With any supplier relationship, it’s important to schedule periodic reviews to evaluate if the service is continuing to meet your needs. Considering key performance metrics such as accuracy and cost, and customer satisfaction, you are available to review if your current supplier or in-house process needs a shakeup. If you’re not sure where to start when it comes to reviewing the performance of your operations, check out our Top 5 eCommerce fulfilment metrics.
If you’re already working with an outsourced 3PL provider, you already know the benefits, costs and processes involved in outsourcing your eCommerce fulfilment. But as with any relationship, sometimes things change, and they just no longer feel right anymore. Whether it’s a gut feeling, falling KPI’s or negative customer feedback – if your current 3PL isn’t working for you, it may be time to consider switching to a new provider.
Why Change Your Third-Party Logistics Provider?
We’re not going to lie; changing your third-party logistics provider isn’t ideal. You’ve spent time, budget and reputation implementing an outsourced fulfilment strategy, and it’s going to cost time, budget and reputation to change that strategy. However, switching 3PL is crucial if they’re not providing you or your customers with best-in-class service. Why? Because a poor 3PL can:
- Negatively restrict your customer reach;
- Negatively affect your reputation; and
- Negatively impact your profits.
All in all, this can be detrimental to your sales, growth and profitability. However, by sourcing the right partner, they can make the transition seamless and straightforward.
When To Change 3PL?
If you have a bad feeling about your 3PL logistics provider, chances are your intuition is spot-on. In our experience, the following eight situations are warning signs that you should consider a new logistics partner.
You’re outgrowing them
The fulfilment provider that suited your needs at the beginning of your eCommerce journey may be unable to accommodate your store’s success.
Suppose you’re restricted on storage space, order volume, shipping speeds or geographical reach or need other returns or quality control services. In that case, it’s time to choose between remaining with your current 3PL or your store’s continued growth.
They’re not delivering the service your customers expect
Whether you have an SLA or operating on eCommerce best practices, there’s a certain level of service you expect on behalf of your customers when it comes to product delivery.
Errors occur, but if your provider is regularly damaging stock, sending incorrect orders or missing delivery deadlines, and they’re not doing anything about it, they are not up to the job and damaging your brand reputation.
They’re not keeping up with eCommerce trends
eCommerce moves fast. In the blink of an eye, we’ve gone from Amazon delivering orders in six days to under 15 minutes, and customer expectations are following.
If your 3PL has become complacent and isn’t updating its technology, resources or processes to keep up with the future trends of eCommerce, switch before you get left behind with them.
They’re not utilising technology
Speaking of technology, if your 3PL isn’t using the latest technology to improve you or your customer’s experience, then something’s amiss.
It’s essential to use a technologically advanced 3PL that uses tech to increase efficiency, accuracy and experience. Warehouse management systems, inventory software, integration with your eCommerce platform, sales channels and ERP system, and other emerging logistics technology make your business bigger and better.
Their cut off times are cutting your delivery options
Fast shipping is getting faster, so you must expand your delivery options to offer quick shipping if you want to keep up. However, early order cut-off times with your 3PL provider may be preventing you from doing so.
Early cut-off times are usually a result of inadequate technology and capacity or facilities located further away from the delivery hub. But they can significantly impact your ability to attract and retain customers who value fast shipping.
They’re not generating an ROI
Outsourcing your fulfilment costs money, but that doesn’t mean you shouldn’t see an ROI. Technology, storage space, warehouse management, customer support, economies of scale and fast shipping speeds should boost efficiencies and sales while cutting shipping costs and errors.
If your 3PL is costing more time and money than it’s delivering, you need to start the search for a 3PL that delivers value, not problems.
They can’t handle peak sales
Christmas, summer sales, Valentine’s Day, and Black Friday are all critical days for eCommerce brands, but peaks in order volume can expectedly and unexpectedly occur throughout the year. Sometimes, it can result from a celebrity influencer showcasing your product online, driving an unexpected spike in sales. Can your current 3PL cope?
It’s crucial that your 3PL can scale as and when you need them. If they struggle to cope during the peaks, you will struggle to retain customers for the troughs.
They’re a provider, not a partner
Logistics service is handling one of the most critical aspects of the business – one that is the key to success, growth and profits. Therefore you need a partner, not a provider.
If you feel that your 3PL is restricting your business through a lack of ambition, an outdated outlook, an aversion to problem-solving or an overall uninterest in your business’ success – fulfilment is never going to be your competitive advantage.
How to change 3PL
If one of those reasons struck a chord and you think you need to switch logistics providers, where do you start?
Changing 3PL doesn’t have to be painful. In fact, with a proper plan in place and an experienced fulfilment partner, you can switch seamlessly. The key steps to follow are:
- Review your current contract: Check your current 3PL contract to determine when you can leave and weigh up any costs involved. For example, it may be more cost-effective to run your current inventory levels dry instead of paying excessive removal fees.
Additionally, you may want to consider the best time to make the switch, as the worst thing you can do is switch just before or during your peak seasons. Whatsmore, many 3PL providers will limit the onboarding of new clients from mid-November due to limited capacity at Peak. - Research and connect with a new 3PL: It’s never too early to begin researching your new 3PL. Once you’ve found the ideal replacement, speak to them about their fulfilment switching process. This should cover project planning, tech integrations, inventory shipments, order routing and everything required to prevent stockouts. Some suppliers may also have designated onboarding project managers to make the process seamless.
- Update your supply chain: Don’t forget to keep your entire supply chain in the loop with new addresses, contacts, transit times, and inbound processes. This is especially important for long-lead-time shipments that may be coming from overseas.
- Update your customers: With the best will in the world, there may be a couple of errors along the way. Make customers aware of your migration and be quick to apologise for and rectify any problems. Customers accept that mistakes happen, but they’re more likely to be supportive if they are kept in the loop.
What's Next?
Ultimately, a third-party logistics provider should benefit your eCommerce business through increased efficiency, scalability and sales. If they’re not, and they’re not willing to do anything about it, it’s time to change your provider and find a better-suited logistics partner.
If you’re reading this far, you’re likely feeling like you need more from your 3PL, so why not give us a call to discuss the next steps and if we can help.
