How to Pick the Right 3PL for Your E-commerce Business

Introduction

In a cashflow-intensive business such as e-commerce, striking the right balance between operational efficiency and cost management is pivotal for sustaining growth and securing profit margins – especially when Jeff is taking a cut! This is where the strategic deployment of a Third-Party Logistics (3PL) provider becomes invaluable. We've found that the most common concern of our consulting clients who use 3PLs is flexibility. Can your 3PL put together a bespoke delivery plan that fits the needs of your business? In this blog, we’ll run through some of the more outlandish requests and discuss what you should expect from your outsourced logistics provider.

Streamlining Operations for Cost-Efficiency

A significant portion of e-commerce expenses is tied up in shipping and freight. Your 3PL should be leveraging considerable buying power to secure reduced freight rates which in turn offsets the cost outlay of utilising their services in the first place. It’s also worth considering how your products are categorised within the warehouse. Often, 3PLs can charge by the shipping box or even the pallet when in reality you have perhaps a few units left in each. A great way to remedy this is by using a provider with software that accurately accounts for your stock levels and ensures that you’re only paying what you owe. Personally, our logistics arm works with the SaaS logistics provider Hutch to enable an end-to-end software solution equipped with a portal for the client to access. We find that this gives a lot of reassurance whilst streamlining comms and ensuring that the client knows exactly when items have been picked, packed and delivered alongside the cost of fulfilment per unit.

Something to Consider…

Nevertheless, cost efficiencies can manifest in many different forms. Take for example a client who fulfilled Amazon orders themselves but was unable to achieve the coveted seller fulfilled prime badge because they were shut on the weekend. A good 3PL will be considering how they can restructure their offer to cater for this. Undoubtedly, the cost of weekend fulfilment for a traditional business is exorbitant when factoring in overtime. However, for many 3PLs this is manageable due to their pre-existing commitments to clients. Whatever your request, it's certainly worth asking a 3PL as in our experience we get abnormal requirements weekly if not daily. Who knows, you may benefit from economies of scale when other clients are asking for the same request thus reducing the cost of adding you to the plan.

Manual Requirements

For 90% of the time, 3PLs are largely indistinguishable – its not until something goes wrong that you begin to tell them apart. A 3PL should be manually assessing a sku when it comes in to determine if it will be susceptible to damage when posted. Equally, they should be flagging products that are frequently being returned and establishing the cause. A big plus of any 3PL is to offer gradated packaging solutions ranging from an envelope up to cardboard-encased bubble wrap. Needless to say, an expense that many do not consider is that of moving 3PLs when you outgrow them or they fail to cater for changing demands. Always look for a provider that can be agile and adjust their offering be it packaging, fulfilment plans or storage capacity.  

Saving Bandwidth

Nothing in life is ever truly ‘set it and forget it’ and it's important to manage your expectations when outsourcing to a 3PL. You’ll still get the calls, invoices and the occasional hiccup. That being said, it’s worth considering that most e-commerce entrepreneurs’ ‘genius zone’ lies in their creativity and high-level strategy. Often, delegation is a key way to free up bandwidth and direct your attention productively. It may seem like a straightforward point but after years of working in a business, many of our prospective clients lose that crucial perspective of what they are good at, and often, why they started the business in the first place – to focus on what they enjoy. 

Sitruna Logistics’ 3PL

If you’d like to discover more about what Sitruna Logistics can offer in terms of order fulfillment for your business and cross-channel expansion then please do not hesitate to get in touch.