Ecommerce 3PL: 10 Factors to consider when choosing your perfect fulfillment provider
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A good Ecommerce 3PL (Third-party logistics) provider, also known as a 3PL will play a strategic role in the growth of your company. Taking time to assess your needs to ensure you find the right partner will have a profound impact on costs, service levels, account management, growth and experience your customers receive post-click. A good-fit 3PL provider is often difficult to find. The best way to find a good fit is to take some time to consider your needs and priorities as a business. In the end, choosing a third-party logistics provider can have a profound impact on the costs, customer service, and supply chain of your organization for many years to come.
In order to start your search successfully, you’ll have to do some introspection on your part. The following three questions are crucial:
- Your company’s priorities in terms of shipping, packaging, customer experience, and marketing at the moment?
- In three years, will these priorities still be the same, or will they change?
- How important is it for you to work with a fulfillment partner who understands eCommerce?
Transportation and warehousing are no longer sufficient definitions of third-party logistics. Modern 3PL companies offer a variety of services in order to meet today’s manufacturers’ demands. It doesn’t matter if they specialize in a specific vertical or offer logistics generalist services. For the most part, fulfillment partners will tout their sophisticated operations, close relationships with carriers, and industry expertise. Therefore, you should consider these characteristics to be foundational, not differences.
Which eCommerce 3PL Is Best?
Choosing the right 3PL depends on several factors, including your industry, market, and location.
In order to evaluate a 3PL partner’s capabilities, you need to know whether they can handle your changing needs, whether they’re kitting, multi-channel fulfillment (DTC, B2B, FBA, or other marketplaces), reverse logistics, subscription boxes, etc.
Several 3PLs may perform well in one service area but not in another. If you want to make real-time, data-driven decisions at the click of a button, do your research and check that your provider has seamless and pre-built integration capabilities with your eCommerce platform of choice.
3PL providers are often judged based on their experience level and ability to provide high-quality services to their partners. An experienced provider in logistics can adapt to new market innovations with ease since the industry is constantly changing. The provider has likely been piloting or leading many of these innovations.
Fulfillment providers should have a reputation for providing outstanding services and have staked out their place in the supply chain market.
The fulfillment and logistics industry considers the reputation of a 3PL to be everything. It’s not just about the satisfaction of the customer (though that’s the most important metric), but about the satisfaction of the vendors, carriers, and employees.
It is important to partner with a well-respected logistics provider since reputable 3PLs will draw on their network, team, and industry relationships to solve any logistics issues. Ask for customer references and spend quality time interviewing each of them – don’t rush this important and often overlooked part of the evaluation process.
4. Security and safety
An organization’s stance on the safety of its operations and the transport of goods and materials speaks volumes about them. A 3PL must stay up to date with the latest initiatives to remain compliant with safety regulations that are constantly changing within the industry.
Security is also vital to a fulfillment partner beyond the safeguarding of assets and the safety of employees. It is not just important but essential to protect sensitive financial data. Make sure that all applicable certifications are current including PCI, FDA, and DEA. If your product MSDS includes hazardous material make sure the provider is certified in HAZMAT shipping as well.
A third-party logistics provider’s service and attention to your account are crucial to your relationship. 3PL companies that invest in customer service realize that quality account management and service excellence are important to manufacturers, brands, and customers.
Fast and straightforward problem identification and resolution are hallmarks of an effective 3PL. A good 3PL will proactively look for ways to reduce cost, ensure inventory accuracy, and optimize your post-click customer experience.
Is your 3PL scalable? While scaling is easier when you have the right partner, it may seem obvious. When a 3PL is already operating at scale, can the 3PL handle the number of products, recalls, and customizing that your operation requires? Ask about the current capacity available in their network and what plans they have to expand in the near future.
Depending on the third-party logistics service, customization can mean different things. If you want your customer experience to be customized right down to the packing slip, you will need a fulfillment company to handle the packaging and shipping. It would be best if you had a fulfillment partner skilled at working in a multi-channel capacity, integrating seamlessly with your supply chain in eCommerce, business-to-business or retail distribution scenarios.
The right 3PL will act as an invisible extension of your brand, providing your customers with the same attention to detail and personal service they expect from you.
Your eCommerce 3PL puts in place internal processes known as Standard Operating Procedures (or SOPs) that run the day-to-day operations of their facility. These SOPs will ultimately deliver the quality of their service including same-day fulfillment, inventory accuracy, receiving timing, and return processing. Customers have high expectations when ordering online and service precision from your 3PL will create issues like overselling that causes backorder, low long-term value (LTV) from a poor experience, and higher return rates.
Ask your 3PL partner about their SOPs, Warehouse Management System, and service level accuracy rates before deciding who to partner with. You may want to look elsewhere if they aren’t using the latest technology or their accuracy rates aren’t greater than 99.9%.
9. Response time
It is important to measure responsiveness both during normal fulfillment operations and when issues occur. You should ask these questions when researching and comparing different 3PLs:
- What are their strategies for handling disruptions in their supply chains?
- What are their response times to changes in order volume, destination, or inventory levels?
- When a product is recalled, how can they track it?
If you obtain answers to these questions, it will give you valuable insight into the type of company with which you are dealing.
10. Applied & Updated Technology
Technology is the key to logistics sophistication. Its success depends entirely on it, so you need to choose a 3PL that has enterprise-level technology to smooth out the entire fulfillment process from ordering to delivering.
Be sure your 3PL integrates with your order management system, provides you with business intelligence, and has top-notch support.
Scale for Growth
If you’re a fast-growing eCommerce brand that can use expert help in scaling your supply chain, Fulfillment IQ can help! Our eCommerce fulfillment and supply chain expertise put us at the front of the pack. We offer a broad range of services ranging from supply chain transformation, design strategy, development of customer experience platforms, to implementation and optimization services.
Today to see how we can help your eCommerce business.
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