Switching 3PLs: How To Know It’s Time to Change Fulfillment Providers and What To Look For In A New 3PL

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If you’re already working with a third-party logistics (3PL) provider, you’re familiar with the costs, processes, and operations involved in outsourcing ecommerce order fulfillment. But that may also be why you’re not certain that your current fulfillment provider is the best fit for your business.

Not all 3PLs are created equal, and working with one that isn’t meeting your business’s needs can lead to stunted growth or even loss of customers. Between contracts, perceived risks, and logistical hassles, it may never seem like the right time to change providers — but taking a critical look at your current 3PL and fulfillment strategy is vital to set your business up for future success. And as it turns out, switching 3PLs is not as hard as you may think.

In this guide, we’ll cover how to figure out whether your business needs to change 3PLs, how to choose a new ecommerce fulfillment company, and steps on how to make a seamless transition.

A note on meeting customer expectations

Before we get into the details of when and how to switch 3PLs, it’s important to understand the impact that your 3PL can have on your business.

It’s no secret that today’s customers have high expectations, and the delivery experience is no exception:

“It’s paramount for people to feel confident that they will receive their products in the shortest amount of time possible. We’d hate to see our customers go somewhere else because we don’t offer 2-day shipping, so we use ShipBob’s 2-Day Express program.”

Francesca Cavallo, Co-Author of Rebel Girls

If your 3PL isn’t helping you provide a best-in-class customer experience, you could be missing out on potential customers and revenue. If you can’t offer your customers the fast, affordable shipping they’ve come to expect, they’re likely to find stores that can.

Either way, it’s vital to your success as an ecommerce merchant that you partner with 3PL that can help you meet rising customer expectations.

Knowing when it’s time to switch 3PLs

Outsourcing fulfillment is a step above shipping orders from home, but it’s important to make sure your 3PL is a good fit. Here are some signs that your current 3PL might not be the best choice for your business — and lessons learned by other ecommerce brands who have been in the same situation.

They’re messing up orders

Your reputation is on the line when you outsource any part of your business. When it comes to holding inventory and shipping orders in a secure, consistent, and timely way, your 3PL has to get it right for you.

“We were working with a 3PL that did not keep promises and had a lot of order errors. As an emerging company, brand recognition and loyalty were key to our business, so we ultimately decided to move to ShipBob. From day one of transitioning to ShipBob, we’ve appreciated the hands-on time spent with us. They are really committed to their customers and keeping themselves accountable.”

Pablo Gabatto, Business Operations Manager at Ample Foods

Fulfillment is not a perfect science and errors are of course bound to occur, especially as things happen while in transit. Make sure your 3PL is a partner that will make it right.

They’re not continuously advancing and improving

Ecommerce is constantly evolving, and customer expectations are doing the same. Can your 3PL keep up with the constant shift? If your fulfillment provider hasn’t changed or expanded their technology, operations, or facilities since you started working with them, they aren’t thinking ahead — and they probably don’t have your customer’s expectations in mind.

“Good enough” is the wrong mindset when it comes to ensuring fulfillment and your technology, processes, and orders are streamlined and optimized for scale.

“ShipBob is not complacent — their software is always improving and the fulfillment services are always advancing, like expanding 2-day shipping coverage. The company has ambition for growth and they keep developing in very real ways.”

Noel Churchill, Owner and CEO of Rainbow OPTX

Not all 3PLs have the resources necessary to keep technology and operations up-to-date, meaning they don’t have the resources to help you continue to scale. ShipBob has received over $62.5 million in funding and uses that capital to make improvements for its customers.

“Other fulfillment providers had a “This is how it’s done, so take it or leave it!” attitude. ShipBob’s dedication to continuously enhancing their offering by getting feedback from the customer community, as well as their customer service, is unparalleled to other 3PLs.”

Sarah Ribner, Co-Founder, PiperWai

You’ve outgrown the 3PL (or have plans to soon)

If your shipping volume is growing exponentially as your business scales, there may come a time when your current 3PL can no longer support you. This is especially true if you’re working with a local mom-and-pop shop whose focus is mainly small businesses.

“We found a fulfillment center within a 5-mile radius of our manufacturing center, which seemed convenient at the time. Turns out [our former 3PL] couldn’t meet our needs, especially as we were growing both our online and wholesale channels. It was a very basic warehousing and shipping operation, where inventory tracking is all done manually.”

Sarah Ribner, Co-Founder, PiperWai

In addition to the ability to scale operations, different 3PLs have different inventory storage systems. It’s important to work with a 3PL that has more than enough warehouse space for your current inventory — as your product line and order volume grow, your 3PL storage should be able to scale with you.

