A service level agreement, or SLA, is a formal, documented agreement that outlines the level of service that a vendor is expected to provide to their client. <\/p>\n<\/div>\n\n\n\n
Specifically, an SLA specifies the details of the service, the standards to which a vendor<\/a> must adhere, and the metrics for measuring service performance. An SLA will also outline any financial penalties that the provider incurs should they fail to deliver on any part of the agreement. <\/p>\n\n\n\n An SLA formalizes a commitment between a service provider and their client, and both parties must agree on the terms. This kind of binding contract helps ensure that neither the vendor nor client make unfair demands of the other, and sets expectations for the partnership. <\/p>\n\n\n\n While SLAs are used across many different industries, they are particularly important for ecommerce brands. Ecommerce businesses usually work with at least a couple outside companies, vendors, suppliers, or manufacturers<\/a> to support different aspects of their operations. These may include: <\/p>\n\n\n\n \u201cThe technology that ShipBob has, like bulk uploads and their advanced reporting, is how we know we\u2019re with the right partner. ShipBob\u2019s ability to meet SLAs, whether it\u2019s receiving our inventory or getting a B2B order out, is incredible. At the end of every week, I look at the report of how many orders ShipBob sends out with Bear and Gard and we\u2019re always amazed.\u201d<\/em><\/p>\n\n\n\n Courtney Trevino, VP of Finance & Ops at BRUCE BOLT <\/p>\n<\/blockquote>\n\n\n\n Because different types of partners provide different services, the details, requirements, and standards covered in each partner\u2019s SLA will vary. For instance, a warehousing partner\u2019s SLAs may specify the maximum number of days they can take to receive and stow inventory, while a SaaS partner\u2019s SLA might dictate a certain amount of uptime for a web page or software tool or a response time or resolution time if there is an outage or downtime. <\/p>\n\n\n\n SLAs are important for ecommerce brands because they serve as a contract that formally outlines the level of service that a brand can expect from each of their vendors. When the ecommerce business knows what services they will receive, what terms and conditions apply for those services, and what standards should be maintained during service delivery, they can plan around those expectations. <\/p>\n\n\n\n SLAs also hold vendors accountable for providing the services that an ecommerce brand pays for, which helps to establish trust and provides peace of mind. <\/p>\n\n\n\n There are three main types of SLAs that are used across industries. <\/p>\n\n\n A customer-based SLA is tailored to address the needs of a specific customer, meaning that the SLA is designed for one client (rather than for a vendor\u2019s entire customer base). It includes details about the service level that the customer is entitled to, the terms and conditions to be followed, and the key performance indicators<\/a> to be met. <\/p>\n\n\n\n This type of SLA can be highly beneficial for brands, as it\u2019s customised to ensure that the client gets exactly what they need out of the partnership. The service provider also gets a very clear idea of how to meet their client\u2019s business needs, since the SLA leaves little room for misaligned expectations. <\/p>\n\n\n Service-based SLAs are built around a specific service that a vendor offers to multiple customers. This type of SLA standardizes the service, outlining the details, limitations, KPIs, and quality of the service whenever and to whomever it\u2019s offered. <\/p>\n\n\n\n A third-party logistics provider<\/a>, for example, may offer a service-based SLA for order accuracy. This means that the provider agrees to maintain a certain order accuracy rate for every brand that it partners with. <\/p>\n\n\n A multi-level SLA is often used when a vendor offers the same service to multiple customers, but at different levels. In other words, a company can offer variations of an SLA, promising different performance levels depending on what service tier a customer uses. <\/p>\n\n\n\n For instance, while a 3PL company\u2019s<\/a> general SLA might set fulfilment time between 3-5 business days, the SLA for customers using their premium 2-day shipping<\/a> service may be promised a shorter timeline of 1-2 business days. <\/p>\n\n\n\n Every service-level agreement is different in terms of structure and content. Some vendors may have standard SLAs that they use across all customers and that are a condition of the partnership, while others may collaborate with you to develop SLAs unique to your brand. <\/p>\n\n\n\n No matter what vendor or industry you\u2019re dealing with, all SLAs should include the following components: <\/p>\n\n\n\n Just as third-party vendors and partners commit to SLAs for ecommerce brands, ecommerce brands commit to SLAs for their online shoppers and end customers. However, they may experience a number of challenges when trying to meet these SLAs. <\/p>\n\n\n Issues in the inventory management<\/a> process could result in delays or inaccuracies that prevent ecommerce businesses from meeting SLA