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What to Consider when Choosing or Switching a 3PL

What to Consider when Choosing or Switching a 3PL

February 21, 2023
Posted By
Olexiy Shapowal
Title asset to the "Summer Shipping" blog post from Atomix Logistics. A small green 3D truck with a small sun floating above it portrays the hot summer sun during order transport. KW: Ecommerce, 3PL, order fulfillment, fulfillment center, summer order fulfillment, new orders, new customer, temperature, protection, packaging, eco-friendly, sustainability

Choosing or Switching a 3PL?

Whether or not you’ve partnered with a 3PL before, trusting another business with the process of delivering your products can be difficult to grip. It can be a complicated and hard decision.

However, finding the right 3PL can be the outsourced solution that helps a direct-to-consumer scale from 7 figures to 8-9 figures in revenue. It’s not hard to find examples of the fastest growing brands that have made the decision to scale such as PrettyLitter (Acquired for $800 million) and Loyal for Dogs ($50 million capital raise).

With so many factors to consider when embarking on the journey for a 3PL partner, things can get overwhelming quickly. That is - until you find a partner that’s juuust what you’re looking for. We know there is no “one-size-fits-all” approach to partnership, so we’ve broken down the most important factors to consider in finding the best 3PL for your brand. 

Table of Contents:

  • Services Offered
  • Location
  • Scalability
  • Technology
  • Reputation and Experience
  • Cost
  • Communication and customer service
  • Return and refund policy

Services Offered

At the end of the day, your business and its needs are going to come first no matter what. If you are doing research on 3PLs, there’s a good chance you’ve already identified a pain point in your business model. That’s a good thing! It means you’re in tune with your business, and understand that successful growth hinges on making the right connections. At the very least, your prospective 3PL should provide these basic services:

  • Warehousing (storage)
  • Picking & Packing
  • Shipping
  • Store integration
  • Inventory management

In addition to the above, your business may require additional services depending on the kind of products you are selling. Services like refrigeration and special kitting projects (subscription boxes, variety pack assembly) are offered by different 3PLs that specialize in different ecommerce markets. So, make sure to stay mindful of your business needs to select a partner capable of fulfilling your orders smoothly.

Location

Okay, so you have a list of possible 3PLs that can handle your business needs. Great! BUT, it is vital to consider the location of your new fulfillment partner. Choosing a 3PL closer to your target market provides the following benefits to both you and your customers:

Each of these perks contribute to increased customer retention, LTV, and customer satisfaction. Not only that, but saving money on shipping costs means big things for business owners, as the average ecommerce business spends ~15%-20% of their yearly budget on order fulfillment costs.

Scalability

In today’s volatile ecommerce markets, brands are constantly growing and changing at every moment. Rather than providing a static solution, your ideal 3PL must be capable of accommodating any of your current or future growth plans. After all; the last thing a business owner wants is for business to skyrocket, only to have order fulfillment come to a screeching halt when it matters most.

Without a scalable fulfillment partner, issues can arise that negatively impact the outward appearance of your brand. Delayed deliveries, missing orders/inventory, and inaccurate tracking ultimately falls on your 3PL from a business perspective. However, customers don’t see the backend processes that keep your business moving. 

Typically, your customer’s experience is limited to ordering, waiting, and unboxing your product(s). To mitigate the risk of a poor fulfillment partner causing your brand image to tank, make sure to double-triple check exactly how well a prospective partner can scale with you.

Technology

Technology has revolutionized the way businesses operate, and the logistics industry is no exception. 3PL (third-party logistics) providers have been able to streamline their operations and improve their service offerings through the use of robust SaaS platforms.

Some of the most valuable improvements technology has made to 3PLs include (but are not limited to) the following:

Increased operational efficiency

Tool-assisted work is always going to be easier than the alternative. Letting software handle the menial tasks means your 3PL can focus on providing the best order fulfillment service for your business.

Significantly reduced error rates

Eliminating the human element in inventory management leads to much more accurate stocking and picking. Additionally, Atomix has developed the Micro-Pod warehousing model to improve picking accuracy even further, significantly reducing pick/pack times across the board!

Supply chain visibility

Leveraging automated accounting allows for both you and your fulfillment partner to be fully in tune with your brand’s order fulfillment operations.

