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What to Avoid When Choosing a 3PL

By March 24, 2021April 15th, 2021No Comments

It is important to find the right 3PL fulfilment partner, as it can determine the future of your business. In our past blog post, we have covered several points to look for in a 3PL. This time, let’s look at some of the points to avoid when you choose a 3PL.

1. Choosing by the lowest upfront costs

Since one of the main benefits of using a 3PL is that costs are cheaper, it may seem like a great idea to start searching for a company with the lowest upfront prices. However, the price should not be the decisive factor.

There are several risks in simply choosing by price. Here is a brief list of them.

  • The 3PL might be lacking in other areas that are more significant to your business.
  • Hidden costs can come out later along with higher shipping costs.
  • Can ultimately cost your business more over time.
  • Might not be implementing the latest technology.
  • Could provide less personal support for customer service.
  • May have lower quality control standards.

Furthermore, take caution if your 3PL is not forthright and transparent about their costs. Make sure to push them for more details on any vague areas, such as hourly pricing.

If you want to know the basics of how much it can cost, check out our other blog post, “How much does a 3PL cost?”.

2. Doesn't use nor organise data

When a 3PL doesn’t properly utilise data, it can result in poor performance. Common examples would be poor inventory management and order inaccuracy. It can also represent incapability in their technology and integrations.

In today’s competitive market, competence in the complex process of inventory management is mandatory. That is because you want to adapt to your customers’ purchase behaviour. For example, popular items mean you need more stock. But how can you tell when to restock when the data is incorrect?

The earliest notion of such activity can be found when you ask for a “simple project plan” or the accuracy of picking or the duration of pick to pack. If your potential 3PL cannot provide it, it’s a sign you start thinking of searching for a different one.

It’s also good to ask what technology they are using for their day-to-day operations. If they answer Excel, that’s a sign to avoid the 3PL for now. Instead, try to choose a 3PL that utilises a WMS.

Also ask if they have a development team, as then it is more likely that they can provide more support on technology. Why? Because the platform and system they use are likely developed by themselves!

3. Lack of communication

A 3PL with a lack of communication is something to avoid. One of the signs is when your 3PL does not hold an initial meeting. Since they are going to handle your products, they should be concerned about your needs. It is also important for yourself, as it is the best time to ask questions.

If your 3PL does hold an initial meeting, see if it reviews the following factors.

  • Project Charter
    • Scope
    • Team Roles and Responsibilities
    • Communication Structure
  • Timeline
  • Project Plan
  • Budget

During the meeting, the 3PL will also exchange what they expect from your side. This means that you will need to communicate your needs on time as well. So, make sure you do that so your 3PL can prepare for any situation.

4. Poor customer service

Swift measures and responses are some of the main key points in ecommerce. When you find trouble in the fulfilment process, a 3PL partner with excellent customer service is a must.

It is good to talk to references before choosing a 3PL. Try asking the questions below.

  • How quick are they getting the answers and details you want?
  • Are you satisfied with their responses?
  • How well do they handle problems?

If you call a 3PL provider for a quote or sign up, they should bend over backwards to accommodate you. If they show a customer-first attitude, you can expect a great partnership, That’s because you can expect the same quality for customer service.

5. Doesn't consider your growth and needs

Since you are running a business, chances are that one of your key initiatives is growth. That means that your 3PL need to have the flexibility to scale their operations too. If they’re not capable, you’ll likely find yourself back at the start.

Another reason why flexibility is important is because of the sales season. During Q4 (when Black Friday, Cyber Monday, and Christmas is in place), a typical 3PL’s order volume can grow by 3 to 5 times the usual amount. It can also get behind schedule by 2 weeks and more. Even if your business is not seasonal, it can be affected by other clients’ spikes.

So, when you’re searching for a new fulfilment partner, make sure to ask how they handle such busy seasons. What are their practices? Were they behind schedule? By how many days or weeks?

After all, your customers won’t be happy if their order comes very late.

6. Lack of experience in your industry

A simple lack of experience in their own field of fulfilment is an obvious risk to take. However, young 3PL companies can be worth the shot depending on their industry-specific experience.

Every industry or type of product can have distinct handling requirements where it is important to have prior experience. Common industries that are prone to this are clothing, food and beverage, and health.

Examples of handling challenges can include:

  • high SKU counts,
  • customised returns handling,
  • special storage conditions,
  • and more.

So, make sure to ask your 3PL what industries they specialise in.

If you are not looking for specific industry experience, make sure to do some research to find a 3PL company with extensive experience.

Conclusion

We have looked through the 6 points to avoid when choosing a 3PL.

  1. Choosing by the lowest upfront costs
  2. Doesn’t use nor organise data
  3. Lack of communication
  4. Poor customer service
  5. Doesn’t consider your growth and needs
  6. Lack of experience in your industry

There are many 3PL companies out there. It is easy to find one by searching on Google. However, finding the perfect one comes with research. Once you find the right one, you will have a fulfilment partner of a lifetime.

If you want to know more about what to look for in a fulfilment partner, try checking our other blog post, “8 Key Features to look for in a 3PL”, for a start.

KeepSpace can help you outsource.

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