What Drives the Choice of a Third Party Logistics Provider?

The search to find the right third-party logistics (3PL) partner that will suit your business’s needs can be daunting. Learn the primary considerations driving the choice of a third party logistics provider.

How to Find a Third-Party Logistics Provider

A 3PL company provides outsourcing services to receive, store, pick, pack and transport your products. They provide logistics, warehousing, shipping, and handling of your inventory and products that can optimize your inventory management and increase your efficiency. Therefore, you need to determine which part of your business process you are willing to outsource. Plus, you have to consider how much 3PL will cost and whether the service provider will enable you to cater to international customers. To help you sort your dilemma, we have listed seven tips to help you find the 3PL for your online business. 

Define Your Needs

You are adding a new member to your supply chain team. Signing a contract without first knowing what you need in the first place won’t be a good idea. Still, you’ll be surprised that a lot of people go through this unprepared. Don’t become one of them. Come up with clearly defined expectations. What are the things that you need? How do you expect to see the results, and when will that be? By defining your needs from the get-go, you won’t fall into partnering with the first 3PL provider you’ll encounter. Instead, you will be able to gauge whether a service provider can cater to your needs or not. 

Consider the Cost

Your focus shouldn’t be on the price point, but transparency. Naturally, you’ll consider 3PL companies who disclose their prices upfront. That’s because this is a great indicator that they value transparency. Nonetheless, keep in mind that every e-commerce business has unique needs. What you can do is contact a customer service representative and inquire about their pricing.

What’s important is that you don’t get tempted by hiring a service provider with the lowest cost. Ideally, you need to browse through all the service features attached to the price before you choose. This is to prevent you from receiving underwhelming results from your service provider. 

Seek Scalability

You also need to consider scalability when looking for a suitable third-party logistics company. When we say “scalability,” we mean that your 3PL service provider can grow or scale back with you. After all, e-commerce businesses are prone to the ebb and tide of sales. That’s because some products generate sales based on seasonality.

Hence, you will need a logistics partner who can help you expand and scale down your operations when needed and without hassle. The last thing you want is to end up choosing a 3PL provider that’s too rigid. 

Check Company Stability

Another thing you need to take note of when partnering with a 3PL is to check for its stability.  Look for a company that has established itself in the industry and is already successful. Preferably, work with a service provider who has partnered with various online stores and international freight forwarders. That’s because this is an indication that the 3PL company knows what they are doing. And having international freight forwarders partnerships means that you expand your business overseas.

Ensure Cutting-Edge Technology

The provider that you work with should not be stuck on using technology that is already obsolete. A company that uses cutting edge technology means a seamless process. This could mean real-time inventory update and management and an integrated point-of-sale system. You can also look for a logistics partner that can handle product returns for you. Depending on your business’s size, you might not need the advanced technologies that they offer for now. Nonetheless, it is okay to know that they have those. That way, you will not need to look farther in case your business starts taking traction. 

Know their Insurance Processes

Once you’ve come up with a shortlist of potential 3PL partners, the next step is to know their insurance policy. Having an insurance policy means that they can protect and secure your assets. Moreover, it’s imperative to make insurance claims quickly. Here’s the thing: An excellent 3PL company ensures that their insurance policy is easy-to-understand.

Review Customer Service

Keep in mind that the 3PL company you work with will be closely connected to your business- at least from most of your customers’ perspective. Think of the 3PL company that you partner with as more of a representative of your business. That’s why choosing a 3PL company that focuses more on addressing customer concerns and issues will benefit you in the long run. Most of your customers will attribute this success to you, and will ultimately lead to repeat business in the long run. 

Finding a Third-Party Logistics Provider

Many third-party logistics companies offer enticing services. However, some of them can be too good to be true or just scratching the surface. That said, it would be best to refer to this post and cross-check whether your preferred service provider meets all these criteria. This also enables you to ask the right questions. That way, you will know whether a 3PL company suits your business’s needs. That’s because the right logistics partner can help expand your market reach and make your business grow.