Finding the right third-party logistics (3PL) partner for your online retail business is imperative, especially if you’re looking to achieve rapid growth. Your 3PL play a major role in the fulfillment process, greatly impacting the customer experience.
Improving the customer experience is one of the most important components to scaling your business. Let’s look at four signs — from late deliveries to lack of risk protection — that could mean it’s time to ditch your current partner and begin the search for a new 3PL.
Shipments aren’t on time
Perhaps the most glaringly obvious sign that it’s time for a new 3PL is when shipments are frequently late or missing. This makes a major impact on the customer experience, and YOUR reputation. Customers don’t blame the 3PL, they blame the brand.
On-time deliveries are important to consumers. 66 percent choose a retailer primarily based on delivery options and timeframes, according to an Accenture eTailers research report. And Amazon was in hot water when their packages during the holidays were late.
When finding a new 3PL, make sure you check references and reviews, and ask about their perfect order rate. If it’s not good, keep looking.
You rely on a single provider
Accenture also found that 70 percent of ecommerce businesses use multiple parcel providers. Nearly three-quarters do so to get the best rates, while 68 percent aim to mitigate risk associated with putting all your eggs in one basket.
If you only have a single 3PL partner and the partnership is great, it’s okay to keep it and add a secondary 3PL to your list. Perhaps they serve a specific region or specialize in a particular type of packaging — whatever it is, they should offer something different from your current 3PL so that you can broaden what you have access to.
There’s no risk protection
Deanna Clark-Esposito, Esq., Managing Attorney at Clark-Esposito Law Firm, P.C. says that when a 3PL provides no risk protection, you’ll want to look for an alternative provider to better safeguard your business.
“If a 3PL can’t provide you with an adequate level of risk protection, it’s time to ditch them and find one who can,” she says. There are other areas beyond shipping where a 3PL comes into play, and there could be legal implications. For example:
- Ensuring shipments aren’t going to restricted locations or denied parties
- Helping to obtain foreign importers of record
- Securing foreign warehousing and handling potential title and currency repatriation obstacles
“In my experience, [3PLs] need to stay on top of … changing laws which can occur overnight,” Clark-Esposito says. “Unfortunately, due to the reliance by companies on their 3PL for such compliance needs … a lapse in the 3PL’s oversight could lead to real consequences.”
They can’t scale fast enough
For rapidly growing businesses, it’s important to use tools and partners that have the ability to scale with your company. As you grow, they grow. “If your company is growing at a rate that’s too fast for you or a 3PL to keep up with, it’s imperative to find a company that can cater to your progress,” says Bea Tanese, media outreach specialist at ShipMonk.
“High costs, inaccurate orders, no international capabilities, poor management system — these are all signs that it’s time to spread your wings,” says Tanese.
Moving forward with a new 3PL
Clark-Esposito and Tanese agree that it’s important to understand your contractual and legal obligation to letting your current 3PL know about the desired change in your business relationship.
“Before switching 3PLs, always check the contract you signed to see what kind of notice you have to give. Then, make sure to give that notice,” says Tanese. “It would be wise not to burn bridges in the process of switching over to a 3PL, and the best way to do that is by following the appropriate protocol.”
How much you rely on your 3PL typically determines what your notice obligations are, Clark-Esposito says. “That 3PL would have reason to know that its client will be looking elsewhere.”
“No business can survive and thrive with incorrect orders, delayed shipping times, or outdated technology,” says Tanese.
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