August 31, 2023
5 Key Questions To Ask When Choosing a 3PL Fulfillment Provider
If you’ve grown beyond your existing warehouse or are struggling to ship customers’ orders due to labor constraints or supply chain bottlenecks, then it’s time to start searching for a 3PL fulfillment provider.
Merchants across the ecommerce industry are leaning on 3PL fulfillment providers more and more as supply chain challenges continue to provoke long-term effects on their businesses.
At the basic level, a Third-Party Logistics (3PL) provider is an external partner that prepares and ships your customers’ orders from one or more fulfillment centers. Experienced fulfillment providers, however, offer several services to help aid the entire fulfillment process—all the way from your manufacturer’s floor to your customer’s door.
Choosing the right fulfillment provider doesn’t have to be difficult, but it does require some thoughtful consideration. After all, the partner you choose will have a monumental impact on your business's costs, customer service, and supply chain now and in the future.
"Selecting a 3PL may seem like a daunting task, but it should be a celebration of the growth and success of your business. If you prioritize your needs such as cost, quality, and speed, you’re sure to select a long-term partner that operates as a strong extension of your brand." —Abby Nawrocki, Director of B2B Fulfillment Operations at Flexport
Here are the key questions you should be asking to ensure you’re choosing the right partner for your unique business needs.
1. How Accurate Is Your Inventory Management and Reporting?
The primary purpose of outsourcing your fulfillment is to have more time to focus on growing your business, not stressing over complex processes.
Look for a partner that offers real-time visibility into your inventory levels to ensure accurate management and reporting, including:
- A breakdown of your inbound shipments and their status (e.g., how many are being received, forwarded, in transit, or ready to ship)
- The number of units available for fulfillment
- Discrepant units with overages or shortages
- Popular SKUs to replenish to avoid stockouts
2. Do You Have a Dedicated Support Team to Assist With Any Issues?
In addition to your business being able to accurately track inventory, you’ll want to extend real-time order tracking to your customers. This level of transparency can reduce customer inquiries about where orders are throughout the shipping process. Ask the potential 3PL provider what technology they have in place to power real-time customer order updates.
Moreover, it’s important to remember that your business is also a customer of the 3PL provider. What sort of assistance do they offer when you run into issues? Can you easily chat with a support representative or submit a ticket to get questions answered quickly? If your only option is to call a customer support number, it may be more difficult to keep your operations running smoothly.
3. How Soon Would My Products Get Into the Hands of My Customers?
Your relationship with a 3PL fulfillment provider can either make or break your customer experience.
A strategic partner should have pre-set service-level agreements (SLAs) to categorize the estimated shipping and delivery time of your customers’ orders (e.g., next-day, 2-day, etc.). These service-level agreements should also be inclusive of any agreements with distribution centers to account for inbounding timelines.
At Flexport, we set clear SLAs so that your customers receive accurate shipping and delivery timelines. When paired with Flexport’s fast-shipping badges, you’re able to get your products in front of more customers and increase sales and trust with accurate delivery dates.
4. How Much Do Your Fulfillment Services Cost? Are There Any Additional Fees I Should Be Aware Of?
When outsourcing fulfillment, hidden fees can yield higher costs and lower profits—prompting deeper concerns for your bottom line. It’s important that you choose a 3PL fulfillment provider with transparent pricing so you know exactly what you’ll be paying each month. Here are some common fees providers might slip into your contract that aren’t obvious at first glance:
- Account setup fees: 56% of fulfillment providers charge setup fees at an average price of $336, according to a recent survey.
- SKU management fees: Some fulfillment providers charge per SKU carried in inventory. If you sell several different SKUs, this cost can add up quickly.
At Flexport, we implement an affordable, all-inclusive pricing model so you know exactly what charges you can expect to see on your invoice. Only pay for the fulfillment and logistics services you use with predictable, all-inclusive pricing. No hidden fees. Predictable pricing per unit that includes receiving, inventory forwarding, picking, packing, and transportation.
Use our Cost Calculator to see what you would pay with Flexport Fulfillment.
5. What Additional Services Do You Offer To Support My Business Growth?
One of the reasons you’re likely looking to outsource your fulfillment operations to a third party is that your business is growing fast. That growth will only intensify the more you sell, making it crucial that your 3PL fulfillment provider can grow with you (because no one wants to switch providers every year).
Ask how their products and services can support your sales directly—both now and in the future. Do they support omnichannel fulfillment (i.e., your primary sales channel may be Shopify right now, but you want to expand to Amazon within the next year)? Do they offer prep services to help you avoid costly inventory compliance issues? Or wholesale fulfillment for when you decide you want to expand to big-box retailers?
A partner that enables you to bundle additional supply chain services that complement your fulfillment operations will help support your long-term growth goals.
Turn Your Fulfillment Cost Center Into a Revenue Driver
Flexport provides D2C fulfillment services designed to meet you at whatever stage you are in your business and logistics journey.
We handle your fulfillment, freight, distribution, and returns, so you can focus on what you do best—growing your business. Our vast physical infrastructure and unique inventory management algorithms allow you to:
- Sell more with faster delivery: Offer lightning-fast, reliable delivery to your customers with Shop Promise and Fast Tags, wherever you sell, at no extra cost. We’ll make sure your inventory is always near your customers for fast, affordable delivery.
- Customize your logistics: Create the exact logistics solution you need using open APIs and review our help docs to assist you through the development process.
- Avoid costly investment: Rely on our vast network of distribution hubs, warehouses, and fulfillment centers outfitted with state-of-the-art technology. Only pay for the services you use, and change your usage as your business grows.
Learn how to get started with Flexport’s D2C fulfillment services here.
The contents of this blog are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. We do not guarantee, represent, or warrant the accuracy or reliability of any of the contents of this blog because they are based on Flexport’s current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This blog has been prepared to the best of Flexport’s knowledge and research; however, the information presented in this blog herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this blog.
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