requirements. For instance, if a brand underestimates the amount of inventory they have on-hand<\/a> and accidentally stocks out of a product, they could be forced to put customers on backorder<\/a>, undercutting their delivery time SLA. \u00a0<\/p>\n\n\n If an ecommerce business experiences issues in the supply chain, it could lead to delays in shipping and fulfilment<\/a>, which could prevent them from meeting SLA requirements. Supply chain bottlenecks<\/a> or disruptions, for instance, prevent goods from moving seamlessly throughout the supply chain. This means that businesses may be unable to fulfil orders and ship them out on time, which will impact customer satisfaction. <\/p>\n\n\n Using outdated technology or failing to integrate tools can create issues that prevent ecommerce businesses from fulfilling SLAs. If different platforms aren\u2019t properly connected, businesses don\u2019t have the seamless visibility needed to effectively manage and fulfil orders. <\/p>\n\n\n As ecommerce businesses scale and expand to new regions, they may experience new challenges that make it difficult to meet their SLAs. This is particularly true if their growth is sudden or if they\u2019re expanding to remote geographic areas where delivery is unexpectedly difficult. <\/p>\n\n\n\n While SLAs are very useful for managing expectations, failing to fulfil them could result in financial (and even legal) repercussions. That\u2019s why it\u2019s important to carefully craft your SLAs and review your partners\u2019 to position your brand for success. <\/p>\n\n\n\n Here are some best practices for successful SLA creation and implementation. <\/p>\n\n\n\n Aligning expectations is crucial to maintaining good supplier relationships;<\/a> otherwise, it could lead to misunderstandings and disputes down the road. Make sure your SLAs set clear expectations on what services are to be provided, along with timelines, deliverables, quality of service, and more. The more specific you are with your expectations, the better you can ensure SLA compliance. <\/p>\n\n\n\n SLAs should also be realistic. If a potential partner\u2019s SLAs sound too good to be true, make sure to double check them against industry standards and have the provider confirm how they will achieve the SLA\u2019s standards. If you are setting SLAs for your ecommerce business, remember to leave yourself enough wiggle room to navigate minor issues or delays. Avoid overpromising, as you will be more prone to disappoint customers and damage your brand\u2019s reputation. <\/p>\n\n\n\n Regular monitoring is essential to maintain SLA compliance, so make sure to constantly track relevant KPIs. In ecommerce logistics, this typically includes KPIs around: <\/p>\n\n\n\n Note any deviations and point them out to the provider before they impact your overall operations. Some partners (like ShipBob) may even offer proprietary software or an analytics dashboard that tracks key data in real-time, so that you can view performance and SLA metrics at any time without having to hunt down and analyse the data yourself. <\/p>\n\n\n With SLAs holding you and your partners accountable for meeting certain performance standards, it\u2019s easier to see what operations or business processes need improvement. By consistently monitoring SLA performance data, you can identify opportunities for optimisation across your supply chain while making sure that SLAs are met. You may even discover ways to exceed customer expectations and improve satisfaction. <\/p>\n\n\n\n The best way for your ecommerce business to meet its SLAs for its customers is to partner with an industry-leading logistics partner that meets theirs. As an expert supply chain and logistics platform, ShipBob delivers the warehousing, fulfilment, and shipping solutions you need to not only uphold your SLAs, but delight customers \u2013 all while staying true to our own SLA commitments to your business. <\/p>\n\n\n\n Here are just some of the ways that ShipBob empowers brands like yours to achieve their SLAs. <\/p>\n\n\n\n ShipBob\u2019s 2-Day Express Shipping<\/a> program ensures that customer orders are delivered within two days \u2013 period. This helps brands meet tight delivery SLAs to compete with ecommerce giants like Amazon, increase conversion (especially with 2-day badging on eligible products), and even boost customer satisfaction by reducing order lead time. <\/p>\n\n\n\n \u201cBecause we sell a high-quality anti-aging product, we want to provide high-quality service throughout the whole customer experience \u2014 and that includes a quick and smooth delivery that shoppers have come to expect. ShipBob\u2019s 2-Day Express ship option lets us meet these expectations for US customers, and compete with the likes of Amazon for speedy fulfilment.\u201d<\/em><\/p>\n\n\n\n Maria Osorio, Logistics and Operations Director at Oxford Healthspan <\/p>\n<\/blockquote>\n\n\n\n Alternatively, brands looking to meet a 2-day delivery SLA can distribute inventory strategically across the US using ShipBob\u2019s Inventory Placement Program.