communication is key to continuously improving supply chain performance.
