Step 3
Shortlisting Potential Fulfillment Partners
Not all fulfillment centers are the same—and not all 3PLs work well for retail. In order to fully understand if a 3PL is a potential partner, you will need to go through a detailed requirements evaluation. This process takes time and is tedious, therefore it is recommended to do a high level evaluation to shortlist potential partners that you’re willing to deep dive into an RFP and make the journey for site visits.
Leverage online directories, industry publications, and professional networks to identify potential 3PL partners with a proven track record within your specific industry or vertical. Focusing your search in this manner increases the likelihood of finding providers who understand the unique challenges and opportunities associated with your business.
Create a short list by reviewing the following high level considerations to see if the 3PL is a potential match.
Partner Success
Prioritize clear and consistent communication throughout your partnership. Choose a 3PL that offers dedicated account management, responsive communication channels, and a commitment to keeping you informed at every step of the fulfillment process.
Fulfillment Volume
First order of importance is to evaluate if the 3PL can match your volume now and in the future. Some 3PLs specialize in handling high-volume operations, while others cater to smaller businesses. Ensure the chosen provider has the capacity and expertise to support your specific volume needs.
Experience & Expertise
Next, look for a 3PL partner with a proven track record within your industry. See if they have other businesses that are similar to yours, focusing on their experience working with businesses of both similar size and product types. Request case studies showcasing successful partnerships with businesses like yours.
Capabilities & Services
Not all 3PLs offer the same services. Carefully analyze the range of services offered by each potential 3PL. This includes core services like order fulfillment, pick & pack, inventory management, and returns processing. Additionally, consider value-added services like kitting, labeling, or gift wrapping that can enhance your customer experience.
Technology Services
In today’s dynamic retail landscape, a robust technology infrastructure is essential and given your relationship will likely last years, you must be assured the 3PL is investing in technology to optimize processes and costs, while also evolving to match your customer’s needs. Otherwise, you could outgrow that 3PL quickly and need to begin this process all over again. Evaluate the 3PL’s investment in automation tools, real-time data analytics, and ideally, AI-powered solutions for optimizing fulfillment processes.
Technology Integration
If your systems can not talk easily, you will have a lengthy on-boarding process with some pain. Frictionless integration between your existing systems (e.g., e-commerce platform, inventory management software) and the 3PL’s technology platform is crucial to starting a productive relationship. Seamless data exchange ensures efficient order processing, accurate inventory tracking, and a smoother overall customer experience.
Geographic Reach
Assess the 3PL’s warehouse network and its alignment with your target markets. If you have national or international expansion plans, consider a 3PL with a geographically dispersed network to ensure efficient delivery times.
Scalability & Flexibility
Your business is bound to evolve. Choose a 3PL partner with the infrastructure and adaptability to accommodate your anticipated growth, whether in order volume, product diversification, or geographic expansion.
Pricing & Transparency
Move beyond headline quotes and delve deeper into the 3PL’s cost structure. Understand the pricing model (e.g., activity-based vs. outcome-based) and inquire about any hidden fees. A transparent billing system fosters trust and avoids unpleasant surprises.
The Problem with Activities Based Pricing
Piecemeal logistics, fueled by activity-based pricing, is a short-sighted strategy that leaves retailers to navigate a disjointed network, struggle with fragmented data and inconsistent experiences, customer delays, errors, and a lack of transparency. It’s a recipe for frustration and lost business.
Limited control of the customer experience
Fulfillment and delivery are disconnected
Workflows not optimized
2024 Fulfillment Guide Complete Outline
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