This blog has been updated on 13th October, 2023.
Is your ecommerce business showing good growth? Congratulations! It is then likely that you don’t want to lose that growth spurt.
As a part of the plan, you may be looking to work with a 3PL provider. However, there are so many different 3PL services in the world. So, what should you look for in a 3PL?
In this blog, we’ll look at 8 key features for you to look for when deciding on a 3PL provider.
1. Scalability or Flexibility
This is one of the most crucial features to look for in a 3PL. The question here is, “Can the 3PL provider efficiently scale their operations according to your changing needs?” Let’s look at some situations.
It is given that there will be fluctuations in your order volume depending on the time of the year and your product nature. For example, if you sell sunscreens, it will likely sell less during the winter compared to the summer season. This means that the amount of service you need from the 3PL will also fluctuate.
Let’s look at the above situation in a bit more detail.
During winter time, you will send out fewer orders. In response to this, you will likely try not to stock up too much as they might become excess stock. The best outcome would be that your fulfilment and storage fees will also decrease.
On the other hand, you will send out more orders during the summer period. You will need more labour capacity to be able to handle the fulfilment of those orders promptly. Plus, you will need to store more products in response to the increased volume of demand.
3PLs are super efficient in these situations- in fact, this is supposed to be what characterises their services! They should be able to fairly scale their services and fees according to the amount you require. This should also result in helping you save costs compared to renting a warehouse or hiring casual workers.
So, how do you find out whether a 3PL is flexible enough for your ecommerce business? Feel free to ask your 3PL provider of interest about their order capacity and storage fee calculations.
For example, KeepSpace 3PL’s Perth warehouse has a daily fulfilment capacity of 500 orders during off-peak seasons and 700 orders during on-peak seasons. If the numbers fit within your usual or estimated order volume, that’s one tick off the list. Other 3PLs should also be aware of their capacity, so they should be happy to answer that question.
Next is about storage fee calculations. Some 3PLs incur storage costs based on per shelf or pallet, which could be beneficial depending on your inventory levels. If you’re not at that wholesale-level volume, it’s better to find a 3PL provider that calculates based on cubic volume. This means your storage cost will be calculated simply based on your product size, so you can pay for the exact amount of space you are using.
2. Robust Technology
Next from the top of the list is technology. Modern ecommerce businesses require swift fulfilment. 3PLs should be able to help achieve that with minimal errors and effort. This is where technology comes in to enhance speed and accuracy.
Overall, it is better when 3PL providers are always willing to continue improving their technologies. It likely means they are enthusiastic to provide for your needs.
Let’s look at 2 main areas in 3PL technology that you should look for in a 3PL provider.
Warehouse Management Software
The very first technology to take note of is the 3PL provider’s platform software. 3PLs usually provide a user view for ecommerce businesses to check the movement of their orders and inventory. They would also have an operations view for their warehouse team to work on during fulfilment or any other warehousing tasks.
When catching up with the 3PL provider of your interest, ask if they provide a demo or free access to their management platform. The best answer to get would be a yes, and also that there are no lock-ins. For example, you can create a free account on our KeepSpace platform without commitments or contracts. You can also look at our management platform without any consequences or hidden fees.
Now, when you look at a platform, see if you can find the order summary page or the inventory page. If it was easy for you to find, brilliant! Try to also take notice of how fast the pages load. A 3PL platform should be swift and easy to navigate so you can efficiently manage your fulfilment.
Here are some more questions to ponder when looking at a 3PL provider’s management platform.
- Can I easily see, comprehend and manage my inventory or orders?
- Is the platform available on different devices? (PC, tablet, mobile, etc.- for portability)
- Does the platform have a method to reach out to customer support?
- Does the platform go through regular maintenance or updates?
- Is the 3PL fast at fixing errors or bugs on the platform?
If you think all of the answers are ‘yes’, then it’s safe to say another box has been ticked off the list.
Applications for Warehousing Tasks
3PLs might use a barcode reader or a mobile app that utilises the camera function. What would be even better- the mobile app works with their warehouse management system for streamlined fulfilment and management. Similarly, with packing and inbounding, it will always be better if the 3PL utilises software or an application.
