Evaluating Third-Party Fulfillment Services

If you're in search of a 3PL, you're going to want to read this: A brand once sent me a 3PL quote and said, “Looks solid. $1.50 pick and pack. Way better than the $2 quote we got elsewhere.” I asked, “Did you check the additional fees section?” Here’s what we found: Additional $2.00 per order for handling fees Additional $0.50 per order for labeling fees So while 3PL A advertised $1.50, the actual cost for a simple one-item order was closer to $4.00. Meanwhile, 3PL B quoted $2.00, and actually meant it. When people talk about "hidden fees" in this industry, this is exactly what they are referring to. Instead of presenting the full cost up front, some 3PLs show only a portion of it and bury the rest in fine print. Another common example is shipping quotes. Some providers will exclude fuel, residential, or delivery surcharges, making their rates look lower. Those missing dollars are often enough to sway a brand's decision in the wrong direction. So, how do you protect yourself? In your RFQ, include your last 100 orders and ask each 3PL to provide two things: 1. The total fulfillment cost [including order processing, pick and pack, labeling, packaging materials, and anything else that would appear on the invoice] 2. The total shipping cost [including all surcharges, such as fuel and delivery area fees] If you do this, you are no longer comparing pricing sheets. You are comparing sample invoices.

Looking at new 3PLs? Ask them who runs their demand planning and how! If you're evaluating a new 3PL, don’t just tour the warehouse and nod at the tech stack. You need to ask, “Who’s actually helping me stay in stock without going broke doing it?” Because that’s what separates good from great. You want to know: → Do they have someone watching your inventory levels daily? → Can they explain how they handle high turn vs slow mover SKUs? → Do they track lead times and reorder points with real data not gut feels? → What happens when a forecast is wrong? Do they fix it, or do you find out in a CS ticket? → Are they proactive, or do they wait for panic mode? A good demand planning team is your early warning system. They’ll tell you when you’re at risk of stockouts, flag weird velocity shifts, and help you plan promos without running your ops team into the ground. A bad one? They’ll wait until it’s too late and hit you with “we didn’t get the PO in time.” That means you become the demand planner. And if you wanted that job, you'd have applied for it. The best 3PL’s are thinking 3 steps ahead with you. So if you're shopping around, make sure they can actually plan, not just pick and pack.

Your 3PL isn't just a vendor—it's the single biggest lever you're ignoring. We ship 35,000 orders monthly with a tiny 0.16% error rate. Here's how we turned our logistics from a headache into a competitive advantage... When I tell other founders our error rate is 0.16%, they don't believe me. That's just 50 mistakes in 35,000 monthly orders. If we had settled for “industry standard” rates of 1-3%, that would = 350 to 1050. This isn't luck. It's the difference between a service provider and a true partner in your business. Most founders underestimate the complexity behind the scenes: • Multiple product variations • Bundled offers • Flash promotions • Custom inserts • Subscription management • Retail allocation One small mistake in any of these compounds into customer service nightmares, retention issues, negative brand perception, and cash flow problems. Here’s how we deal with this → Our 3PL built us an HOURLY inventory tracking system with near-perfect accuracy for over six years. