Your customers won’t point fingers at your third-party logistics (3PL) provider whenever there’s a delivery delay, damaged product, or any other logistics problem.
Instead, they’ll be complaining about you.
And that can cost you more customers, damage your reputation, and result in revenue loss.
In fact, Forbes reports that 74% of customers buy based on customer experience alone. Meanwhile, another report discovered that 71% of businesses use 3PLs to improve customer experience. This shows how your 3PL company is critical for customer experience and sales.
But how do you choose a 3PL provider?
Here are the 6 things to consider before signing a contract with any logistics company.
#1 – Identify Your Shipping and Fulfillment Needs
Your 3PL provider is more than just a means to an end. They’re also a partner in your business growth. That said, they should be able to fulfill your present and future needs.
So, before choosing a 3PL company, consider the following questions:
- What are your current business goals?
- How will hiring a 3PL help you meet these goals?
- Will these goals change in 3-5 years and what is that impact on your supply chain?
- What role will your 3PL provider play in your overall vision?
For example, you might be focusing on local expansion right now, but you’re also planning on going international down the line. Then, you want to partner with a logistics company that already has a global reach.
#2 – Decide on a Budget
While it’s tempting to get as many additional services as possible, the costs can quickly pile up. You also have to consider that 3PL pricing can vary from company to company, with some requiring onboarding fees. It can also fluctuate depending on market conditions.
One way to avoid operating at a loss is to decide your budget. This way, you can separate the 3PL services that are nice to have from your non-negotiables.
Pro Tip: Ask for a free quote from the 3PL providers you’re considering. This will help you accurately compute your budget and gives you a clear idea of the services you need.
#3 – Check the Reputation of the 3PL Provider
The best 3PL providers don’t only have good client reviews, they also have a positive relationship with their employees, carriers, and other business partners. By doing so, they have a strong network of partnerships they can pull from whenever they need help. This, in return, allows them to provide you with more agile solutions during a crisis.
Additionally, check out how many years of experience they have, especially in your niche industry. That way, you know that they have the expertise in storing, handling, and packaging your products.
#4 – Determine the 3PL Provider’s Responsiveness
Responsiveness goes beyond replying to all your messages, inquiries, and concerns. It also means being proactive in all your logistics services.
A responsive 3PL provider warns you of possible risks, disruptions, or crises. Then, you can take the appropriate measures to mitigate them or minimize the damage to your business. At the same time, they should also tell you how to optimize your supply chain and inform you of any opportunities.
#5 – Look for Scalability and Flexibility
You won’t be a small business forever. Chances are that your supply chain needs will change in 6 months. And it will keep changing as your business flourishes. So, you want to have a logistics company that can keep up with your growing needs.
That way, you establish a strong relationship with your 3PL partner and know you can trust them with all your logistical needs. In return, you are sure to deliver excellent customer service consistently.
Another benefit is that you don’t have to go through the process of looking for a new 3PL company. You also avoid the risks and costs that come with it.
#6 – Don’t Skip Out on Security
Because your goods will be with your 3PL provider most of the time, they need to securely and safely store, package, and handle your goods. That means anything from keeping perishables in cold storage containers to packaging fragile items to avoid damage. This also includes ensuring that none of your goods are stolen or lost in transportation.
One thing to look for in a highly secure 3PL provider is their certifications. Some of these include:
- Food and Drug Administration (FDA)
- Payment Card Industry Data Security (PCI DSS)
- Hazardous Materials (HAZMAT)
Another aspect to pay attention to is their supply chain transparency. In other words, do you have complete visibility of all your goods once your 3PL provider obtains them until your customer receives them?
With 3PL providers being instrumental in your short-term and long-term goals, you have to make sure that you’re working with the one that meets all your needs. So, consider these 6 tips when searching for a 3PL partner.
Want a reliable 3PL company to work with?
At San Legend, we help eCommerce businesses scale their brands and break into new markets by providing customized, agile, and forward-thinking third-party logistics solutions. Reach out today to see how we can help.