7 Warning Signs to Watch for When Evaluating a 3PL


Successful companies often scale faster than their owners intend them to. When this occurs, it often makes sense to outsource fulfillment and logistics tasks to companies that specialize in handling them. A third-party logistics provider (3PL) helps busy business owners ship their items so they don’t have to. If you are looking to outsource your fulfillment it is imperative that you do your homework and don’t rush into a partnership without thoroughly evaluating your options.

It’s very easy to go wrong by outsourcing a critical need to a company that simply isn’t up to the task. If you experience a sudden spike in sales volume you may find yourself in immediate need of a good 3PL. It’s easy to reach out to whichever 3PL that you first come across. It can be easy to lose control of your business when a bad 3PL takes over the crucial function of fulfillment for your business. So how can you avoid that happening? As it turns out, there are a few warning signs that will help you know what kind of operation a potential logistics partner is capable of handling. Take into account its location, prices, available storage space, track record, types of companies they serve, and many more things in order to make the best decision for your ecommerce fulfillment. It is imperative to be thorough because your 3PL will have a direct effect on customer satisfaction—your 3PL will be the determining factor to the speed and condition that your products arrive. When you do your research, be sure to watch out for the red flags below when evaluating any 3PL that you consider working with. It might save you from making a costly mistake when selecting a 3PL to outsource your fulfillment and logistics to.

Delayed Shipments

Fulfillment has to be fast. A full 63 percent of customers expect three-day shipping. Having a 3PL that drags its feet on such an essential business function can really harm your long-term profitability. This much is plainly clear. What’s not as immediately clear is that delayed shipments indicate much bigger problems. It could be the result of understaffing, inefficient processes, or even growing too quickly. Read your prospective 3PL’s service level agreement (SLA). Make sure they’re promising quick shipment. Ensure that reviews online mention quick, timely shipments. If things go wrong with expected shipping times, you can refer to your SLA to try and remedy the situation.

Poor Customer Service

When you interview a potential 3PL and express an interest in getting a quote, or even signing up for service, they should go out of their way to accommodate you. If they don’t, that should be a red flag and indicator of how they might treat you in the future as a paying client. Without a customer-first attitude there is a good chance that they might also treat orders, or any customization, with little accommodation. You should be looking for a fulfillment partner that makes your life easier, that takes the stress out of logistics. Make sure that your 3PL puts their best foot forward when you are considering their service, as that can be an indicator that is how they approach their business as a whole.

Lack of Communication

Customers have much higher expectations when it comes to what they want to know about products they order. They want to know where their package is, be it through consistent email communication or through tracking numbers. It is imperative that any 3PL that you consider have this ability. On your end of communication, you will probably have questions for your chosen 3PL. Make sure they respond quickly to your inquiries. If they’re not able to quickly answer your questions during the intake process, that is a big warning sign of problems to come down the road.

Complicated Fee Structure

The pricing structure for order fulfillment can be complicated. There is no way to reduce a good deal of the complexity because, in large part, prices are set by the major shipping carriers, such as UPS, FedEx, DHL, as well as smaller regional ones that a 3PL might use. They set their rates based on the size and weight of the packages to be sent. It’s very difficult to provide a specific quote for fulfillment services because of this. This confusion creates opportunities for bad actors to exploit customers. If you are presented with a bill full of fees you don’t understand, that is likely an issue. Fees should be straightforward: account maintenance fees, storage, shipping, and labor. If you order value-added services such as labels, kitting, pick-and-pack, etc., each one should be clearly understandable. Your bill will inevitably have multiple line items, but if there are ones you routinely don’t understand, that could lead to problems.

Bad Reviews

It may seem obvious, but bad reviews are the biggest, easiest-to-spot warning sign of a bad 3PL. Visit websites such as TrustPilot, Google, and Shopify before you make any serious attempt to reach out to a 3PL. Don’t get too caught up in the number of stars alone, though. Read individual reviews and see what went wrong. Stay away from places that don’t have a whole lot of reviews as well. It’s remarkable just how much a simple Google search for company reviews can prevent massive problems in the long run.

Long-Term Contracts

A long time ago, fulfillment used to be an extremely challenging undertaking. Many 3PLs used long-term contracts in order to ensure they had a steady supply of funds to keep their businesses going. In 2021, though, there is no need for this anti-competitive practice. If the 3PL feels the need to lock you in with a contract, there is a reason for that. Long-term contracts can be a warning sign that the 3PL is not financially sound.

Poor Technology

Managing fulfillment is an extremely technology driven process. As such, you will want to be able to monitor your inventory in real-time. You want to have access to tracking numbers and see where specific shipments are. Ideally, you want a great mobile app for all this as well. If a company gives you bad, overly complicated software, that can be a warning sign. Your interactions with the 3PL you choose will largely be through their software platform. If you dislike their software, you will likely come to have problems with the company as well.

Bottom Line

A little bit of research goes a long way. In a world so rich with competing fulfillment companies, you never have to compromise as long as you do your homework. Don’t let warning signs and horror stories scare you away from outsourcing fulfillment. A fantastic 3PL can free up time, save money, and generally make your life so much easier. When evaluating a company that you are considering outsourcing your fulfillment to, it is important to take a close look at how that relationship is going to work. By ensuring that the lines of communication are clear and they are putting their best foot forward, you can go a long way in meeting your ultimate goals: making your customers happy, saving you time and effort, and improving your profit margin. If you ignore the factors above it could complicate things for you and your business. Make sure your 3PL partner checks all the boxes to make the relationship a success.

If you are looking for a 3PL partner to work with we would love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.