How to Vet a 3PL - Every Question to Ask a Fulfillment Company

Uncover the critical information you need to make an informed decision.

How to Vet a 3PL - Questions to ask a Fulfillment Company

It doesn't matter if this is your first rodeo or you're a seasoned eCommerce veteran - finding the right 3PL fulfillment partner for your brand is no walk in the park.

 

With over 21,000 3PLs in the US alone , eCommerce businesses are faced with an infinite amount of choices, confusing terms, vague pricing structures, and a healthy dose of “reading between the lines” to identify a truly compatible partnership.

 

As a 3PL founded by store owners, we've experienced both sides of the equation.

 

After conducting more 3PL searches for our own brand ventures than we can count (and talking to thousands of others who have done the same) we've learned two things that matter most when vetting a fullfillment company:

 

1. Knowing what details about your opperations matter to 3PLs in order to receive an accurate quote and scope of service.

AND

 

2. Knowing the right questions to ask that cut through the sales jargon and uncover what a 3PL is really all about.

 

Below, we're going over the most helpful operational details to know and our top questions to ask a 3PL during the vetting process.

 

What questions should I ask a 3PL?

Fulfillment isn't always straightforward and some 3PLs gloss over the finer points to speed things along. Take control of the conversation by asking the right questions, like the ones below:

Questions to ask 3PLs about fulfillment capabilities:

  • Can you support DTC fulfillment at our current and projected volumes?

  • Can you support B2B fulfillment with [insert your retail/wholesale partners here]. Are there any limitations to this service?

  • What checks and balances do you have in place for store compliance and routing guidelines?

  • Can you support high-touch packing? Ex: Pack-out in a box, custom fill, packing list, marketing materials, etc. Are their limitations to this service?

  • Am I able to dictate packing instructions?

  • How is fulfillment allocated daily? Are all clients picked and packed simultaneously, in shifts, in zones, etc?

Questions to ask 3PLs about client and account support:

  • What does the onboarding process look like?
  • From contract signing, how long will it take to begin fulfillment at your warehouse?
  • Do you provide clients with a dedicated account rep?
  • Are account/customer support reps located on-site with our products?
  • What is your average communication response time?
  • What escalation protocols are in place?

Questions to ask 3PLs about receiving, inventory, and storage:

  • What are your SLA’s around receiving processes and timelines?

  • If inventory is split between warehouses, how is allotment determined?

  • What is your shrinkage allowance?

  • How is backstock inventory stored? How is it transferred to active inventory?

  • Do you have limits on how long products can be stored?

  • How often are inventory counts audited?

Receiving and Inventory questions to ask a 3PL Fulfillment Company

Questions to ask 3PLs about general operations:

  • Where are your headquarters and warehouse locations?

  • What are your normal days and hours of operations?

  • What is the general composition of full-time, part-time, and seasonal employees?

  • Do you utilize temp agencies? If so, for what?

  • Are your fulfillment processes 100% fully scan-based?

  • What level of visibility will we have as products move through the warehouse? Are they in real-time?

You get the jist. Specificity matters!

 

And this is truly just the tip of the iceberg. We've compiled over 100 more crucial questions around shipping, reverse logistics, pricing, and more (for free!) here. 

Developed by eComm brand owners, our 3PL Vetting Tooklit will help you ask the right questions

that empower informed decision making.

What information do I need to gather before talking to a 3PL?

Getting your details sorted and stored is crucial. It not only helps in getting accurate quotes but

also establishes your brand as one to be taken seriously. A win-win!

Before approaching a 3PL, gather:

  • Historical sales data and growth projections for DTC and B2B

  • Current challenges with fulfillment (including costs, scalability, compatibility, security, performance metrics, etc.)

  • Average order volume, broken down by month

  • Inventory levels and total SKU counts

  • Current/former WMS

  • Packaging specifications

  • Top 5 customer locations by volume

  • Product technicalities like hazardous or regulated materials, required storage conditions, and lot tracking

  • API connection needs

  • Return rates and handling preferences

  • Future business goals and expansion plans

  • Anticipated (or needed) start date with a 3PL

We suggest organizing all of your details in a spreadsheet for the whole team to access internally and to share with 3PLs during the vetting process.

Want to take a load off creating this resource? This one is all mapped out for you with over 70+ brand detail fields to fill in with your specific data. All for free. Because we’re Nice like that.

 

What are the characteristics of a good 3PL?

A good 3PL fulfillment partner should offer:

 

  • Scalability to match your growth

  • Technological integration for real-time tracking

  • Data insights and analytics that help you

  • Low-to-no (we’re talking <2%) shrinkage rates

  • Dedicated, responsive account managers with escalation protocols in place (It’s out there - for brands of all sizes. Don’t let anyone tell you otherwise.)

  • Detailed and custom SOPs for your brand's fulfillment needs and processes

  • Transparent pricing without hidden fees

  • 100% scanned-based inventory and fulfillment practices

Characteristics of a good 3PL

Look for 3PLs that have services above your current needs. That way, as you focus on entering new markets or expanding your catalog, your 3PL has the ability to scale with you.

When should I consider switching from self-fulfillment to using a 3PL for my eCommerce brand?

The golden question.

 

A move to a 3PL should be considered when:

 

  • Order volumes exceed your in-house fulfillment capabilities

  • You have enough inventory turnover that you won’t get eaten alive by storage fees.

  • You're looking to expand into new markets.

  • You want to focus on core business activities, but operations are weighing you down.

  • Shipping and storage costs become unsustainable.

When should I consider switching from one 3PL to another?

Switching 3PL providers is a significant decision, often prompted by the need for better service, scalability, or alignment with your brand's values and goals.

 

Here are key indicators that it might be time to consider a change:

 

Consistent Fulfillment Errors:  Frequent mistakes in order fulfillment, such as incorrect items shipped or delays, can erode customer trust and satisfaction. A pattern of errors with little problem-solving and solutions on the 3PLs part is a signal it’s time for a switch.

 

Lack of Scalability: If your current 3PL struggles to keep up with your growth or peak season volumes, causing bottlenecks and delays, it's crucial to find a partner who can scale with your business needs.

 

Poor Communication and Customer Service: Effective communication is vital in logistics. A partner that is not responsive or fails to provide clear and timely updates can create unnecessary stress and operational inefficiencies.

 

They’re All Talk, No Action: Unfortunately, overpromising and underdelivering is a chronic issue in 3PL fulfillment logistics. If your current 3PL got you in the door with certain “guarantees” but have excuse after excuse as to why they can’t deliver, it’s time to look for other options.

 

You’re Still Playing Fulfillment Operator: You’re paying your 3PL to take responsibility off your plate, right? If you find your team doing the same amount of work (or more) just to stay on top of, check behind, or remind your 3PL of how to perform your processes correctly - start exploring elsewhere.

 

Changing Business Needs or Strategy: As your eCommerce brand evolves, your logistics needs may change. Whether it's expanding into new markets, offering new products, or shifting sales strategies. A new 3PL may be able to keep up better.

 

Recognizing when it's time to switch 3PLs can safeguard your brand's reputation and ensure your logistics operations contribute positively to your growth and customer satisfaction. If you're encountering these signs, it might be time to reevaluate your fulfillment strategy and consider other options that align more closely with your current and future needs.

 

No pressure, but if you're looking, we might know of one.

 

 

 

Be a part of a Nice Community

Gain access to insider tips and expert advice from eCommerce specialists delivered directly to your inbox.

Back to The Nice Way