If you outsource fulfillment to a 3PL (third-party logistics provider) you know that it can appear costly.
But the promise of cost savings can be an illusion. A common occurrence is small but growing ecommerce brands get lured into doing business with tech 3PLs. They get promised a high-tech platform and reduced costs. However, in the end they get poor or no service and fulfillment that isn’t up to their customer’s quality standards. In the end, these companies end up paying more money and dealing with lots more stress.
Hiring a 3PL with premium fulfillment services means they will go above and beyond the standard to help your brand stand out from the rest. Whether you have premium products or not, choosing high-quality fulfillment will give your ecommerce business a competitive edge.
How to Choose Your Fulfillment Method
Many smaller brands, with low order volume, will choose in-house fulfillment because it seems easier and cheaper. But there is always a tipping point when outsourcing will be more cost-effective. Even at this early stage you may find the following issues with in-house fulfillment:
- You’re spending more time on operations than on growing your brand.
- You lose customers because of incorrect orders or damage due to poor packaging.
- You lose retailer contracts because of routing guide issues.
- You get negative reviews on a marketplace because of missed or incorrect orders.
- You lose sales on returned SKUs because they aren’t put back into “good stock” fast enough.
While this list above is only a few reasons, there are many more signs that in-house fulfillment may not be right for your business.
For brands looking to outsource fulfillment for the first time, there are so many variables to consider that it can be daunting. Often smaller ecommerce businesses choose the low-price-leader when picking a 3PL. What they don’t realize is that standard pick, pack, and ship services won’t help them grow or scale. Plus, a standard fulfillment provider may end up with more errors or limitations than a premium one.
Ecommerce brands who choose to hire a premium fulfillment provider benefit from:
- Higher percentage of perfect order rates
- Getting a foot in the door with new, bigger sales channels
- Having industry experts on-call to help optimize their shipping mix for cost savings
- Getting shipping discounts based on high volume contracts
- A competitive edge in their vertical by having higher quality fulfillment than their competition
- More opportunities for scaling
What is Premium Fulfillment?
Premium services look like they cost more as line-items on a bill. But what they signify is service that is above and beyond the standard to ensure the highest quality control possible.
Your logistics partner should be just that, a partner. You should never be treated as a vendor. When you are treated as a vendor it signals that your 3PL thinks of your business as a transactional relationship. If your provider isn’t invested in your customers and growth, they may not be the right fit for your brand.
When vetting your 3PL here are some questions to ask to gauge if they have premium services or standard services.
- What are your guarantees? This is another way of asking what type of performance you can expect from your 3PL. Do they track their accuracy rate? Do they have speed guarantees?
- Can you show me an example of a current customer’s SLAs? SLA stands for service level agreements. These are the operational rules that your 3PL will mark their performance by. This may include same-day shipments or customer response time.
- Do you have any shipping priority or discounts? When a 3PL can guarantee high volume shipping, many carriers will give them a discount or priority during times of high demand. This is particularly helpful around peak season.
- What are the ways you will help me forecast? If a 3PL is in the business of proactive logistics they will look at your inventory, storage, shipping, and other supply chain metrics for ways you can get products to customers faster and cheaper.
- How long have you been doing fulfillment? You want true experts helping you out. If your 3PL is too new they might not have the experience to help your brand scale.
Ultimately a 3PL is an extension of your brand. When seeking fulfillment support keep in mind that there aren’t any “bad” 3PLs, just ones that might be an ill fit for your brand’s needs.
Premium Fulfillment Services May Actually Save You Money
If you are seeking support from a 3PL here are the most common premium services. Not all brands have the same needs, and not all 3PLs offer the same services, but these are a few top fulfillment services and how they can save you money.
Dedication and customer service. You need to know that when there’s an issue (and there will be!) you can pick up the phone and get a real person who knows your brand on the other line. Don’t settle for poor customers service or a hotline to call. Premium service means your team is on-call when you need them.
Data and the expertise to use it. Premium service means not only collecting supply chain data but being able to make informed business decisions with it. Your provider should regularly leverage data to help you forecast, distribute inventory, and optimize returns.
Advanced technology. If your warehouse management system isn’t up to date, you may not have the real-time visibility into your supply chain that you need. Technology tools like WMS or ecommerce integration channels are vital for business shipping into retail and marketplace outlets.
Automation. If you can automate it, you should. Premium service means you have access to automation tools to increase accuracy and speed, save you time and potentially money. This could be labeling, sorting, or customer communication.
Room for your growth. If you tour your 3PL’s warehouse and it looks overcrowded, it probably is. Without room for your products, you may find that products go missing more often than you’d like. If you’re looking to grow, make sure your 3PL has room to expand and grow with you—that includes storage but also new sales channels. A premium provider will want to work with you long term, which means helping you find outlets to grow into.
Peak season support. Ecommerce is all ebbs and flows. A premium provider will make every month as smooth as the last, no matter the sales volume. Your 3PL needs to be able to staff appropriately to meet these volume changes. This is particularly true of the winter holidays, when many brands see a big spike in sales.
Industry partnerships. To run a successful high-growth ecommerce brand, you need more than just premium fulfillment. Is your 3PL willing to connect you with other premium partners? Freight forwarders, shipping carriers, and international experts? A premium 3PL will likely have relationships with other great companies to support the rest of your supply chain operations.
If you’re looking for a 3PL with fulfillment centers in cities across the US, we own and operate facilities in The Bay Area, Los Angeles, and Kentucky. Use DCL’s national footprint of warehouses to distribute your inventory across the country to reduce transit times and save on shipping costs. If you need fulfillment or shipping support and want to partner with DCL Logistics, we’d love to hear from you.