What to Know Before Outsourcing Fulfillment to a Third-Party Logistics Warehouse

For any growing business, an unmanageable and growing workload can overwhelm your in-house warehouse. Instead of capitalizing on the momentum of business growth, you become forced to focus all your efforts on supervising warehouse employees and ensuring your shipments have gone out. When your warehouse structure is no longer sustainable for scaling, you're faced with the opportunity to outsource fulfillment to a third-party logistics company, or 3PL.

Outsourcing fulfillment to a 3PL after the initial launch of your business has a lot to do with timing. A valuable partnership with a third-party logistics company will allow you to reduce overhead costs, provide a runway to scale, and the ability to dedicate more time to business growth.

When sourcing warehouse management services, consider a partner that is willing to support your goals by taking the time to align certain aspects of your business. Here are 5 criteria you need to consider when choosing a 3PL partner.

Criteria 1 - Know Where Your Business Stands and Where You Want It to Go

If you're looking to expand your channels, consider how many SKUs you plan to acquire, whether you're planning to develop new product categories and your projected monthly order volume.

It may help to outline the ongoing problems you're currently trying to solve along with problems you may encounter in the future. Doing so might give you a better idea of which 3PL can best meet these challenges.

Criteria 2 - Consider Your Shipping Complexities

Nowadays, customers are big on "direct-to-everywhere" shipping, which entails strategically expanding and selling on every online and physical retail channel you can find your customers on.

The challenge posed on each e-commerce platform, marketplace (digital or otherwise), B2B, wholesale, and pop-up shop is not knowing which one to prioritize. As much as you may want to enhance your diversity in shipping services, you won't be able to target every single channel. Determine which channel is most important to you and communicate this to your 3PL.

Criteria 3 - Think About Pricing

When talking costs, outline all your storage and service requirements with each potential 3PL. Consider the anticipated costs of orders shipped, the number of items picked, pallet storage, inserts, and anything else that goes into your process.

Maybe your products don't require a lot of handling but experience high volume orders. Discuss all of these with your 3PL.

Criteria 4 - Determine the Geography of Your Warehouse Footprint

If you know where the majority of your orders originate from, prioritize 3PL partners with warehouses in those states and cities. You'll be able to keep them within lower-priced shipping zones and get products out to your customers quicker with two-day shipping. The best part? You won't incur two-day shipping costs.

Strategically choosing where you want your main warehouse distribution centers situated can drastically reduce freight time and shipping rates.

Criteria 5 - Take a Look at Your Data

Incorporating a system that can combine data with your sales channels, manufacturers, and warehouses within your network is critical. At the very least, you'll want:

Master SKUs set up for each of your products
UPC codes and barcodes that correspond to each product
A way to track inventory costs for costs of goods sold
Profitability reporting

3PL Logistics and Warehousing by Comet Delivery Services

Many e-commerce businesses don't realize they need to outsource fulfillment to a 3PL until it's too late. Whether you're sourcing warehouse management services that target local or international shipping, we can tackle all your fulfillment and delivery service needs - contact us at Comet Delivery!

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