<\/a> ShipBob\u2019s proprietary algorithm uses your brand\u2019s real order data to calculate the most optimal split of inventory across our network of dozens of fulfilment centres, so that you can place inventory closer to customers. This enables you to ship orders via inexpensive ground shipping, and still have them arrive in 2 business days. <\/p>\n\n\n\n \u201cBy leveraging ShipBob’s US fulfilment network, we’ve significantly reduced shipping times. Previously, it would take us five to six business days to deliver items to customers. However, with the utilisation of four of ShipBob’s US fulfilment centres, the average delivery time has been reduced to just two and a half days from order receipt to customer receipt. <\/em><\/p>\n\n\n\n Expanding our warehouse network from 2 to 4 warehouses has translated into substantial cost savings, amounting to $1.5 million in freight expenses for Our Place.<\/em><\/p>\n\n\n\n Currently, only 2% of our parcels are reaching Zone 7 or Zone 8 collectively, indicating that 98% of our parcels are reaching Zones 1 through 6. By shipping locally to lower zones, we’re achieving the most significant reductions in outbound costs.\u201d<\/em><\/p>\n\n\n\n Ali Shahid, COO of Our Place <\/p>\n<\/blockquote>\n\n\n\n ShipBob will even handle physically distributing your inventory for you. Simply send your inbound inventory to one of ShipBob\u2019s receiving hubs, and we\u2019ll take care of sending it to regional fulfilment centres on your behalf. <\/p>\n\n\n\n ShipBob\u2019s industry-leading warehouse management system (WMS)<\/a> gives you real-time visibility and control over your ecommerce operations. It serves as a single source of truth for managing every aspect of your ecommerce, including inventory management, order management, transport management, and picking and packing \u2013 giving you real-time insights to help you meet your SLAs. <\/p>\n\n\n ShipBob\u2019s WMS can also help your brand improve order accuracy and operational efficiency through location specific inventory visibility, flexible picking methods, and prescriptive, visual step-by-step packing flows and built-in visuals. <\/p>\n\n\n\n \u201cShipBob\u2019s WMS has more than doubled, if not tripled, our productivity in terms of labour hours. Our average days to ship is now only 0.8 days, so most packages are shipping same-day or next-day, with rare exceptions. We\u2019ve cut 4 days of lead time because orders are getting processed, fulfilled, and shipped more efficiently. When we first started with ShipBob, we were doing about 15K orders per month, and now we\u2019re processing 30K \u2014 double what we were doing just six months ago.\u201d<\/em><\/p>\n\n\n\n Ben Tietje, Co-Founder and CEO of Earthley <\/p>\n<\/blockquote>\n\n\n\nThe meaning of SLAs in ecommerce and business <\/h3>\n\n\n\n
\n
\n
3 types of SLAs <\/h2>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2022\/07\/b2b-distribution-700x280.jpg?w=1280px\")
<\/figure>\n<\/div>\n\n\n1. Customer-based SLA <\/h3>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/au\/wp-content\/uploads\/sites\/33\/2024\/03\/e6e30f797bec9a3ca0144d19056f1426-700x467.jpeg?w=1280px\")
<\/figure>\n<\/div>\n\n\n2. Service-based SLA <\/h3>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/au\/wp-content\/uploads\/sites\/33\/2025\/01\/bb78933dba1a8974d6ec8fddd388be65.png?w=1280px\")
<\/figure>\n<\/div>\n\n\n3. Multi-level SLA <\/h3>\n\n\n\n
How SLAs are structured in ecommerce <\/h2>\n\n\n\n
Key components of an SLA <\/h3>\n\n\n\n
\n
SLA hurdles ecommerce businesses face <\/h3>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2023\/12\/dc8bfd1d30090f09c45b3a6b5d84f52e-700x467.jpeg?w=1280px\")
<\/figure>\n<\/div>\n\n\nInventory management issues <\/em><\/h4>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/au\/wp-content\/uploads\/sites\/33\/2022\/07\/iStock-927673200-3.jpg?w=1280px\")
<\/figure>\n<\/div>\n\n\nShipping and fulfilment delays<\/em> <\/h4>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2023\/02\/warehouse-technologies-700x280.png?w=1280px\")
<\/figure>\n<\/div>\n\n\nTechnology and integration challenges<\/em> <\/h4>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/au\/wp-content\/uploads\/sites\/33\/2022\/07\/iStock-510572900-1.jpg?w=1280px\")
<\/figure>\n<\/div>\n\n\nScalability and geographic difficulties<\/em> <\/h4>\n\n\n\n
Best practices for implementing SLAs <\/h2>\n\n\n\n
Set clear, realistic expectations <\/h3>\n\n\n\n
Monitor and report <\/h3>\n\n\n\n
\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2025\/01\/5b9f4c734fa140dc45fc74314dbe92ae-e1737342249307-700x471.png?w=1280px\")
<\/figure>\n<\/div>\n\n\nImprove and optimise <\/h3>\n\n\n\n
Meet and exceed your SLAs with ShipBob\u2019s fulfilment solutions <\/h2>\n\n\n\n
Achieve 2-day shipping <\/h3>\n\n\n\n
\n
Distribute inventory for fast, affordable delivery <\/h3>\n\n\n\n
\n
Power your operations with ShipBob\u2019s WMS <\/h3>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2024\/11\/e31b57c0b73738f2f473975710225956-700x460.png?w=1280px\")
<\/figure>\n<\/div>\n\n\n\n
Leverage a global fulfilment network <\/h3>\n\n\n\n
![\"\"](\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2024\/11\/7dc5d99b1b09518852785b9733c7605f-700x438.png?w=1280px\")
<\/figure>\n<\/div>\n\n\n![](\"\/wp-content\/themes\/shipbob-2022\/resources\/svg\/plus-solid.svg\")
<\/div><\/div>