As any online or multichannel retail business expands, it’s important to identify what’s necessary for successful growth. As fulfillment is a key part of that expansion, it’s crucial that this component of the business has the ability to grow with the company as well. While your 3PL partnership may start strong, growth can poke holes in what…
As any online or multichannel retail business expands, it’s important to identify what’s necessary for successful growth. As fulfillment is a key part of that expansion, it’s crucial that this component of the business has the ability to grow with the company as well. While your 3PL partnership may start strong, growth can poke holes in what at first seemed like the perfect relationship. Here are four signs that it may be time to break up with your logistics provider.
They Can’t Handle Peak Seasons
The retail industry is filled with sharp changes in sales volumes. Cyber Monday alone accounted for $6.59 billion in online transactions this past year. During periods of high sales and stress, such as Christmas and Valentine’s Day, e-tailers face an especially significant burden of packaging and shipping rapidly rising order volumes under strict deadlines.
On top of the increased workload associated with the busiest shopping seasons of the year, the inability to properly get orders to shipping carriers in order to meet delivery dates can pose a threat to growing brands. Failing to deliver by the estimated date can create poor brand experiences that can make customers feel as if they’ve been stood up, causing them to not buy again. If you notice that your logistics provider has an increase in order-picking errors or order processing, you may want to rethink the relationship. While the 3PL may absorb the expense of correcting the mistakes, it will not always be able to repair the bad feelings a disgruntled customer has because of the error.
No Real-Time Visibility Into Your Operations
Inventory visibility is crucial for basic online operations, and technology that provides operations status updates in real time is critical. As more shoppers expect real-time order status and shipping updates, true fulfillment transparency has become a basic necessity. Temando’s The State of Shipping in Commerce 2017 indicates that 78% of shoppers want email tracking updates, but only 31% of retailers offer them. Emerging brands who partner with a 3PL that can’t offer this will be less attractive than competitors who do.
Another factor is the evolution of omnichannel. More shoppers prefer to purchase from brands that offer a buy online pickup in store (BOPIS) option. If brands don’t provide up-to-date inventory information that accurately informs potential customers of a desired item’s availability, these customers won’t be able to choose their preferred fulfillment method.
Real-time inventory visibility is a valuable tool. Identifying fast-moving and underperforming SKUs can assist in projecting future sales and promotions, resulting in more informed choices that will likely yield an improved bottom line. A 3PL with a lackluster technology stack and poor expertise won’t be able to help partner brands meet consumer demands. The result will be missed opportunities and failure to secure first-time or repeat customers. Forecasts will be less accurate, so e-tailers will likely notice lower profits for each quarter.
They Can’t Scale With Growth
One reason many emerging brands partner with 3PLs is that executive management anticipates their long sought after “hockey stick” growth is approaching. E-tailers at this stage need as much support as possible to effectively respond to new customers and even expand into new channels. By outsourcing logistics responsibilities to 3PLs with experience working with similar companies, brands can expect improved fulfillment efficiency, allowing decision-makers to focus their attention on other elements of operations.
Simply because a 3PL has the available storage space and workload capacity to take on a client does not mean it will be able to handle the growth. If your 3PL doesn’t have the capacity to store all of your brand’s SKUs as you grow, you should be alarmed. If a 3PL’s capabilities don’t align with a brand’s long-term goals and needs, it can cause serious problems that negatively affect the partnership.
Brands should view a 3PL partnership as a mutually beneficial experience. The brand and logistics partner should complement each other, creating success on both ends. 3PL providers need to have the brand’s best interest in mind, as they refine operations to facilitate the brand’s growth and success. Constant communication is important in this respect. Just as transparency leads to success with customers, it creates trust between a brand and 3PL, which is a vital component to any relationship.
Simply keeping a brand updated with daily operations and inventory status is not enough. A quality 3PL should also offer consultative support and guidance. The 3PL’s success needs to be in parallel with its clients, so the recommendations they provide should come with valuable insight to help emerging brands adapt their strategies to reach more customers, make more sales and operate more efficiently. If your 3PL isn’t keeping you in the loop or even worse, failing to respond to questions and suggestions, it most likely indicates that the relationship isn’t meant to be.
Fulfillment partners often bring different strengths and capabilities to the table that blend with specific brands’ short- and long-term necessities. Emerging e-tailers shouldn’t settle for anything less than a solid relationship that will grow as they expand.
If you think that your relationship with your current 3PL is rocky and would like to talk to someone from our team about ways your operations can improve, feel free to contact us here.