You’ve realized you need fulfillment services providers to store products and fulfill orders for your business.
Now you want to know what traits to look for in a 3PL so you hire the best partner, right?
Well then, look no further. In this post, we will go over 7 qualities to search for in a fulfillment provider and why they matter.
Later on, we’ll also talk about:
- how to search for 3PLs,
- how to narrow your options down to the best candidates and
- how to evaluate one before deciding to hire.
So without further ado let’s begin!
1. Multiple warehouses or fulfillment centers
While operating from a single warehouse is more straightforward, doing so causes inefficiencies as your business expands and your customer base widens, especially if you sell on Amazon and to customers in the US generally.
For example, if you have customers in New York on the East Coast, California on the West Coast, Florida in the Southeast, and Alaska in the far Northwest, but your provider has only a single fulfillment center in California, logistics delays are bound to affect your shipments destined for customers all around the other coasts.
A valuable 3PL solves this by offering you a network of warehouses and fulfillment centers.
Not only does this reduced transit distance ensure products are situated as close as can be to their end consumers, it also results in less shipping costs for your businesses.
2. Facilities that fits your business needs
You need a warehouse that’s designed to handle the kind of products your business sells.
For example, this could mean forklifts to move pellets around, large rack systems to store huge and bulky SKUs, conveyor belts to move items around during picking and packing, etc.
The reason why you have to prioritize compatibility in this sense is because a 3PL that specializes in fulfilling the same or comparable products as yours will have the training, tools and processes to store, pick and pack your orders quickly and safely.
For instance, if you sell apparel, you want to search for a 3PL that can handle high-SKU and high-returns products with facilities such as
- Automated sorting technology to categorize SKUs,
- RFID scanning (RFID) systems to track inventory,
- Customizable shelving systems to accommodate for different types of clothing, and others.
Whereas if you sell cat food online, you want to prioritize facilities like temperature-controlled storage, FDA (Federal Drug Administration) approved sanitary and safety conditions and pest control measures, among others.
3. Access to transport hubs
When you work with a 3PL that can access sea ports, interstates, highways and air networks quickly, you enable your business with numerous methods of getting products to their end users.
Going beyond that, another advantage of access to shipping networks is that you can then offer competitive delivery times by leveraging the flexibility to choose between different logistics methods based on transport schedules and minimal transit time.
So during your search for a fulfillment company, prioritize access to logistics or transportation networks. A suitable 3PL will enhance your operation by integrating with various ground, sea and air shipping services. Whereas, a 3PL that relies on a single sea port for shipping introduces the risk of delays due to congestion, strikes, or other issues specific to that port.
4. Seamless Integration
3PL integration is a means to automate communications between you and your fulfillment provider. It works by connecting your digital ecosystems such as your existing ERP, your website and your other sales channels to the 3PL’s warehouse management system or ERP.
There are many forms of such integration, but the most common you want to look out for are:
- Integration with your inventory management system
- Integration with your store’s shopping cart and billing software
- Integration with your shipment tracking software
- And integration with your customer service portals
The main benefit of these integration APIs is that they enable you to conduct business faster and more efficiently.
For example, with inventory management system integrations, every time an SKU is picked, packed or shipped, its new status is updated between you and your 3PL’s systems so you always know whether an item has been sent out or not.
Likewise, with shopping cart integrations, once an order is placed and the buyer makes payment, your 3PLs can begin order processing immediately.
5. Inventory and shipment visibility
“Real-time” stock visibility refers to the ability to obtain up-to-date information on your cargo at every step along its journey, from the moment it’s assigned an SKU to when you ship it out and it reaches its final destination.
A top 3PL will guarantee you this level of visibility with advanced tracking systems, and enable your business to monitor SKUs continuously, receive alerts in case of delays or issues, and make real-time decisions to optimize your supply chain operations.
So when assessing a 3PL, inquire about the tracking technologies they use. 3PLs with round-the-clock visibility often leverage tracking systems such as RFID, GPS, or barcoding.
6. Value-added Services
While you may have a growth plan, you can’t predict all the services your company will need in the future. As this is often the case, you want to find an effective 3PL that offers value added services relevant to your business and products.
In fulfillment terms, Value Added Services are additional solutions businesses need to meet customer demands and to avoid complications in their fulfillment operation because working with a separate 3pl for one or two extra services is both costly and complicated.
Here’s an example of when value added services come in handy. Imagine you sell work wear for men.
During the holiday season, you may want to introduce bundle offers such as “buy X get one tie and socks of your choice free.” So to minimize labor and time spent while fulfilling these orders, you can ask your 3PL for kitting support, which involves bundling different SKUs that sell together in a single package.
In another case, to establish a memorable customer experience, you might ask your 3PL for customized packaging support, such as etching names onto the product, personalizing the shape of the parcel and using special wrapping paper.
Whatever it is that you need, partnering with a provider that’s versatile enough to meet market demands and provide additional support will provide immeasurable benefits.
7. The Ability to Scale with You
The best fulfillment providers double as business partners that help manage volatility in your supply chain.
While this often means responding to disruptions and threats to timely fulfillment, it also includes taking advantage of opportunities that arise such as dips in sourcing costs, demand increases during peak shopping seasons and strategic expansions in new locations.
