That's why ecommerce businesses choose to partner with a third-party logistics (3PL) company that can help meet the expectations of online shoppers. The right 3PL can make a huge impact on brand reputation, customer satisfaction and profit margins. But the wrong 3PL can slow down operations, stunt future growth and reduce profit margin.
If you currently work with a 3PL, chances are it was a big step to transition from fulfilling orders in-house to outsourcing the process. It's no wonder that switching 3PLs while keeping your business up and running can seem daunting.
Fortunately, not all 3PLs are created equal, and it's easier to switch 3PLs than you might think. If your current 3PL is slowing you down, the sooner you make the switch to a 3PL that can offer a long-time partnership, the better.
In this article, learn how to determine if it's time to change 3PLs and what to consider when sourcing a new fulfillment provider.
Why would a business choose to switch?
Spending too much on shipping, slow fulfillment operations, lack of visibility and transparency and ultimately delivering a subpar customer experience — a bad 3PL partner can impact your business financially and emotionally.
The mission of a 3PL should always be to help you focus on growing your business by providing fulfillment solutions that save you time and money. If you're spending all your time babysitting your current 3PL due to fulfillment mistakes, inaccurate billing and inconsistent operations, then it's no longer worth the time, money, and headaches.
The ecommerce space continues to move fast and competition is high, which means there is no time to waste with the wrong 3PL. If things are not working out, it's worth considering a new 3PL partner that can provide you with a much better experience.
“We used to work with a 3PL that was terrible. It was so stressful trying to deal with them. We’d have to reach out 3-4 times per day, and I even had the CEO’s number because there were so many issues and fulfillment errors all around. This old 3PL charged for each pick and pack, wouldn’t take responsibility for any errors they made, and getting orders fulfilled would take up to 20 days in some cases.”
- Torii Rowe, COO & Co-Founder of MANSSION
Here are some of the biggest reasons why businesses choose to switch:
1. Low order accuracy.
A 3PL partner should provide security, consistency accuracy and speed. Though the fulfillment process is never perfect and errors are inevitable, the right 3PL should be doing whatever it takes to minimize error and help you prepare for the unexpected.
If your 3PL provider is causing a high volume of customer support tickets, bad reviews and a decline in sales, then your 3PL partner isn't doing their job.
2. Lack of improvement.
A 3PL should offer plenty of room for growth and should always be implementing new ways to speed up processes, automate tasks and improve order accuracy. If your fulfillment provider hasn’t changed or expanded their technology, operations, services and facilities since you started working with them, they might be just fine staying exactly as they are.
‘Good enough’ is the wrong mindset when it comes to order fulfillment. Every ecommerce business needs a 3PL that is thinking ahead, has consumer expectations in mind and provides the resources to help you scale.
3. No room for expansion.
If your order volume is growing exponentially and your current 3PL can not support you as well or help you expand into new markets, it’s time to find a provider that can grow with you. This is a common challenge when ecommerce businesses start out working with a mom-and-pop shop with one location whose focus is mainly small or local businesses.
If you want more nationwide coverage or looking to expand internationally, you can either add additional 3PLs to your roster or fully switch to a global 3PL with international locations to reduce barriers to purchase.
4. Poor customer support.
If you have a question about a customer order, your fulfillment invoice or inventory levels, can you rely on your 3PL to support you? Do you get the answers you need in a timely manner?
If you have to go through multiple people to get answers instead of having access to important information at your fingertips, you need a better solution. Your 3PL should always be able to provide a transparent, holistic view of fulfillment performance and access to real-time insights into inventory levels, order status and more.
5. Outdated technology.
Technology is key. This is one of the biggest reasons why ecommerce businesses choose to switch 3PLs. If you don’t have immediate insight into the status of every order that passes through the warehouse, which SKUs were picked and what quantities of inventory you have on hand, it will be difficult to respond to customer concerns and understand inventory turnover.
