Important Questions Which Help To Vet A 3PL

Choosing the right logistics/fulfilment partner can be one of the most daunting tasks when starting an e-commerce company with physical goods. We can't highlight enough how important a solid 3PL vetting process is. Take your time and compare all 3PL options very thoroughly. Most 3rd part logistics companies will have a sales department whose employees will be more than happy to help find answers to your questions. The below list should help you facilitate this process.

  1. On which days of the week do you fulfil orders? Only from Monday to Fridays or also on Saturdays and Sundays? Remember speed matters! The Amazon FBA warehouse - for example - works on every single day of the week, including weekends!
  2. How much do you charge for storage per sqft/sqm? Remember: If you work with a 3PL, he will charge you even if you don't sell a single item. If you start off very small, why not fulfil yourself and store all goods in your basement?
  3. How much do you charge for receiving items? Remember: If you ship your goods to their warehouses, they will have to open every box to make sure all the content you claimed you shipped actually made it to their warehouse. In other words, they will count to items. This is called "receiving" and in most cases not free of charge.
  4. How much do you charge when I decide to close my account? Remember: When you decide to leave the 3PL for whatever reason, you will most likely have to pay a "closing fee" in the same way you had to pay for a "receiving fee". The more boxes you have sitting in their warehouse, the more the 3PL will charge you to close your account.
  5. Do you offer integrations with Shopify or other E-commerce platforms? Remember: Your Shopify inventory is only as smart as the API which pushes up-to-date data from the warehouse to Shopify. To build this API will sometimes cost you extra depending on which 3PL you work with.
  6. Do you offer inventory insurance? If yes, how much does it cost? Remember: You continue to own all the inventory, even though it's not sitting in your own warehouse. However, in some instances (fire, floods, pilferage, etc.) your inventory might get damaged or disappear altogether. In these cases, you need an insurance. Not including it into your calculation would be a big mistake.
  7. Is worldwide shipping possible? Remember: Some local 3PL might only offer the option to fulfil your items within a particular country. But what if your client places an order from abroad? Do you reject these orders? Of course, you shouldn't, i.e. it's important to clarify these situations well in advance.
  8. What are the rates to ship items to/from the US or Europe? Remember: Shipping to another continent, let alone shipping via Express to another continent, can be a very costly matter. In most cases, 3PL have agreements and volume discounts with courier services (UPS, DHL, Fedex, etc.) which should give them favourable conditions compared to yours. However, not in all cases do 3PL pass on their "volume discount savings" to you as the client. Get their rates and compare them to services such as ParcelMonkey or ParcelHero.
  9. What is the cost per pick/pack? Remember: For every package, the 3PL sends to your client, you will have to not only pay for the postage but also for the packaging material and a "pick&pack" fee. In other words, you pay for a person to walk to your product in the warehouse and "pick" it up and the "pack" it into a carton box for shipping to the client. The pick&pack rates can vary greatly when comparing 3PL providers. Also, ask for volume discount: If you hit a certain threshold, your pick&pack rates usually reduces.
  10. Do you allow visits to your warehouse to get a first-hand impression of the day-to-day operation? Remember: It's in your interest to know where and how your inventory is stored. If you know a 3PL's warehouse is in your state, why not ask if you can pay a visit? Most 3PL will most likely decline to cite privacy reasons but it's still worth a try.
  11. What reference clients do you have? Remember: Every company should be happy to introduce you to some of their happiest clients. While most 3PL reps will - of obvious reasons - only tell you the most shining facts only reference clients might also be able to tell you some of the critical details you might otherwise not know.
  12. Do you offer customised packaging? Remember: Competition in the E-commerce space is getting bigger by the day. One reason more to make sure that every touchpoint you have with your client is outstanding. One of these "touch points" is the very moment your client receives his/her parcel. The more customization options your 3PL can offer the better. As questions such as: Do you add marketing flyers to the shipping box? Do you offer custom-size carton boxes with my brand's logo? etc.
  13. How many warehouses do you have and where are they located? Remember: Many 3PL would like to appear bigger than they actually are. If you have a global client base you would ideally want to collaborate with a global 3PL, i.e. with one which is also located in more than 1 country. However, be aware of some 3PL (such as Shipwire) which tell you that they are global, but once you start digging you find out they don't own any of their foreign warehouses. Ask specifically: Do you own all warehouses in foreign countries or do you "only" cooperate with other warehouse companies?
We hope this checklist is helpful. If you believe anything is missing and/or incorrect please leave a comment in the comment section below. It's our intention to keep this blog alive, i.e. for it to provide constant value we're happy to occasionally update it.


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