“When we first launched, we briefly worked with a different 3PL, but the biggest issue was that they were too small. They only had two locations, so I knew they wouldn’t be able to accommodate the growth we anticipated.”

Founder, My Calm Blanket

If you’re trying to expand internationally, you can either add additional 3PLs to your roster or fully switch to a global fulfillment company (for example, having one 3PL in the US, one in Europe, and one in Australia).

You need better support

If you have a problem with an order or need an update on inventory levels, do you know who to reach out to at your current 3PL? And do you get the answers you need in a timely manner?

“I can talk directly to my account manager [at ShipBob] who personally makes sure that everything is running smoothly and works with me to solve any issues. This level of support is something that no other 3PLs could match, especially at our volume and scale.”

Greg MacDonald, CEO, Bathorium

A good 3PL will offer customer support that goes above and beyond answering FAQs. Your 3PL should be a partner, not just a provider; They should be able to give you a transparent, holistic view into your business’s fulfillment operations, as well as help connect you to other partners in the ecommerce space that can help you grow your business.

“Having a helpful, dedicated account manager at ShipBob that we can go to who responds quickly and has a good understanding of our products and company is really important to us. It’s given us extra support we wouldn’t have with a different 3PL.”

Oded Harth, CEO & Co-Founder of MDacne

Their technology is basic or archaic

First and foremost, a 3PL today must offer fulfillment software with order management capabilities. Full stop. If you don’t have insight into the status of every order that passes through the warehouse, it’s impossible to address customer concerns or assess the quality of the experience you’re offering customers.

“At the end of the day, we needed a more efficient, accurate, and technologically advanced 3PL partner with better customer service than our previous fulfillment center.”

Sarah Ribner, Co-Founder, PiperWai

Oftentimes, however, being able to track orders isn’t enough. If you have to manually upload orders to your fulfillment provider’s system, you’re losing a lot of time — and your customer’s orders likely aren’t going out as soon as they should be. You should be able to sync your order fulfillment software with your ecommerce platform to automatically push orders as soon as they’re placed.

If your current setup requires you to use several different systems to keep things running, you risk producing inconsistent data or duplicating SKUs or orders. Keeping things streamlined through just one or two platforms can reduce clutter and chaos.

Your 3PL should also automatically push tracking info back to your store as soon as the order ships. This two-way push of data helps ensure that orders are shipped quickly and that you and your customer are both kept in the loop.

“ShipBob aligns very well with Shopify and doesn’t have older, archaic technology like other 3PLs.”

Greg MacDonald, CEO, Bathorium

You’re not getting your money’s worth

The cheapest 3PL isn’t always the best one, but if you’re paying a premium for order fulfillment, the value to your business should be clear. The technology, warehouse management capabilities, customer support, customization options, and geographic footprint can all add value over a traditional 3PL.

There might be hidden logistics costs you’re not necessarily aware of, such as freight costs to move inventory from a port city to a rural location — just to ship orders back out to the coasts. The cost of these inefficiencies adds up over time.

“Other 3PLs pass fees onto the client for work they do related to manual processes because they lack the fulfillment technology needed to meet customer expectations.”

Carl Protsch, Co-Founder, FLEO

Many 3PLs are notorious for hidden costs and fees for every little movement. Fulfillment pricing and cost structures can be confusing.

“Our other fulfillment company made empty promises to us about costs and failed to mention all the other line items that factor into the total costs, unlike with ShipBob, where everything was bundled into a few line items. With pricing being way too high, we realized we were sold the “perfect” solution. Additionally, the other 3PL didn’t file claims for damaged shipments for us like ShipBob.”

Lindsay Louise, Fulfillment & Retail Manager at Synchro

When a 3PL is the right fit for your business, the cost should be more than worth it. Order fulfillment can even be a revenue driver for your business — giving customers a great variety of shipping options can help reduce cart abandonment while offering free or expedited shipping over a certain spend can increase average order value.

“By encouraging customers to meet a spend threshold for free 2-day shipping, we’ve seen great results without harming our margins. Offering this shipping option has increased our average order value in these zones from $75 to $148.”

Ryan Casas, COO of iloveplum

[Download: ShipBob’s 2-Day Express Shipping: How to Drive Revenue Through Ecommerce Fulfillment]

Customer satisfaction is suffering

At the end of the day, your customers get the final say on whether or not your order fulfillment is up to par. If it’s not, they’re sure to let you know, whether that’s through a surge in support tickets, bad reviews, critical social media posts, or simply a decline in sales. If your customers are consistently unhappy with the delivery experience, you’re using the wrong 3PL.

