top of page

When is it Time to Switch 3PLs? Look for These Seven Signs


As an ecommerce business owner, you never want to start your work day and see a review like this: 


“Item showed up broken. We reached out for a replacement, but it was the wrong color! Will never buy from this seller again!”

Or...


“I’d love to review this but it never arrived, so zero out of five stars, I guess.”

If you see these types of reviews, you’d probably immediately send a message to your third-party logistics provider (3PL) to ask what happened. Sure, mistakes happen. But this is the tenth time in the past 3 months and it doesn't seem to be getting better.


Now, imagine receiving an email from your provider a week later saying, “Processing returns will now cost additional fees. Reach out for pricing.” That's the final straw.


By now it’s clear: you don’t have an issue with your product. You have an issue with your 3PL.


Horror stories like the one above are common across internet forums for sellers, but not every sign that it’s time to find a new logistics partner is so obvious. As a 3PL provider with clients all over the world, we at OTW Shipping have heard almost every reason why our partners switched logistics providers.


Below are some of the biggest red flags to look out for.


Seven Signs You Might Need a New 3PL Provider


You may need to find a new provider if your current partner does any of the following:

  • They don’t provide consistent and accurate service

  • They don’t offer competitive, transparent pricing

  • They don’t communicate effectively

  • They can’t guarantee warehouse security and quality control

  • They can’t guarantee fast shipping speed or ship to the locations you want

  • They don’t allow for product customization

  • They can’t help your business scale


We’ll discuss each of these below:


They don’t provide consistent and accurate service

As the link between production and your customers’ doorsteps, your 3PL needs to be reliable and accurate. Everyone makes an occasional mistake, but look out for repeat instances of these five issues in particular:

  1. Losing inventory in storage

  2. Shipping incorrect products or product variants

  3. Missing cutoffs for orders

  4. Sending orders out in unnecessarily large boxes resulting higher shipping costs

  5. Not securely packaging orders resulting in broken product


You never want to see more than half a percent of your inventory lost or more than 0.1% of your orders (1 out of every 1000) shipped broken or incorrectly. Returns are expensive to process and hurt your reputation. Consistently losing inventory means you risk overselling, impromptu stockouts, and lost profits during peak selling periods. All of these items may seem small but can waterfall into larger issues.


They don’t offer competitive, transparent pricing

Fulfillment services should be priced based on each client’s needs, so it’s normal to offer personalized quotes. That said, if your 3PL's pricing takes hours to decipher and it takes all day to audit your bills, you won’t know if you’re being overcharged.


Inflation is affecting us all, but be on the lookout for predatory rate hikes and fee increases. Want to add new services to your service level agreement (SLA)? Make sure your quotes don't seem too high compared to what you’re already paying. More than one fee increase in a year might also mean your 3PL is trying to hide behind inflation to unfairly profit off you. Make sure their numbers are forged in reality and have numbers to back up how much they're raising rates.


They don’t communicate effectively

Customers are more demanding than ever, and you need your logistics provider to answer questions and concerns even faster to keep your customers happy. If your 3PL forces you to submit tickets to outsourced support or go through email, you're not going to be able to work together effectively.


When you can't communicate with your provider, every inconvenience is an emergency. Expecting a response within 24 hours is the bare minimum to keep you afloat, but you need someone to get you responses in minutes or hours when issues arise. And not just someone online, but someone who actually handles your product and knows how to help. Good companies will often give you a direct communication channel outside of email or phone, like Slack. We offer a channel similar to Slack at OTW Shipping for all of our customers, Ryver.


They can’t guarantee quality control

Kitting projects consistently messed up? Retail orders not meeting requirements and causing you chargebacks? Clearly your 3PL has operational issues that are a sign of larger issues. If you can't rely on your 3PL to pay attention to the little things, you can't build trust - not the kind of partner you want.


They can't ship where you want to sell

Mistakes or negligence aren't the only issues at 3PLs – sometimes they simply lack the capabilities you need. More than half of online consumers expect fast shipping. That depends largely on where a 3PL’s warehouses are located. If your 3PL has one warehouse on the East Coast but you want to market a new product to Californians, your conversion rate might be hurt by longer shipping times.


Similarly, you might be excited to find your product going viral in Europe, only to realize your 3PL doesn’t do international fulfillment. Trends live and die in weeks thanks to social media. You might miss sales opportunities if your 3PL isn’t ready to quickly ship outside of specific areas.


They don’t allow product customization

Kitting and subscription boxes, which combine random or rotating assortments of items into a single package, have exploded in popularity since the pandemic. Moreover, custom packaging can help your brand stand out and improve the unboxing experience.


Not all 3PLs offer custom packaging or kitting services however. Don’t find yourself wanting to explore new avenues to stand out only to realize your 3PL can't handle it or will only do it for three times more than you thought.


They don’t help you scale or develop your business

If you first contracted your 3PL while making 50 sales per month, you might have thought it would be years before you hit 1,000 sales in a month. You likely didn’t bother asking if they could handle the capacity. However, ecommerce businesses can grow quickly and if your 3PL has a cap on monthly fulfillment capacity or their software or team can't handle it, you’ll be stuck overselling or scaling back your own success.


Not all 3PLs can accommodate new processes either (like kitting and subscription boxes mentioned above). You might decide to work with an established retailer, only to find your 3PL won’t meet their packing requirements. Go ahead and read Walmart’s 400-page secondary packaging guide. That stuff is hard!


How to Switch 3PLs

When your logistics provider stops delivering as promised or can’t offer you what you need, you owe it to your business and your customers to find a new one. 

Where should you start? You can read our article about finding 3PLs, and once you find one, we can help you transition too. Or if you need some quick advice, follow these three steps:


Step 1: Consider Potential Risks Before You Switch

  • Will switching to a new 3PL disrupt your operations?

  • Will you have to pay any cancellation or contract breakage fees?

  • Will the return on investment be worth it?


Step 2: Find Your New 3PL

Make sure your new provider will meet all your current and future business needs by forecasting your needs - retail expansion, new sales channels, etc.


Step 3: Make Your Transition Plan

Prepare by outlining your timeline, steps for data and product migration, employee responsibilities, contingency plans, and other details to make a smooth transition.


Growing Brands Ship With OTW Shipping

Most 3PLs treat client relationships like transactions. We designed our business to feel like in-house fulfillment for your business. We created OTW Shipping for growing ecommerce brands that crave the same service large brands receive every single day!


When you ship with OTW, you get:

  • 99.99% order accuracy

  • Transparent rates and custom quotes to fit your needs

  • 2-day ground shipping to over 90% of the US

  • Access to a Slack-like channel where you can chat with our team directly

  • State-of-the-art warehouse management software

  • And much more


Interested in a quote? Get your personalized rates now.



Comments


Commenting has been turned off.
bottom of page