If you’re an eCommerce seller, a third-party logistics partner (3PL) can be a lifesaver. 3PLs allow you to offload the time, cost, and headache of storing inventory and handling logistics on your own. In fact, 75% of retailers say the use of 3PL services has contributed to an overall reduction in logistics costs.
That said, not all providers are created equal. Unfortunately, a number of bad apples exist in the fast-growing 3PL industry.
When we start working with a new seller, we often ask them why they switched from their previous 3PL or 4PL. Often, they will volunteer a combination of reasons, but there are some common themes.
Here are the top 10 most common 3PL problems we’ve heard many times before — watch out for providers that tick these boxes.
Before an order can be shipped to a buyer, it has to be prepped with any necessary safety stickers, protective wrapping, custom packaging, and other details as required by your brand or the channel you’re selling on.
If you’re an Amazon FBA seller, for instance, you must meet strict prep requirements, which include attaching a barcode, passing fall tests, and using the right packaging for your product category. Should you fail to meet any of these criteria, you could face fees as much as $2.20 per unit to have Amazon repackage your products properly.
Whether your 3PL is prepping your items for FBA or direct-to-consumer deliveries, orders should be turned around within 24 to 72 hours. But the reality is, some may take 10+ days just to prepare your shipment due to disorganization or inexperience.
The solution: Find a 3PL with experience in handling products like yours and managing orders for marketplace services like FBA (this shouldn’t be their first rodeo).
If you have custom requirements for how your partner should package or label your products, provide clear instructions up front.
One of the most frustrating things about working with a 3PL is the inability to keep tally of your own inventory. Some 3PLs may not have the right processes or software in place to provide real-time updates on your stock, even though it’s your money and your reputation on the line.
Behind the scenes, the warehouse floor may be a frenetic scene, with employees rushing to get orders out the door and nobody making sure clients are kept in the know.
The solution: Find a 3PL with a WMS or other online portal you can access at any time.
For instance, MyFBAPrep has Preptopia®, which offers real-time insight as to where your stock is and how your SKUs are performing.
If you have questions, Preptopia® lets you reach out to the team from within the portal, plus includes a variety of other tools to help you analyze your inventory.
Similar to the issue above, it’s not uncommon for 3PLs to keep you in the dark, even after you’ve reached out with a question.
This is typically due to the multitude of moving parts within a logistics operation. If your 3PL isn’t big or experienced enough, it’s easy for customer support to fall through the cracks.
The solution: Find a 3PL that assigns a dedicated account manager to your team. This ensures you always have someone to reach out to who’s personally responsible for communicating with your team.
The best 3PLs are also reachable through phone, chat, and/or email — not merely a ticketing system — when an emergency arises.
This may be one of the most unnerving flaws of any 3PL. If, for some reason, your item arrives or gets damaged within the warehouse, your partner should spot this before the product is delivered to your customer.
The last thing you want is to receive customer complaints because your 3PL didn’t have the quality control processes in place for employees to identify and report issues early on.
The solution: Work with a provider that has clear internal guidelines for how to ship, handle, and inspect your items for damages. It should also be clear who’s responsible for what.
For example, if an item arrives at a 3PL’s warehouse with poor protective packaging, you should rightfully be held liable for any injuries to the product. However, if an item is damaged while in the warehouse, then your provider should assume the cost of replacement.
Additionally, it helps to work with someone who’s handled your types of products before. Some 3PLs may not support cold storage, for example, while others may specialize in specific categories or services. Find one that’s most suitable to your storage needs.
When a 3PL receives a new shipment, there are various tasks that they need to perform to make sure your wares are properly accounted for and stored in the right place. It’s possible your items may be miscounted, mis-routed, or remain unreported because of poor workflows.
If the latter occurs, you’ll likely be left wondering whether your shipment ever made it to the warehouse or not, and feeling uneasy knowing you have a lot of money tied up in your inventory.