“As we’ve grown internationally and in our general order volume, we’ve seen satisfaction go up. ShipBob was a key player and significant partner in helping manage what became unmanageable when we were shipping orders out ourselves.”

Matt Dryfhout, Founder & CEO of BAKblade

3 questions to ask a potential 3PL

Thinking about making the switch? Here are five questions to ask a potential 3PL to gauge whether they’re the right fit for your business so you can be confident in your move.

1. How are you different from our current 3PL?

When outsourcing order fulfillment, it’s important to look for a scalable solution that goes beyond the traditional pick, pack, and ship model used by many legacy and mom-and-pop providers alike. This means that the 3PL coordinates with all aspects of the supply chain, rather than only taking care of one isolated part of the ecommerce logistics process.

Making sure every piece of your supply chain is optimized can give your customers a better overall experience by helping you make more informed decisions about inventory and operations.

2. How does your technology work with ours?

One of the most important elements of choosing a fulfillment solution is finding technology that works not just for you, but with you. There are two main technological elements to look for: how the 3PL’s software will connect to your online store, and how your 3PL’s software will help you understand how to improve your business.

These two elements make up what we call a tech-enabled 3PL. A tech-enabled 3PL is a technology and logistics company that helps with everything from order and inventory management to tracking ecommerce orders and managing ecommerce returns — while pushing data between all platforms involved.

“We use Shopify as our ecommerce platform. The seamless integration between the two systems has made it very easy to do everything from manage inventory to create prepaid orders.”

Greg MacDonald, CEO, Bathorium

3. How many fulfillment centers do you have and where are they located?

This two-part question helps you keep shipping costs low and is particularly important if you plan to offer your customers 2-day shipping or other expedited delivery options — without breaking the bank.

If you’re only shipping from one location, you’re limiting your business’s reach in key markets where your customers reside — and probably paying too much for shipping.

“Storing inventory in different regions is key to reducing costs and transit times. From expanding into a second ShipBob fulfillment center, we are able to offer 65% of our customers with 2-day shipping, up from 32% by only having a single West Coast facility. Soon, this will be 100%. Not only is this better for our customers but we also gain a 13% savings to our bottom line.”

Pablo Gabatto, Business Operations Manager at Ample Foods

Working with a 3PL that has fulfillment centers in major US cities allows you to split your inventory across several locations. In turn, this puts your inventory closer to your shipping destinations, meaning packages ship to lower shipping zones and therefore cost less for you and your customers.

You can also offer two-day shipping via ground for customers in areas surrounding the fulfillment centers, which can be much cheaper than expedited air shipping.

“Using five fulfillment centers across the country is great because our product is high-quality and heavy, so it helps us cut down shipping costs.”

Francesca Cavallo, Co-Author of Rebel Girls

How to transition to a new 3PL

Making the switch to a new 3PL can be overwhelming if you don’t have a plan in place. Here are some important steps to take as part of the transition to a new fulfillment provider.

Review your supply chain

With a new 3PL comes at least one new fulfillment center. Unless your new fulfillment center is in the same city as your old one, you will have new transit times for inventory to be sent from your manufacturer to your fulfillment center(s). Make sure you keep this in mind when figuring out when to reorder inventory, especially if your new fulfillment center is farther away from your manufacturer than the old one.

Make sure to also share your new fulfillment center’s address with your manufacturer to ensure that inventory is routed to the right place. And of course, be sure to understand and follow the new 3PL’s inbound receiving process and communicate any changes in labeling and organization to your manufacturer.

Phase out the old fulfillment center

First and foremost, make sure the time is right to make the switch. You may still have a year left in your old contract and cannot break it, but it’s never too early to start researching a new solution.

It might seem tempting to pull all of your inventory out of your old fulfillment center as soon as possible, but it’s important to keep stock there until you’ve fully transitioned. Keeping inventory in your old fulfillment center while shipping inventory to your new 3PL can help prevent stockouts and backorders while you get set up with the new provider.

Once you are fully onboarded and have ample stock levels in the new 3PL’s fulfillment center, consider running a sale to clear out the inventory in the old location — but make sure your backend technology is set up to route those orders to the old 3PL.

Keep your customers in the loop

No matter how well the transition between 3PLs goes, there’s always a chance that the unexpected will happen and your customers may experience delays in shipping. For this reason, let your customers know that you’re switching 3PLs to improve the shipping options and experience.

Leverage product pages, email, social media, and banners on your website to give as much of a heads up as possible. Transparency is a best practice in customer communications, and this shows that you’re working to improve the customer experience.

