7 Factors to Consider When Selecting a 3PL
Gone are the days where a third-party logistics (3PL) company is just "4 walls." It used to be that you would lease your own warehouse space and do everything yourself. Racking, shelving, inventory, fulfillment, etc. "Third-party" means that you are using someone else's services and facility to handle this important function for you, and you are paying them for a set of services like storage, pick/pack, and fulfillment, among others. The best 3PLs now offer several value-added services and are highly specialized.
Similar to agency shopping, "using the one your friend has" is often not a great fit.
What are the factors that seem different among many 3PLs that are important for you to evaluate when selecting your prospective vendor?
Do they have enough locations near where your consumers and suppliers are in order to deliver the best and cheapest service?
3PLs are often category-specific. Beyond the problem with shipping bulky or perishable items such as furniture, flowers, or milk, there is a significant difference in both packing and shipping for things like apparel and shoes.
Automation has gained traction, but is still extremely spotty across providers. What percentage of their parcels benefit from consistent automation? How? What is their innovation pipeline? Some don't even mention it.
Even in 2020, some 3PLs offer no consistent returns services. For some, it's hardly on the rate card.
Turnaround time is also critical - I've seen a wide range of processing promises.
Amazon expertise is another differentiator. Not only for SFP (seller-fulfilled Prime) and FBA (fulfillment by Amazon) but also 1P (first-party) sales.
Liquidation and ReCommerce is also a service offered by some. In a few, it's a specialty.
If you keep asking, you will find what each type of facility specializes in, and who they are geared for. I am consistently amazed by retailers who give advice on mailing lists to other retailers without knowing a thing about their business. "My provider has the best rates, you should use this one." What else would you choose this way? How could you trust someone's advice without understanding a thing about their requirements and expectations?
