You started out doing the shipping yourself. You loved putting products into packages and printing the labels, because it represented all the hard work you’ve invested starting your business.
Now your online store is growing, and shipping has turned into a headache. It needs to be done every day, but your business has a lot of other needs too.
If you’re currently evaluating whether you should expand your operations and hire someone to take over fulfillment, you may want to consider a third-party logistics provider (3PL) to do the job for you.
What is a Third-Party Logistics Provider (3PL)?
A 3PL is a logistics provider that allows you to outsource your fulfillment operations. The provider will handle various business activities for your company, such as:
- Warehousing
- Distribution
- Fulfillment
- Inventory management and forecasting
- And more
Sooner or later, there will come a time when it will be necessary to enlist a 3PL (or expand operations to do it yourself). If you’re starting to run out of space or are shipping around 10-20 daily orders on your own, a 3PL can help you save time so you can focus on business.
It’s also a great investment if you’re looking to expand overseas or adapt to seasonal changes. Here’s what to take into account to pick the 3PL that’s the right fit for your business.
Payment History and Financial Stability
When choosing a 3PL, consider what would happen if they were to suddenly shut down or go bankrupt. If you’re not ready, it could have brutal consequences for your business.
It’s always better to be safe than sorry, which is why you need to pick a 3PL with financial stability and solid payment history. You’ll be saving yourself a lot of trouble in the long run.
Do your research and ask around to learn more about how they’ve handled payments in the past. If they have a history of not being reliable, then it’s best to move on and find a better partner to fit your needs.
Excellent Industry References
Not all 3PLs are created equal. You’ll also have to find out what others in the industry are saying about their services along with strong financial stability.
One of your goals during your research should be to network with their existing customers and get their opinion on the 3PL. Here are some questions you can ask them to learn more about how the logistics provider does business:
- Is the 3PL easy to work with?
- Are their customers satisfied with the results they’re getting?
- How much money were they able to save on shipping, labor costs, and other rates?
- Does the 3PL offer reports and updates on key performance metrics?
- How were they able to scale thanks to the logistics provider?
Technology Integrations
There’s plenty of technology that helps you manage your supply chain easier. A quality 3PL should be able to integrate tools that give access to automation, connect with major carriers, and help you get the best rates.
Take a look at the 3PL’s website and see which ecommerce integrations are possible when you work with them. They should be able to integrate with the best platforms, such as:
- Amazon
- WooCommerce
- Shopify
- Whatever your store needs
Their Industry and Area Specialization
Speciality is key to finding the perfect 3PL. The right 3PL for your business depends on your location, the type of products you sell, and your current logistical needs.
For example, let’s say that you’re selling high-tariff items such as consumer goods and luggage. An option to consider is cross-border fulfillment, which is perfectly legal if you sell items with a 15+ tax rate.
Another aspect to consider is the 3PL’s location. Thanks to Amazon, customers expect to receive their products as soon as possible. As a result, it may be better to choose a 3PL that’s close to your customers. That will save you on shipping costs and keep delivery times to a minimum.
You can save on shipping costs by using one in the middle of the country or close to the region where you do the most sales. Larger 3PLs will have multiple locations you can leverage to cover the entire country.
View the full article on the Essential Hub blog for more insight into 3PL options and how to find the best fit for your business.