As an e-commerce business grows, keeping up with fulfillment becomes increasingly challenging. A strained distribution operation can have a negative impact on the customer experience, ultimately impacting profitability over the long-term. To avoid this problem, many online sellers outsource their distribution operations to a third-party logistics (3PL) company to guarantee more reliable order fulfillment.
If you’re running an e-commerce business that’s straining at the boundaries of its fulfillment capabilities, you might be asking yourself: How do I find a fulfillment 3PL? With so many 3PLs available, finding the best one to suit your unique business requirements may seem daunting. This article will offer actionable tips to help you find a 3PL that will take the stress out of your fulfillment process.
Five Tips for Finding a High-Quality Fulfillment 3PL
Once you’ve made the choice to outsource logistics, it’s important to find the right 3PL partner for your company’s operation and culture. The following tips will help you find the most beneficial partner for your operation.
Conduct an Audit of Your Operation
Not every 3PL is set up to handle order fulfillment. 3PLs often specialize in specific areas, so you want to make sure you don’t waste time targeting logistics providers that don’t work in your industry. Before you put out feelers, conduct a thorough analysis of your fulfillment and logistics wants and needs and determine exactly what you will need from a fulfillment partner. Knowing what you need upfront will help you target your RFI/RFP process.
Narrow Down Your RFP Pool
Sending out a blanket request for proposal (RFP) in search of a 3PL probably won’t yield ideal results. Many good 3PLs won’t waste effort responding to RFPs that lack detail or have gone out to a broad audience, while less picky 3PLs may get much of their business submitting low-effort proposals of this nature. If you don’t have a narrow list of candidates to send RFPs to, consider sending out a simpler request for information (RFI) first. These forms tend to be shorter and require less effort from providers, though they will provide enough information for you to narrow down your list of potential candidates.
Make Sure The 3PL Can Scale
If you’re seeking a logistics partner, it’s probably because you’ve started to grow at a pace your in-house fulfillment operation can’t keep up with. You don’t want to search for a new provider every few years, so scalability is a key asset in a new 3PL relationship. Make sure any new partner can grow in terms of storage space, technology, staff, carrier capacity, and any other projected needs for your e-commerce business. As an online seller, remember that scalability is more than just a long-term goal. Your 3PL must have the capacity to scale over short-term periods, such as holiday peak seasons or in the face of unexpected demand spikes.
Ask About Retention Rates
There are two types of retention that you will want to explore with any prospective 3PL: customer retention and employee retention. Poor customer retention rates are a key indicator of problems to come. There are many reasons a 3PL may lose a customer, but if they seem to lose a lot of customers then that should be a red flag. Similarly, employee retention reflects the quality of the 3PL’s work environment at their facilities. If the 3PL doesn’t treat their employees well, that will translate into lackluster service in your fulfillment operation.
Ability to Access Your Key Markets
One of the primary advantages of using a 3PL relates to real estate. Running your own fulfillment operation requires an ability to find suitable industrial real estate. As an e-commerce business, you need access to your primary markets within 48 hours to compete with major brands like Amazon and Walmart. By outsourcing fulfillment to a provider, you gain access to their existing real estate footprint and their ability to source hard-to-find industrial real estate in or near busy markets.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.