According to IBISWorld, the third-party logistics (3PL) industry is worth $194 billion and has grown at a rate of 3% since 2014.
The retail business world is changing with the advent of Amazon and other pure e-Commerce stores. And those changes have brought about the need for better ways to store products before a sale, ship items to customers, and offer tracking services. What’s more, digital business owners need to do all these things faster and cheaper than their competitors.
That’s where 3PL comes in. But with so many logistics companies popping up these days, it can be difficult to find one that’s right for your business. That’s why we’ve created this guide to the top 5 things to look for in a 3PL company.
Looking for a logistics partner but don’t know where to start your search? Then keep reading for the top questions you should ask your prospective 3PL partner.
1. Are They As Sophisticated As You Are?
If you’ve dealt with 3PL companies before, you know that some are better than others when it comes to processing and responding to customer actions. Why? Because some third party logistics companies use more sophisticated technology than others and are better suited to respond to your business needs.
2. Are They Disaster-Proof?
One of the biggest risks to business owners with perishable or weather-sensitive products is the chance for disaster. Do your prospective 3PL businesses have a disaster strategy in place? If so, ask whether the strategy prepared to deal with the risks unique to your business.
3. Can They Scale As You Do?
Flexibility and scalability in your prospective 3PL partner is key to successful future growth. If your logistics partner doesn’t have enough warehouse space to house your products when your business expands, you’ll have to start your search over again. That can waste valuable time and money better spent vetting your prospect out from the beginning.
4. Do They Offer Business Intel?
In today’s digital age, data is everything. When you’re interviewing or researching your 3PL prospects, inquire into whether the companies offer data about your business processes. These might include insights about industry trends, networking opportunities, and more.
5. How Much Capital Do They Have?
Third-party logistics is a capital-intensive business, which means you won’t get the services you signed up for unless the 3PL company has the cash flow to serve your needs. Before you sign the contract with a logistics partner, request proof of the business’ financial health. If any of your top contenders can’t or won’t show their financials, it’s probably a good sign that you can cross them off your list.
3PL for Your Growing Business
If you’re searching for a 3PL business to assist with your e-commerce business needs, make sure to use these 5 tips to help vet your top contenders. That way, you can keep making money off your online business and stop wasting margins on subpar logistics services.
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