Choosing a 3PL Partner: 12 Questions to Ask
If you’re looking for a company that will package and ship your products, you may be in the market for a third-party logistics (3PL) partner. But with varying services, packages, and payment plans, it can be hard to compare companies and pick which one is best for your small business. If you’re feeling lost in the world of 3PL partners, check out the 12 questions you need to ask before choosing a 3PL partner.
Services and reputation are arguably the most important factors in choosing a 3PL partner. Try these questions to get to the heart of what a potential 3PL partner can offer.
1. What is your mission? Why do you do what you do?
It may seem like a basic question, but it is one that separates out providers from true partners. A provider’s answer will likely focus on the goals of their own company. A partner will focus more on their customers and what they help them achieve.
A true partner is selfless. They will help with last-minute orders, show patience and kindness to customers, and be honest about what you can expect from them.
2. Do you specialize in any product / industry?
While your 3PL provider doesn’t need to specialize in your industry, it’s helpful to know if they have experience handling your product. Especially if you have a unique product or a high price point, choosing a 3PL partner with experience in your industry can be a significant advantage and prevent losses for your business.
If you sell something unusual, make sure to ask if the partner has any certifications for shipping unique items like dry goods, perishable foods, hazardous materials, or medications. This will ensure that the people handling your product have the appropriate knowledge and expertise to get it to your customers legally and safely.
3. What are the minimum and maximum order volumes you can handle?
If you are a new business, it is crucial to discuss minimum and maximum order volumes with your 3PL fulfillment services provider. Failing to sell enough or selling over the volume you’ve paid for can cause unexpected charges and shipping delays. By discussing expectations and back-up plans with your provider preemptively, you can avoid being penalized for unexpected shipping volumes.
Shipping is also a big consideration when it comes to choosing a 3PL partner. Two-day shipping is now considered standard, and many companies are beginning to offer one-day and same-day delivery. Ask these questions to find the best match for your shipping needs.
4. Do you work exclusively with specific shipping carriers?
If you’re just starting out with your online business, you may not be concerned if your 3PL partner only offers one shipping carrier. After all, the shipping industry is competitive and all major providers have quick and affordable options. However, as you sell more online, your customers’ demands may require you to seek out multiple shipping carriers.
If you sell products with a high price point, customers may want to sign for the delivery or receive it through certified mail. They may want the option to overnight their package or pick it up at a shipping store or post office. There are a variety of options offered by each carrier, and with a great 3PL partner, you can leverage the best of each carrier to satisfy your customers.
5. Will you negotiate shipping costs on my behalf?
After deciding to ship with multiple carriers, you may be unsure how to proceed. One option is to work with each carrier personally to arrange rates and services. This will also allow you to compare and negotiate shipping costs and speeds. However, it can become time-consuming and stressful on top of running a business.
If you’re lucky, your 3PL fulfillment services partner will negotiate rates and options from multiple carriers for you, and you will simply get to reap the benefits. This is one of the many benefits of choosing a full-service 3PL partner, rather than just a company that will package and ship your products.
6. Where do you ship from? Do you have multiple warehouses?
Warehouse location and shipping speed is crucial for online businesses. In order to compete with larger online stores, you will likely have to provide one or two-day shipping at a reasonable price point. If your customers are based largely on the east coast and your 3PL partner is based in California, two-day shipping will be significantly more expensive, if not impossible.
For this reason, you should ask your potential 3PL partner if they have multiple shipping locations, and if so, where they are located. This can help you provide better shipping expectations and information for your customers. It will also help you eliminate partners that are not a good fit simply for geographical reasons.
Extras & Add-Ons
In addition to standard services like warehouse storage, order fulfillment, and shipping, there are a variety of specialized services you may need for your business. While more of them are becoming standard, it’s important to ask these questions to know what you’re paying for when choosing a 3PL partner.
7. Do you provide additional services like assembly and kitting?
If you offer modular products, bundled products, or subscription boxes, you may need to take extra care in choosing a 3PL partner. These products require additional steps and attention to ensure that customers get what they order.
In the age of subscription-everything, quality 3PL partners will help confirm shipping lists and postage, coordinate shipments, and negotiate rates for even lower shipping on high-volume deliveries. Subscription boxes and kitting don’t have to be stressful with a good fulfillment partner.
8. Will you provide customer service?
Great customer service has become a given. In order to compete with larger online stores, you will need to provide flawless service to even your toughest customers.
Managing each customer yourself may work if you have a small order volume. But if you’re handling hundreds of orders a month, customer service can easily slip through the cracks.
If you want to devote time to making your product the best it can be, outsourcing your customer service to a reliable 3PL fulfillment service can be a smart move.
9. Do you handle returns, refunds, and reverse logistics?
You may think you’ve found a great provider for 3PL fulfillment services who will store, package, and ship your product. But business owners also spend a lot of time on what comes after: returns, refunds, and reverse logistics.
Before signing on with a new 3PL partner, check to see how they handle these services. How do they decide when a refund is issued? What will that look like for your company’s profits? Do they also offer recycling if you sell electronics or something that can be refilled or reused? All of these questions are good ways to start the conversation on reverse logistics when looking at potential 3PL partners.
Price and Payment
Finally, you should know what to expect when it comes to cost and payment options. 3PL fulfillment partners charge differently depending on what they provide, so you may need to be creative when comparing apples to oranges. Here are a few questions to ask about price and payment when choosing a 3PL partner.
10. What additional fees and charges can I anticipate in addition to my 3PL fulfillment services fee?
If you’re budgeting for a small business, you know that every dollar matters. Depending on your order volume, some 3PL providers may charge you unexpected fees. Be sure to know set-up fees, volume limitations, and the costs of any add-on services like kitting and customer service before choosing a 3PL partner.
One easy way to avoid extra fees is by choosing a partner with a flat rate. This means you will have one charge each month, and you can easily predict and budget your 3PL fulfillment service costs based on your forecasted sales.
11. How long is the contract? What are the terms?
As with any major business decision, don’t be afraid to have your legal counsel take a look at your contract. Double-check the term length, as well as any restrictions or charges that could harm your business performance in the long run. Feeling good about the contract you sign will give you confidence in your 3PL partner and help you build a positive, long-term relationship.
12. How often do I pay? Can I pay online or do I need to send a check?
For many eCommerce businesses, being able to handle finances online can be a huge advantage when choosing a 3PL partner. For others, paying by check may work just fine. Either way, be sure to ask what payment methods are accepted by your 3PL partner.
It is also important to ask about the frequency of payment. If you are starting a new business, you may want to look for a plan that allows you to delay your first major payments until your company is making regular sales. Whatever your needs may be, make sure that your 3PL provider is comfortable with the payment timing and options you can provide.