The top 10 questions you should ask any prospective 3PL

Apr 20

Updated: September 21, 2023

When evaluating potential third-party logistics (3PL) partners for your e-commerce or physical product brand, it is essential to ask the right questions to ensure the 3PL can meet your specific needs. In addition to our free and confidential 3PL matching tool, we’ve heard every question under the sun and decided to summarize the top 10 questions you should ask your 3PL candidates, listed in no particular order:

What is your experience in working with similar products or in similar markets to our business?
Understanding a 3PL's experience with similar brands will give you an idea of their expertise and capabilities. Ask for specific case studies or references to ensure they have a track record of success in handling the unique challenges of your product or industry or market. Example: High tech product fulfillment is very different from apparel fulfillment. The same goes for medical devices, food, perishables, pharmaceuticals, etc., etc. This one is super important to ask. There are plenty of exceptions but, as an example, Rush Order tends to focus on 6 key product categories.
How flexible and scalable are your services?
Ecommerce and other high growth businesses often experience fluctuations in order volume and changes in target markets, so it's important that your 3PL can adapt to changing demands. Ask about their ability to scale their services up and down as needed, as well as the timeframes required for such changes. As an example, Rush Order offers a global presence while other 3PLs may focus on domestic markets only. There’s no right or wrong answer here but it’s important to know if your 3PL will be the right fit for the short term and long term.
What technology and integrations do you offer? Tell me about the size and scope of your inhouse or outsourced software development team(s).
Efficient logistics and inventory management rely heavily on technology. Inquire about the 3PL's warehouse management system, order tracking capabilities, and their ability to integrate with your e-commerce and/or ERP platforms, as well as any other software you use for seamless data exchange.
How do you handle returns, exchanges, and customer service?
Returns and exchanges are an integral part of ecommerce operations. Ask about the 3PL's returns management process, including the turnaround time for processing returns, restocking items, and handling customer inquiries or integrating with your customer service team. Make sure their approach aligns with your brand's policies and customer expectations. Flowcharts can be a big help here. Don’t hesitate to ask for any off-the-shelf documentation the 3PL may have on “reverse logistics”.
What are your pricing and contract terms?
Discuss the 3PL's fee structure, including any additional charges that may arise, such as storage fees, picking and packing fees, and minimum volume requirements. Freight charges are often one of the largest expenses you’ll encounter with a 3PL. Also, ask about the contract terms, including the length of the agreement, termination clauses, and any penalties for not meeting agreed-upon service levels.
What is your approach to order fulfillment and shipping?
Inquire about their order processing time, shipping options, and partnerships with carriers. Determine whether they can provide expedited or international shipping, and ask about their shipping rates to ensure they meet your budget and customer expectations.
How do you ensure the accuracy and quality of your services?
Ask about the processes and procedures they have in place to maintain inventory accuracy, order fulfillment accuracy, and the overall quality of their services. This may (or should) include technology-driven quality control measures (e.g. barcode scanning 100% of outbound shipments), staff training, and performance monitoring. Don’t be afraid to ask for empirical statistics about shipment error rates and about what happens when a quality issue arises, such as a customer receiving the wrong item.
What are your contingency plans for unforeseen disruptions?
It's crucial to understand how a 3PL can handle disruptions, such as natural disasters, labor strikes, or equipment failures. Ask about their backup plans and procedures to ensure they can maintain operations and minimize potential impacts on your business. This question should be answered with firm assertions about written procedures, technology, and perhaps even the multiple geographic locations the 3PL could potentially manage your operations from in the event of a local disruption.
Can you provide customized services, such as kitting, labeling, or packaging?
Some ecommerce brands require special services, like customized packaging or promotional inserts. Some high tech products may require firmware flashing or product refurbishment. Ask if the 3PL can accommodate these requests and, if so, whether there are additional fees or lead times associated with these value added services.
How do you handle communication and reporting with your clients?
Efficient communication is essential for a successful partnership. Inquire about the 3PL’s preferred methods of communication, empirical response times, and the type and frequency of communication reports they provide. A regular cadence of Quarterly Business Reviews (QBRs) are also a sign of effective account management and communication. Ask for an anonymized sample or template of a QBR deck to gauge the 3PL’s style of communication with their clients. Make sure their communication style and availability align with your expectations and needs.