Not all 3PL providers are created equal, and working with one that doesn’t meet your business needs can lead to stunted growth or even customer loss.
Between contracts, potential risks, and logistical challenges, it may not seem like the right time to change providers. However, it’s essential to take a critical look at your current 3PL provider and retail fulfillment strategy to ensure future success for your business. In fact, transitioning to a new 3PL may not be as difficult as you think.
In this article, we will cover how to determine if your business needs to switch 3PL providers, how to choose a new eCommerce order fulfillment company, and the necessary steps to ensure a smooth transition.
A Note on Meeting Customer Expectations
Before diving into the details of when and how to switch 3PL providers, it’s important to understand the impact a 3PL can have on your business.
Today’s customers have high expectations, and the delivery experience is no exception:
- 38% of customers say they will never shop with a retailer again after a negative delivery experience.
- 73% of shoppers expect fast and affordable deliveries.
- 24% of customers cancel their orders due to slow shipping.
If your 3PL provider isn’t helping you deliver a best-in-class customer experience, you could be missing out on customers and revenue. If you can’t provide the fast and affordable shipping your customers expect, they are likely to find stores that can.
Either way, for your success as an eCommerce merchant, it is vital that you partner with a 3PL provider that helps you meet rising customer expectations.
How to Know When It’s Time to Switch 3PL Providers
Outsourcing fulfillment is a step above shipping orders from home, but it’s important to make sure that your current 3PL provider is the right fit for your business. Here are some signs that your 3PL provider might not be the best choice — and lessons learned by other eCommerce brands that faced similar situations.
1. Errors in Orders
Your reputation is on the line when you outsource any part of your business. When it comes to inventory management and shipping orders securely, consistently, and on time, your 3PL provider must get it right.
Order fulfillment isn’t a perfect science, and mistakes, especially during transit, are expected. Make sure your 3PL provider is a partner that will correct errors when they happen.
2. Lack of Continuous Improvement
Ecommerce is constantly evolving, and so are customer expectations. Can your 3PL provider keep up with these changes? If your fulfillment provider hasn’t upgraded or expanded their technology, operations, or facilities since you started working with them, they might not have a vision for your customers’ future expectations.
3. Business Growth Outpacing the Provider
If your shipment volume grows significantly as your business scales, there may come a time when your current 3PL provider can no longer support you. This is especially true if you are working with a local small company that mainly focuses on small businesses.
In addition to scalability, different 3PLs have different inventory storage systems. You need to ensure that they have the expertise and infrastructure to handle your growing needs.
4. Insufficient Support
If you encounter issues with an order or need an update on inventory levels, do you know whom to reach out to? And do you receive the answers you need in a timely manner?
A good 3PL provider should offer comprehensive support beyond just answering FAQs. They should be a partner, not just a service provider.
5. Outdated or Insufficient Technology
In today’s world, a 3PL provider must offer fulfillment software with order management capabilities. Without visibility into the status of each order, it becomes impossible to address customer concerns or assess the quality of the customer experience you’re providing.
6. Not Getting Value for Money
The cheapest 3PL isn’t always the best option, but if you’re paying a premium for fulfillment services, the value should be clear.
7. Declining Customer Satisfaction
Ultimately, customers are the ones who decide if your fulfillment services meet expectations. If they don’t, customers will let you know, whether through increased support tickets, negative reviews, critical social media posts, or simply declining sales.
3 Questions to Ask a Potential 3PL Provider
Thinking about switching providers? Here are three questions to ask a potential 3PL provider to determine whether they are the right fit for your business and make an informed decision.
1. How are you different from our current 3PL provider?
When outsourcing fulfillment, it’s important to look for a scalable solution that goes beyond the traditional pick, pack, and ship model used by many smaller and legacy providers.
This means that a 3PL provider should handle all aspects of the eCommerce supply chain, rather than just isolated parts of the logistics process.
Optimizing every aspect of the supply chain can provide your customers with a better overall experience by helping you make more accurate decisions about inventory and operations.