The solution: Find a partner with software like Preptopia® that notifies you when your inventory has been received, as well as shows the exact number of units counted.
Also, ask your partner for a list of pre-receiving tasks for you to complete. This could include steps like providing the number of units per pallet and giving instructions for how to label your items so your 3PL knows exactly what to do and expect when your shipment arrives.
When you hire a 3PL, it’s assumed they’ll meet basic requirements like delivering your orders on time or fulfilling orders accurately. If they fail to do so, it should be clear who takes responsibility and how.
That’s where service-level agreements (SLAs) come in. An SLA acts as an official contract between you and your provider, specifying the details, length, and nature of your partnership. However, some 3PLs may not openly offer an SLA, or give them with loose terms.
The solution: Contract with someone who’s transparent about pricing, services, and other important details. Your SLAs should include details like processing procedures, order fulfillment cut-off times, KPIs (for which your 3PL is held accountable), and much more.
If your partner is unwilling to discuss SLAs or adjust any terms according to your feedback, run. This doesn’t bode well for a future relationship.
A number of order errors — wrong item, wrong quantity, or wrong address — reflect poorly on your business. Unfortunately, any of these can occur if your 3PL is disorganized or doesn’t enforce frequent quality checks.
Relatedly, orders may be delayed if your provider fails to comply with FBA standards and processing times. Amazon takes several days to process shipments before your items are available for delivery. Moreover, if Amazon spots an issue with how your inventory has been prepped, you could face additional delays and fees.
The solution: When on a discovery call, ask your provider about the quality checks they perform within the warehouse. What steps do they take to make sure your items are accurately labeled, stored, and picked?
Include terms in your SLA outlining specific performance standards, as well as what happens when a mistake occurs.
Nobody wants to hear that his or her shipments are parked in a lot, waiting to be processed. Sadly, this happens from time to time when a 3PL doesn’t have strict procedures for the unloading and receiving process, or lacks enough space in the warehouse.
So, a traffic jam occurs in the parking lot, and your container winds up being one of many waiting to be unloaded.
The solution: Work with a well-reputed team that has enough manpower to deliver on their SLAs and promises. Ensure your 3PL has enough storage space to house your inventory.
If you know there’s a busy sales season approaching, talk with your partner early on to secure extra storage space and manpower, and prepare them for additional shipments and a spike in sales.
3PLs need to scout for warehouse space just like any other business. Some may have dozens of warehouses located throughout the U.S., while others may only have a handful in select cities.
If you’re looking for a partner with locations near your supplier (which helps reduce shipping costs and speeds up delivery), you’ll need to do your due diligence.
The solution: Look for a fulfillment partner that is transparent about their warehouse locations.
For instance, MyFBAPrep has a map of our 50+ locations directly on our site.
If you can’t easily find information like this by looking at a company’s website, schedule a discovery call and talk through any concerns or questions.
Inventory shrinkage is a significant problem at some facilities. This stems from issues like accounting errors, shipping errors, human errors, or theft. According to one report, 42.7% of shrinkage is due to employee theft, while 15.4% is due to administrative errors.
The solution: This loops back to visibility. Partner with a 3PL that has a WMS or other system to properly track and account for your wares. You should be able to see any discrepancies between your shipments (or sales) and the number of units still at the warehouse.
In addition to this, your provider should have its own internal protocols for discouraging theft and training employees on how to report theft anonymously. To prevent further inventory loss, your 3PL should reduce dock-to-stock time and take regular stock counts.
When you’re looking for a new 3PL, or evaluating your existing one, pay attention to the most common complaints above. If you speak to a customer of theirs as a referral, ask about how often they had to deal with these issues. If you’re working with a 3PL and considering a change, look at how many times you’ve encountered or voiced those complaints.
Once you find a 3PL that deals with all of those complaints effectively and preempts them, you’ll know you’ve found a reliable, trustworthy, and efficient long-term partner.