Mistakes to Avoid When Evaluating a 3PL

Mistakes to Avoid When Evaluating a 3PL

When it comes to choosing a third-party logistics (3PL) provider there are many factors to consider. 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 business. It is imperative to be thorough because your 3PL will have a direct affect on customer satisfaction—your 3PL will be the determining factor to the speed and condition that your products arrive. 

Since there are so many 3PLs and other fulfillment companies out there it can be difficult to make the right choice. Avoid the mistakes below when evaluating any 3PL that you consider working with.

Choosing the Lowest Upfront Costs

When you first look at options for outsourcing your fulfillment, choosing a company that has the lowest upfront pricing might seem like a great decision. However this shouldn’t necessarily be the determining factor in your decision. 3PLs who offer very low rates might be lacking in other areas that should be more significant to your decision. Choosing the company with the lowest initial price can wind up costing your business more over time. Oftentimes, companies are able to offer lower prices because they aren’t implementing the latest technology, provide less personal support for  customer service, or have lower quality control standards. These are the important places to spend your money when it comes to running a successful ecommerce order fulfillment company. When your end customers are unsatisfied with your order fulfillment process it becomes less likely that they will become repeat customers. Spending a little more money upfront can benefit you in the long run when you consider all the elements.

Not Setting Expectations

When evaluating an order fulfillment partner, it is important to lay out expectations at the start so both parties know what is expected of them. Obviously the goal is to have a perfect order experience every time, however this is unlikely to be the case. Before you sign a contract, be sure to ask hard questions about corrective actions, how the 3PL will handle errors or issues, and what your role needs to be in order to ensure all orders are done seamlessly.  Things to consider when coming up with these expectations and benchmarks include: order volume, scaling for seasonal demand, as well as the amount of automation utilized in the fulfillment center. You should also ask your potential 3PL about their historical order fulfillment accuracy, and if they have a threshold that they must meet before they might incur penalties (such as covering costs of returns) if they fall below it. 

Choosing the 3PL Closest to Your Location

It might seem like a great idea to choose a 3PL that is physically close to you, but you should also consider the proximity to your customer base.  Having your 3PL’s fulfillment center close to the destination point will help reduce shipping time, which can be a significant cost factor. Of course, being able to visit your 3PLs facility and review your inventory or monitor the 3PLs operations whenever you want is also a nice option to have. Depending on the type of product you have (if it needs assembly or software updates often) it might not be a higher priority than reducing delivery times and shipping costs. Cheaper and quicker shipping is often the determining factor when customers are deciding on where to make their purchases. Before you opt for the location that is most convenient for you, think about what would be the best choice when it comes to keeping customers satisfied. Their experience should be your first priority.

Failure to Provide Relevant Data

Communication between you and your 3PL is integral to building growth and bringing on new sales channels. Keeping important information internally may be a good competitive strategy for running your business, but leaving your fulfillment company in the dark can lead to miscommunication and errors down the line. Finding a 3PL that you feel you can trust is important. If you find you are hesitant to share important data with your 3PL, there will be a disconnect between your companies needs and their services, which can complicate the fulfillment process. Your partnership with a fulfillment company will work best when you truly view it as that, a partnership. This mindset allows you to take the viewpoint that they will manage projects with you instead of for you.

Failure to Communicate Demand Changes

Making your 3PL aware of potential seasonal demands ahead of time is critical so that they can make proper arrangements to accommodate a spike in orders.  Your fulfillment provider will need time to adjust their processes. Both you and your customers will benefit when you give your 3PL advanced notice of demand increases. This will allow them to make alternate arrangement and avoid overtime costs, as well as recruit and train laborers to handle the additional orders. This will also help decrease the number to order errors, which will increase the overall satisfaction of your customers. This applies not only to seasonal demand changes, but changes that might come from media exposure, special sales or discounts offered, or anything else that might change the status quo when it comes to your order fulfillment norms. 

Ignoring 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.

Bottom Line

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 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.