5 Essential Questions to Ask When Choosing a 3PL Fulfillment Provider

Introduction

As your ecommerce business grows, you may find yourself facing challenges with warehouse space, labor constraints, or supply chain bottlenecks. These issues can significantly impact your ability to fulfill customer orders efficiently. If you're experiencing such difficulties, it might be time to consider partnering with a Third-Party Logistics (3PL) fulfillment provider.

The ecommerce industry has seen a growing trend of merchants relying on 3PL fulfillment providers, especially as supply chain challenges continue to have long-lasting effects on businesses. A 3PL provider is an external partner that manages the preparation and shipping of your customers' orders from one or more fulfillment centers. However, experienced providers offer a range of services that cover the entire fulfillment process, from your manufacturer's floor to your customer's doorstep.

Selecting the right fulfillment partner is crucial, as it will significantly impact your business's costs, customer service, and supply chain operations both now and in the future. To help you make an informed decision, we've compiled a list of five essential questions you should ask when evaluating potential 3PL fulfillment providers.

1. How Accurate Is Your Inventory Management and Reporting?

One of the primary reasons for outsourcing fulfillment is to free up time to focus on growing your business rather than getting bogged down in complex processes. Therefore, it's crucial to choose a partner that offers real-time visibility into your inventory levels, ensuring accurate management and reporting. When evaluating a potential 3PL provider, inquire about the following inventory management features:

• Detailed breakdown of inbound shipments and their status (e.g., receiving, forwarding, in transit, or ready to ship)
• Real-time updates on the number of units available for fulfillment
• Identification of discrepant units with overages or shortages
• Alerts for popular SKUs that need replenishment to avoid stockouts

Accurate inventory management is essential for maintaining optimal stock levels, preventing stockouts, and ensuring timely order fulfillment. By choosing a 3PL provider with robust inventory management capabilities, you can make data-driven decisions about restocking and avoid costly inventory issues.

2. Do You Have a Dedicated Support Team to Assist With Any Issues?

While accurate inventory tracking is crucial for your business operations, it's equally important to extend real-time order tracking to your customers. This level of transparency can significantly reduce customer inquiries about order status throughout the shipping process. When evaluating potential 3PL providers, ask about the technology they have in place to power real-time customer order updates.

Moreover, remember that your business is also a customer of the 3PL provider. Inquire about the level of support they offer when you encounter issues. Consider the following questions:

• Is there an easy way to chat with a support representative?
• Can you submit a ticket to get questions answered quickly?
• What are the available channels for customer support?

If your only option is to call a customer support number, it may be more challenging to keep your operations running smoothly. Look for a provider that offers multiple support channels and responsive service to ensure that any issues are resolved quickly and efficiently.

3. How Soon Would My Products Get Into the Hands of My Customers?

Your relationship with a 3PL fulfillment provider can make or break your customer experience. Fast and reliable shipping is a crucial factor in customer satisfaction and loyalty. When evaluating potential partners, ask about their shipping capabilities and timelines.

A strategic partner should have pre-set service-level agreements (SLAs) that categorize the estimated shipping and delivery time of your customers' orders. These SLAs should include options such as:

• Next-day delivery
• Two-day delivery
• Standard shipping

It's important to note that these service-level agreements should also be inclusive of any agreements with distribution centers to account for inbounding timelines. This ensures that the entire fulfillment process, from receiving inventory to delivering to the customer, is accounted for in the shipping estimates.

By choosing a 3PL provider with clear SLAs and fast shipping options, you can offer your customers accurate shipping and delivery timelines. This transparency builds trust and can lead to increased sales, especially when paired with fast-shipping badges or guarantees on your ecommerce platform.

4. How Much Do Your Fulfillment Services Cost? Are There Any Additional Fees I Should Be Aware Of?

When outsourcing fulfillment, hidden fees can lead to higher costs and lower profits, which can be a significant concern for your bottom line. It's crucial to choose a 3PL fulfillment provider with transparent pricing so you know exactly what you'll be paying each month. Be aware of common fees that providers might include in your contract that may not be obvious at first glance:

• Account setup fees: According to a recent survey, 56% of fulfillment providers charge setup fees, with an average price of $336.
• SKU management fees: Some providers charge per SKU carried in inventory. If you sell a wide variety of products, this cost can add up quickly.
• Storage fees: Be sure to understand how storage fees are calculated and if there are any long-term storage penalties.
• Returns processing fees: Inquire about the costs associated with handling returns and restocking items.

When evaluating potential 3PL partners, look for those that implement an affordable, all-inclusive pricing model. This approach ensures that you know exactly what charges to expect on your invoice. Ideally, you should only pay for the fulfillment and logistics services you use, with predictable, all-inclusive pricing that covers receiving, inventory forwarding, picking, packing, and transportation.

To get a clear picture of potential costs, ask providers if they offer a cost calculator or can provide a detailed quote based on your specific business needs and volume. This will help you make an informed decision and avoid unexpected expenses down the line.

5. What Additional Services Do You Offer To Support My Business Growth?

One of the primary reasons for outsourcing fulfillment operations is to support rapid business growth. As your sales increase, your fulfillment needs will likely become more complex. It's crucial to choose a 3PL fulfillment provider that can grow with you, as switching providers frequently can be disruptive and costly.

When evaluating potential partners, ask how their products and services can support your sales directly, both now and in the future. Consider the following questions:

• Do they support omnichannel fulfillment? (For example, if you currently sell on Shopify but plan to expand to Amazon in the future)
• Do they offer prep services to help you avoid costly inventory compliance issues?
• Can they handle wholesale fulfillment if you decide to expand to big-box retailers?
• What value-added services do they provide, such as kitting, bundling, or custom packaging?
• Do they offer international shipping and customs support for global expansion?

A partner that enables you to bundle additional supply chain services that complement your fulfillment operations will help support your long-term growth goals. Look for providers that offer a comprehensive suite of services, including:

• Freight forwarding and transportation management
• Customs brokerage
• Inventory management and demand forecasting
• Returns management and reverse logistics
• Analytics and reporting tools

By choosing a 3PL provider with a wide range of services, you can create a scalable fulfillment solution that adapts to your business needs as you grow. This approach allows you to streamline your supply chain operations and focus on core business activities that drive growth.

Conclusion: Turning Your Fulfillment Cost Center Into a Revenue Driver

Selecting the right 3PL fulfillment provider is a critical decision that can significantly impact your ecommerce business's success. By asking these five essential questions, you can gain valuable insights into potential partners and make an informed choice that aligns with your business goals and customer expectations.

Remember, the ideal 3PL partner should offer:

• Accurate and transparent inventory management
• Responsive customer support
• Fast and reliable shipping options
• Clear, all-inclusive pricing
• A range of services to support your business growth

By partnering with a 3PL provider that excels in these areas, you can transform your fulfillment operations from a cost center into a revenue driver. The right partner will enable you to offer faster delivery times, improve customer satisfaction, and focus on scaling your business while leaving the complexities of logistics to the experts.

As you evaluate potential 3PL fulfillment providers, keep these questions in mind and don't hesitate to ask for detailed information about their services, technology, and pricing. The more information you gather, the better equipped you'll be to make a decision that supports your business's long-term success in the competitive world of ecommerce.