To know if a potential 3PL is able to scale up with you, you can ask questions such as, but not restricted to;
- Can your inventory system handle a surge in SKUs?
- Are you expanding storage space continually with new warehouses?
- Do you offer cubic storage pricing so I only pay for what I use?
- Do you have available room in case I want to increase my next resupply amount or if I want to restock sooner than usual?
- Can accommodate changing packaging requirements?
- How many top shipping carriers do you integrate with to provide shipping flexibility?
- Do you have a process to inspect and restock salvageable returned items immediately?
- And others you can find here, here and here.
At the end of the day, you want to work with a 3PL that’s resourceful enough to promote the growth of your business.
How to Find the Right 3PL for Your Business
Define what you require from a 3PL
Not all 3PLs are alike. Similar to how a clothing retailer has distinct fulfillment requirements compared to a company selling electronics, each 3PL specializes in meeting the unique fulfillment needs of different industries.
So if you have needs outside standard pick and pack, such as Amazon FBA prep, sourcing, quality control, product branding, kitting or others, put them into writing and ask 3PLs on the shortlist you’ll soon create whether they offer those kinds of support.
Browse the Internet using search modifiers
Next up, take your search for fulfillment providers to the internet.
For this stage, I recommend refining your search queries to find services that are most relevant to your business. Otherwise, you’ll end up with search results filled with the same few companies that pay thousands of dollars to appear first with ads.
Besides taking advantage of the modifiers in the image above, add names of specific services you need to the search phrase.
For example, if you run a women’s boutique and need kitting, simply run “women’s apparel fulfillment and kitting” into your browser.
Furthermore, if you’re looking for a specific location you can add a state to your query such as “women’s apparel fulfillment and kitting Miami’.
Create a vetted fulfillment providers list
For any 3PL you find, whether from review lists or through search listings, you want to make sure they offer the services you need.
To find this information, go through their site and landing pages. If there’s any details you can’t find, reach out to them via the channels they list on their About Us page or web footer. When you can get through to a rep, ask whatever questions you have.
At this stage, I recommend you take notice of the response times of each 3PL you contact and how helpful they seem.
When you’re sure a potential 3PL fits your requirements, don’t add them to a list just yet.
Search Google for reviews and visit review sites like Trustpilot, Google Business and X to gauge the 3PL’s overall customer sentiment.
Once you’ve completed this process, narrow your list down to 3 to 5 providers you consider your best options.
Request and review quotes
Before reaching out for quotes just yet, notes on each 3PL – taking record of factors such as how quickly they responded to your initial inquiry, how knowledgeable they seem, how helpful and caring they seem and really anything else that sticks out to you.
Every 3PL has a different pricing model so you can’t compare apples to apples.
For example, while one company may have lower than average storage fees, they might have high pick and pack fees to balance the difference.
To help you out, here is this 3PL pricing comparison template that compares different pricing models to deliver a true fulfillment cost per order.
Ask about their customer service
When assessing fulfillment companies, always look for a provider that offers reliable, human customer service.
Timely and helpful service keeps customers happy and more importantly keeps them shopping within your store. In contrast, delayed and unhelpful service when the customer needs it most will result in dissatisfied shoppers, few orders and poor reviews.
Not many 3PLs offer customer service, so it’s more common to see e-merchants partner with such providers.
However, some effective ones do. While their services might cost a little more per order, I guarantee it’s an investment you’ll favor, as hiring internal labor for customer service comes with the challenge of training and salaries.
Moreover, outsourcing customer service to a separate 3PL can complicate your operation, and switching 3PLs completely is expensive.
So if you ask me it’s better to pay $0.25 more per order as long as your customers are assured of quality service every time they need help.
Ask about their warehouse capacity
To gauge how many clients they work with and how much volume they handle, inquire about the 3PL’s warehouse capacity.
You want to work with a fulfillment provider capable of supporting your business when it’s time to scale.
So in line with this, avoid 3PLs who don’t have at least 2x-10x the amount of space you need.
If you handle a few dozen or hundred orders every week, find a 3PL on the middle to higher end of that range. In contrast, if your business is already handling thousands of products monthly then a 3PL with double or triple your storage needs is fine.
Review the contract
Once you’ve decided on a 3PL, the final step is to request and review a contract.
Be wary at this stage of 3PLs that promise the world in a quote, but tell a completely different story in their contract. One that’s usually ridden with hidden fees, storage restrictions, and unfair service limits.
Preferably, consult a lawyer or law agency in your industry to investigate the terms and conditions you agree to by signing the contract.
Furthermore, you can use this resource to negotiate a 3PL contract that’s fair for both your and the provider.
With all that said, we’ve reached the end of this guide. I hope I’ve been able to make clear what you must look for in fulfillment providers and steps for finding, vetting, and communicating with potential providers.
If you found this post helpful, do yourself a favor by visiting the Globallyfulfill Blog where we post new ecommerce and dropshipping guides every week. And if you’re a dropshipper, I suggest following up this reading with our post on how to find and work with dropshipping suppliers.
Goodbye and good luck finding the right provider for your business!