2. How does your technology integrate with ours?
One of the most important factors when choosing a fulfillment solution is finding technology that works not just for you but with you.
Two main aspects to consider: how the 3PL’s software connects with your online store and how the technology helps you improve your business.
These elements form what’s known as a tech-enabled 3PL. A tech-enabled 3PL provider assists with everything from order and inventory management to tracking orders and managing returns — while integrating data across all platforms.
3. How many fulfillment centers do you have, and where are they located?
This two-part question is crucial for keeping shipping costs low, especially if you plan to offer one-day shipping or other expedited delivery options without breaking the bank.
If you’re shipping from only one location, you limit your business’s reach in key markets and might be paying high shipping costs.
Partnering with a 3PL provider that has fulfillment centers in major cities allows you to distribute your inventory across multiple locations. This reduces shipping costs as your products are closer to their shipping destinations.
How to Transition to a New 3PL Provider
Transitioning to a new 3PL provider can be overwhelming if you don’t have a solid plan. Many brands have successfully switched to Diggipacks for a seamless experience.
Here are the important steps to take during this transition.
Review Your Supply Chain
Switching to a new 3PL provider means having at least one new fulfillment center. If the new fulfillment center is not in the same city as the previous one, consider the new transit times for shipping inventory from your manufacturer to the new fulfillment center.
Make sure to account for this when determining the reorder schedule and quantities, especially if the new fulfillment center is further from the manufacturer than the previous one.
Additionally, ensure that you share the address of the new fulfillment center with your manufacturer so that inventory is routed to the correct location. Understand and follow the inbound receiving processes of the new 3PL provider, and communicate any changes in labeling and organization to your manufacturer.
Phase Out the Old Fulfillment Center
First and foremost, make sure it’s the right time to switch providers. You may still have time left on your old contract, but it’s never too early to start exploring new options.
It might be tempting to immediately pull all your inventory from the old fulfillment center, but it’s important to keep stock there until the transition is fully complete. Keeping inventory in the old center while transitioning to the new 3PL can help prevent stockouts and backorders.
Once the transition is complete and you have enough inventory in the new fulfillment center, consider running a sale to clear out old stock. Just ensure your backend technology is set up to route orders to the old 3PL provider.
Keep Your Customers in the Loop
No matter how smoothly the transition goes, unexpected delays can happen, and your customers may experience shipping delays. That’s why it’s essential to inform your customers that you’re switching 3PL providers to improve shipping options and the overall experience.
Use product pages, emails, social media, and banners on your website to give your customers a heads-up. Transparency in communication reassures customers and shows that you are working to improve their experience.
This is especially effective if the transition allows you to offer new shipping promotions, like international shipping or free two-day delivery. This gives your customers something to look forward to while keeping them informed.
Diggipacks has helped thousands of merchants like you
If you’re looking for a fulfillment provider that checks all the boxes covered in this article, consider switching to Diggipacks.
We understand that moving from the familiar to the unfamiliar can be uncomfortable, but Diggipacks is here to provide a well-managed, smooth transition that minimizes risks and helps set you up for long-term success.
Our comprehensive guide ensures a successful transition, answering frequently asked questions by eCommerce businesses like yours.
What You’ll Get from Diggipacks
Every business is unique. We work with you to find the best solution for your specific needs. Here are some highlights of what you’ll receive when you switch to Diggipacks to ensure a smooth transition:
Dedicated Account Manager + Shipping Audits Team
Diggipacks’ fulfillment specialists are experts in the field, making it easy for your business to get started by tailoring the process to meet your most important needs. You will have a dedicated point of contact throughout the transition (before, during, and after switching 3PLs).
Personalized Support
In addition to a dedicated account manager and audit team, multiple teams will support your business during and after the transition to Diggipacks.
Capacity and Expertise
Diggipacks has onboarded thousands of customers. We continue to adapt and improve the process to ensure a successful transition.