A 3PL’s technology should always offer more than a basic portal and integration with your ecommerce store — especially if your business offers bundles, subscriptions or other customizable services — you need access to backend logistics that can easily plug into your existing tech stack.
6. Not worth the cost.
The cheapest 3PL isn’t always the best one. The ability to offer fast, affordable shipping can even be a revenue driver for your business by reducing cart abandonment and increasing average order value and customer loyalty. But if you’re paying a premium for fulfillment services, the value your 3PL partner provides should be clear.
Every 3PL offers different capabilities. Technology, inventory management tools, premium customer support, data and analytics, customization options and geographic footprint are all great value adds that a modern 3PL can provide. But a 3PL's pricing model and cost structure should never be confusing as hidden costs can quickly add up.
When a 3PL is the right fit for your business, the costs should be more than worth it and the pricing should be clear and predictable.
What to look for in a 3PL partner.
Every 3PL offers a unique set of capabilities as every ecommerce business has different needs. But there are three primary points of evaluation to consider when looking for the right fulfillment partner.
Here are three things to consider when sourcing a new 3PL:
1. Visibility, transparency and accountability.
From transparent pricing and insights into fulfillment performance, to visibility into the entire fulfillment and shipping process, the right 3PL partner should never hesitate to provide you with visibility into their operations. A good 3PL will always communicate their service-level agreements (SLAs) and actual performance with their customers. When sourcing a potential partner, be sure to understand all SLAs before you enter into the partnership.
You will always want to make sure there is visibility into operations, so the 3PL is held accountable against their agreed upon SLAs. These SLAs can range from shipping orders out on time, to the speed at which they receive and stow your inventory.
2. Best-in-class technology.
A 3PL for today’s competitive ecommerce landscape goes beyond the traditional pick, pack and ship model. Technology and integrations are key: one of the most important elements of choosing a fulfillment solution is finding technology that works not just for you but with you.
Your 3PL partner should enable an end-to-end fulfillment solution that helps with everything from order and inventory management to tracking ecommerce orders and managing ecommerce returns — while pushing data between all platforms involved.
For instance, ShipBob is a 3PL partner of Linnworks that owns the entire tech stack to increase the velocity and scale at which we can make improvements based on customer feedback.
3. A growing fulfillment network.
If you’re only shipping from one location, you’re limiting your business’ reach in key markets where your customers reside and most likely paying too much for shipping and waiting too long.
Working with a 3PL that has multiple fulfillment centers allows you to split your inventory across several locations. This puts your inventory closer to your shipping destinations, meaning more packages ship to lower shipping zones and therefore cost less for you and your customers.
This distribution strategy also enables the ability to offer a variety of shipping options for your customers, such as two-day shipping for customers as well as ease of cross-border shipping when you are ready to expand internationally.
Note: If you choose a 3PL with multiple fulfillment center locations, make sure that every location is operated and powered by the same technology or warehouse management system (WMS). This enables consistency and tracking of inventory and fulfillment performance across the entire network.
When is the best time to switch?
Between contracts, perceived risks and logistical headaches, it may never seem like the right time to change providers — but taking a critical look at your current 3PL and logistics strategy is vital for future success.
There are many factors that affect the timing of a 3PL transition, such as ramping up for the holidays, but no matter what, it's never too early to start researching a new solution.
"Even if you’re working with a 3PL currently, there could be a better option out there.
When I switched to ShipBob, it was game over! I could finally start growing my business. They made the move from my prior 3PL fast and easy, and I saw the benefits of working with them right away."
- Courtney Lee, Founder of Prymal
Finding a 3PL that acts as a partner and not just a vendor can help you achieve your goals and sustain your brand for the long run. If you're looking to switch 3PLs, ShipBob has partnered with thousands of ecommerce brands and has a lot of experience supporting them throughout a 3PL transition. They offer hands-on support, fast onboarding and intuitive technology that plugs into your existing tech stack to make the transition as smooth as possible. Learn more about ShipBob.