When your direct-to-consumer brand reaches the tipping point, where filling orders and keeping track of inventory is all you’re doing day and night, it’s time to look for a third-party logistics or 3PL partner. Since these companies specialize in inventory storage, packing and shipping, you can focus on more important things like developing your products.
For any DTC brand, choosing a 3PL is a huge decision. Order fulfillment is your single biggest cost line item. More importantly, your fulfillment provider will be entrusted with all of your inventory. The consequences of a poor choice can be catastrophic, while those of a good choice could be life-changing for a brand. Here are 8 key things to look for.
How is Their Reliability?
Research. Research. Research. Find a fulfillment company that is reliable, and that can get the job done on time, every time. Do not settle for less. How can this be measured? Ask about their retention rates. How many of their customers stay with them year over year? How much attrition do they experience?
Ability to Scale Quickly as Your Brand Grows
Those same efficiencies and forward-thinking technological innovations that save you money on pick-and-pack services will serve you well when your brand becomes the next influencer darling or gets discovered by a big-box retailer.
If your 3PL doesn’t have the technology in place to manage B2B fulfillment or isn’t prepared to rapidly expand your fulfillment center space and staff up to fill orders, you could miss the opportunity and become a social sensation for all the wrong reasons.
When you put your inventory in someone else’s hands, you’ll be depending on them for information every minute of every day. You’ll need to be able to see and prioritize orders, monitor inventory levels and track shipments.
Your fulfillment provider must be able to exchange real-time data with your order and inventory management systems, but also integrate with all of the various shopping platforms, marketplaces and retailers where your products may be sold. It also needs to integrate with payment systems as well as domestic and international shipping carriers. It’s incredibly complex, and each entity involved is constantly upgrading or changing technological requirements. Look for a fulfillment provider that is committed to keeping up.
Discounts on Shipping
Any 3PL that ships thousands of small packages daily should be able to offer discounts on shipping. Some go a little further. Look for a fulfillment company with more than one FC location so your products don’t have to travel as far to reach your customers.
Also, look for a 3PL that maintains relationships with more than one shipping carrier. That way, when a hurricane, polar vortex or pandemic shuts down one route or carrier, they have other options. More options can also lead to savings if they have the ability to route shipments the most cost-effective way.
If your product needs temperature-controlled storage, you’ll need a 3PL that knows how to combine this type of storage with DTC fulfillment and shipping.
Ability to Use Branded Packaging
You put a lot of effort and money into developing your brand, your website and your packaging. When your customer opens that box, are they going to get the personalized brand experience you envisioned? Many 3PLs have a one-size-fits-all, our-way-or-the-highway mentality. If creating a unique customer experience is important to your brand, make sure your 3PL will accommodate your unique needs.
Kitting and Other Special Capabilities
How willing is your fulfillment partner to go beyond the basic pick/pack/ship services? Whether or not you need kitting, assembly, product inspection, special inserts or gift card activation, you will learn a lot about a 3PL by asking if they can handle it.
A good partnership is built on clear, two-way communication. Expectations and responsibilities should be discussed during the onboarding process and clearly defined in a set of SOPs for your brand. This document should cover all aspects of the fulfillment process, from storage to transportation to systems support. In addition, you should have a clear channel of communication in the event something needs immediate attention. Be wary of a 3PL that seems unwilling to sit down with you and offers only a boilerplate document for you to sign.
When choosing a 3PL it’s important to do your homework but in the end, you’ll have to trust your instincts. Are they listening to you? Do they have a good understanding of your needs but also show a willingness to adapt? Is their technology where it should be today, and are they investing in tomorrow? The answers to these questions will tell you whether or not you can trust them with your brand.
Esther Kestenbaum is president of Ruby Has Fulfillment