If they don’t use any other applications, the recommended bare minimum would be that they utilise their warehouse management platform.
“What about the 3PLs that utilise robots?” Sure, it should be no problem! If you’re worried, ask how the robot works and its accuracy rate.
3. API Integrations
First, what is an API? An API (application programming interface) allows interaction between devices, applications and software. Its main characteristic is that it delivers data back and forth between platforms. Since this interaction is automated, it reduces human error and saves time regarding any data input.
In the 3PL industry, this usually refers to the connection between ecommerce platforms (such as Shopify and Amazon) and the 3PL’s management software.
Most 3PLs will enable you to see your orders from your different online stores, all on their management system. It saves you time by preventing the need to go back and forth between platforms. (Hey, didn’t we hear that phrase earlier?)
It applies to inventory as well. If you use another system to manage inventory, you can integrate it with your 3PL provider’s platform. Then, you can check your orders and stock levels from one platform. It will help you make faster decisions regarding demand and re-stocking.
Now, as mentioned earlier, most 3PLs will provide this service. So, the determining factor for this one is whether the 3PL provider of your interest can integrate with the ecommerce platform that you use. Otherwise, check if they integrate with an inventory management system you like to use (an example would be CIN7.)
Some 3PLs can also integrate with courier services and accounting applications. It makes it easier for you to do two things.
- To make direct requests related to shipping.
- To calculate your profits and fees from your orders.
Generally, the more integrations, the better. For example, at KeepSpace, we can integrate with over 50 platforms and applications. If you want to have a look, check out from here.
4. Network
A 3PL’s network can point to three different aspects.
- Its physical warehouses and their locations.
- Their courier partnerships and shipping locations.
- Relationships with other 3PLs and ecommerce businesses.
In this blog, we will look at the first two aspects.
Warehouse Locations
Some 3PLs will have multiple locations, whether it is domestically or internationally. This brings benefits to you when you decide to expand your business reach.
The first benefit is in the form of faster and cheaper shipping- which will also lead to a higher customer satisfaction level. For example, let’s say your business is in Perth, but your new customer lives in Sydney. It would be much quicker and more affordable to fulfil the order from a warehouse in one of the eastern states. Your customer will be able to get their order soon and feel more secure that the product is coming from a close location.
Here are some of the other benefits of choosing a 3PL that already has multiple locations.
- The expansion process is much easier as it will be either:
- Similar to when you partnered with the 3PL, or
- It involves the same process as sending inbounds.
- Every information- such as orders, inventory and accounting details for each warehouse- will be accessible from one platform.
- When you don’t have enough stock in one warehouse, you can immediately send the order from another warehouse with inventory.
- Reduces your time to tell the staff how to pack your products.
Of course, you can still choose a different 3PL if it’s better for your operations or financials. There will be the extra steps of asking for quotes and building trust, but it is ultimately up to your ecommerce business’s situation and needs.
Courier Partnerships
The more courier partnerships a 3PL has, the more ways to fulfil your orders. It would also mean they have experience handling high volumes, as they need to clear a threshold for the partnership.
So, keep an eye out for the 3PL’s choices of couriers. It is more likely that they will flexibly provide the best shipping service for your needs- in terms of service and pricing.
For starters, find a 3PL with your preferred courier for domestic shipping. Some noticeable ones in Australia would be Australia Post, StarTrack, TNT, Couriers Please, Aramax, Sendle, and more.
After that, also look if the 3PL provides methods to ship internationally. You can think ahead when you expand your customer audience overseas. When you do look for 3PLs with international shipping methods, we recommend looking out for DHL and FedEx, the solid players.
5. Stability
Since you are looking for a long journey in your ecommerce venture, your partner in logistics should be stable to support you on the way. Now, a stable 3PL means two things. One, it provides high-quality and reliable fulfilment. Two, there are no worries about a sudden bankruptcy. So, how do you figure out whether a 3PL is stable?