This can be especially effective if the switch is going to allow you to offer new, more appealing shipping promotions, such as international shipping or free 2-day shipping. This can give customers something to look forward to while keeping them proactively in the know.

ShipBob has helped thousands of merchants like you

If you’re looking for a fulfillment provider that checks all of the boxes we’ve talked about in this article, consider switching to ShipBob.

We know that moving from the familiar to the unfamiliar can be uncomfortable, but ShipBob is here to provide a controlled, well-managed experience that mitigates risk and helps set you up for success in the long-term. ShipBob has a comprehensive playbook to help you switch 3PLs. Our approach ensures a successful transition, including answers to frequently asked questions by ecommerce businesses like yours.

What you’ll receive from ShipBob

No two businesses are alike. We work with you to find the best solution for your unique needs. Here are a few highlights of what you get when you make the move to ShipBob to ensure the transition is beyond perfect.

Dedicated Implementation Engineer

ShipBob’s Implementation Engineers are subject matter experts that make it simple for your business to get started by catering the process to meet your most important needs. This is your dedicated point person throughout implementation (pre-, during, and post-3PL transition).

Throughout this time, there will be at least three dedicated training sessions including account configurations and other preparations prior to your first shipment, and more check-ins throughout your first 30 days of shipping.

You will also have someone onsite in the warehouse to help with new customer launches, serving as the project manager on the ground floor to make sure that implementation, operations, product, and tech are all aligned and set up for success.

Dedicated support

In addition to having an Implementation Engineer help set your business up for a successful fulfillment transition to ShipBob, multiple teams are here to support your business!

As soon as you’re introduced to your Sales Implementation Engineer, you’ll be paired with a dedicated Merchant Care team through phone, and email tickets for all day-to-day questions, requests, or issues you have for prompt resolution.

Once Implementation is complete, you’ll work with a Merchant Success Manager, who is your dedicated consultative advocate. They will continue to understand and deliver against your business’s strategic needs through the duration of the partnership and discuss proactive opportunities for your business.

“ShipBob has worked hard to understand our needs and offered more flexibility than other 3PLs. They have used their expertise to give us business-specific solutions that have really made a difference.”

Pablo Gabatto, Business Operations Manager at Ample Foods

Capacity and experience

ShipBob onboards roughly 15 new customers each week. Having helped thousands of customers, we have a very good process to ensure a successful transition, with additional steps for merchants that do the largest volume of orders with the most complex needs.

Technology configurations for your unique needs

With ShipBob’s proprietary technology, you can use our built-in integrations or go as custom as building something yourself with our open API.

“ShipBob has an open API that allowed our tech-savvy company to operate exactly how we wanted. Other 3PL companies only had simple technology like a very basic Shopify integration. We provide a personalized product that requires unique configurations, so we couldn’t rely on an out-of-the-box solution like Shopify and what other 3PLs offered. With ShipBob, we can write a few lines of code instead of creating a manual kit for each possible order combination as we’d have to do in a tool like Shopify.”

Oded Harth, CEO & Co-Founder of MDacne

For the not-as-technological customers, our software already seamlessly integrates with popular ecommerce platforms, making it possible for you to link your store with the click of a button, and then import your products and orders. The backend work is already done for you, so it’s easy to start automatically fulfilling orders. For setting up more complex aspects, like bundles and merged products, our team is here to help.

Once an order has shipped, ShipBob’s technology can push tracking information back to your ecommerce store, so your customers stay in the loop throughout the delivery process without compromising your brand experience.

We enable clients to distribute inventory across our network of fulfillment centers in major US cities, and our software automatically routes the order to the fulfillment center that can ship the order to your customer in the fastest and most affordable way. This helps ecommerce businesses reduce shipping costs and transit times exponentially over time.

Strategic and data-driven insights

ShipBob also has an analytics tool that provides your business with insights to make data-driven decisions. It show you the following at a glance:

  • How quickly products are selling and which items are best-sellers or slow-movers
  • How many days of inventory you have until you are expected to run out based on SKU velocity
  • Where your customers are and where you’re shipping from (with the ability to compare current and ideal distribution)
  • How your current demand compares to previous time periods
  • A breakdown of transit times and average cart value by shipping method (to see which shipping methods are most attractive to your customers)
  • How much inventory you were holding at any ShipBob fulfillment centers at any point in the past
  • And much more

“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.”

Oded Harth, CEO & Co-Founder of MDacne

Switch to ShipBob

If ShipBob sounds like it might be a good fit for your business, and you’re looking to switch 3PLs, we’d love to connect. Fill out the form linked below and someone from our team will be in touch to discuss your business’s specific needs and share more information.