On demand communication

This one goes hand-in-hand with the bullet point above: having the data points on hand is one thing, but actually taking the time to communicate and share those insights really separates the great 3PLs from the good.

With the right technology in place, your ideal logistics partner will serve as an invaluable extension of your business, ensuring your brand image stays strong and trustworthy. Seeking out a 3PL partner with a proven track record of being tech-based ultimately means that your business will have a much easier time keeping up with the volatility of ecommerce markets. 

Reputation and Experience

While this one may seem pretty redundant, it’s still important enough to warrant mentioning. At the VERY least, make sure to fully vet any prospective fulfillment partners before reaching out to them. A great resource to look for is any existing testimonials on the company’s website, the more recent the better. 

Additionally - see if they (or their employees) have any sort of social media presence! Most modern 3PLs have an active presence on the internet, regularly interacting with partners, clients, and anyone with questions.

Remember; the internet is a priceless resource for doing almost any research you can possibly think of. Any internet browser will be able to provide you with the information you need to learn all about a company’s values, history, and proven track record. From that point on, it is up to the business owner to determine how beneficial a partnership might be.

Cost

When considering your options, comparing pricing between each prospect is likely one of the most swaying factors in your final decision. Everyone wants the most bang for their buck, but it’s important to remember that in finding a fulfillment partner; you are investing in the future of your brand. It may feel a little scary to spend money you could be saving on a third party - but remember that you will end up saving a LOT more down the line with the right 3PL provider. 

In addition to the “typical” services that 3PLs provide, many tend to specialize in catering to specific ecommerce markets. As mentioned previously, services like refrigeration and kitting are considered outside the scope of legacy 3PL providers. As a result, most modern 3PLs charge additional fees to cover the extra labor going into packaging/shipping your product(s).

Taking all of these factors into account will help you make the most well-informed decision possible, ensuring your business has the best opportunity for continued growth. (P.S. - Atomix offers a fully customized proposal for every single one of our clients (and prospects), reach out today to learn more about our pricing models!)

Communication and Customer Service

When it comes to choosing the right 3PL, strong communication and customer service is absolutely essential. A reliable fulfillment partner will be there to keep you posted with everything you need to know, ensuring everyone is on the same page.

Modern fulfillment partners are beginning to shy further away from call centers and email-based communication, instead opting for more personal communication methods. The rise of dedicated account managers with cell phone numbers and group chats with your fulfillment team has resulted in much closer relationships between businesses and their 3PL partners.

An important concept to remember is that finding a 3PL is about more than just storing and shipping your product - it’s about creating and nurturing a lasting relationship (and building trust). Startup 3PLs understand that new business owners don’t always fully understand the nuances behind logistics quite yet, and that’s perfectly okay! 

More often than not, your potential fulfillment partner will be happy to walk you through their process - always feel free to ask about visiting a warehouse before going through with a deal. In addition to learning more about logistics operations, you will also have the opportunity to establish an in-person relationship with another business owner! 

Return and Refund Policy

Last but most definitely not least - the infamous return and refund policy. When an ecommerce business owner begins processing returns while using in house fulfillment, tracking orders can get confusing and convoluted.

However, a reliable 3PL can swoop in to save the day! A 3PL with a good returns and refund policy helps reduce customer frustration and encourages them to come back for future purchases. Having a clear and user-friendly online portal gives customers an easy way to initiate returns, and shows that your business values giving your customers the freedom to shop as they please. 

Your ideal 3PL partner should have a streamlined process to take care of:

  • Receiving returns
  • Inspecting returned items
  • Issuing prompt refunds

With a clear and transparent returns process, you can build trust with your customers that their shopping experience will always be satisfying. 

Conclusion

Choosing a 3PL partner can carry with it a significant impact on your brand. Whether that impact is positive or negative depends on you, the business owner, having the right knowledge to make an informed decision about your brand’s future. Considering all of the factors mentioned above (services, location, scalability, technologies, reputation, cost, communication, and returns policy) will ensure your business continues to thrive in one of the most competitive markets in the world, and your customers stay satisfied. 

We hope this blog has provided you with the necessary information to make choosing a 3PL that much easier. If you have any other questions about anything 3PL related, don’t be afraid to get in touch with us!

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