Years of Experience
The easiest way to start your research is to look at how long the 3PL has been around. The long years represent the consistent quality of services they provide.
It also represents how adaptable they are to the changes in the industry. They will embrace change and always look for innovation and improvements. Especially since logistics is an industry prone to rapid change, it represents the 3PL’s experience.
If you choose a 3PL with years of experience, they will always be able to provide great insight into solutions for your ecommerce store’s fulfilment.
Financial Records
Since 3PLs are capital-intensive businesses, it is crucial whether they are financially stable. If the 3PL doesn’t have enough money in the bank, it could lead to poor quality service and negligence of your ecommerce business. The worst case is- your operations team suddenly evaporates.
When 3PLs have healthy finances, they have the resources to invest in your growing business. That could be buying a specific tool for your fulfilment, partnering with another courier, adding a new integration or increasing their service line. It also means they can afford the operational capacity to fulfil your orders.
You can always ask your 3PL of interest about its finances. While not all 3PLs might show their Quickbooks, they should be able to give you an about number or situation. After all, 3PLs know that trust is the key to partnerships.
6. Customisation
3PLs are about customising their services to match your needs. This includes omnichannel capacity and customised fulfilment processes. However, in this section, we’ll specifically go through the packaging and shipping customisation.
Building up your personal brand consists of various strategies. This can include raising social media presence, designing original packages, writing personalised letters, and so on.
3PL can assist with your personalisation process during its packaging and shipping process.
You can send your original designed packages and personalised letters to the 3PL, and they will be used when specified. Some 3PLs can even produce the packages and letters on your behalf, as long as you provide the design details. Here at KeepSpace, we also provide a range of customisation choices.
Customisation also applies to various shipping choices. Other options can include fast shipping, delivery tracking, palletisation, and so on.
7. Customer Service
How do you figure out the level of a 3PL’s customer service? The best way is to ask their partners. It’s more likely that you’ll get a truly honest opinion about the 3PL provider.
Excellent customer services are what should connect you and the 3PL’s relationship. Here is a list of what is considered as excellent customer service.
- Quick at identifying issues;
- Effortlessly resolving problems;
- Providing business solutions;
- Fluid communications;
- Safe logistics;
- Responsive to your needs, and more.
8. Safety and Security
When you leave your precious products and orders in the hands of your 3PL, make sure to know about their safety and security measures. Both physical, and digital.
Safety regulations go through almost constant change in the 3PL industry. Which means the 3PL needs to stay up to date with the latest ways in order to continue the business.
Therefore, safety records which show constant adaption are evidence of a well-organised 3PL.
Digital Security
The 3PL’s platform keeps your order information. This includes your customer’s personal information. Your 3PL should have proper digital security on their platform in order to protect this information.
Digital security can come in the form of security software and staff protocols.
Security software is fairly straightforward. Either they have installed security software from a trusted third party, or they have an excellent IT team.
Staff protocols refer to safe cyber habits, such as not clicking on URLs from spam mail. This lowers the possibility of allowing viruses and hackers on the platform.
Physical Security
3PLs store your products in their warehouse- which are then passed on to couriers. It’s a given that you are concerned with security. You wouldn’t want your precious products to get stolen.
Try asking, “What are your security measures?” While you’re at it, also ask for their safety records. A good record usually means a well-organised 3PL. Check here for more questions to ask your 3PL provider.
Also, take notice of their risk management.
Physical risks exist in the warehouse of 3PLs. Boxes and pallets are stacked up on high shelves. Staff use fork lifts. Some products are fragile or heavy. Risk of cuts while packaging, and so on.
If they have proper management and their staff are happy and healthy, it’s likely a great 3PL.
So, what should I look our for again?
When you are looking for a 3PL provider, it is good to look into these eight features.
- Scalability/Flexibility
- Robust technology
- Integrations
- Wide network
- Stability
- Customisation
- Customer service
- Safety and security
You will want to have a long-lasting relationship between a 3PL. One that will help grow your ecommerce business.
Further Readings
If you want to know more about how to choose a 3PL, check out our other blog posts that can help you.
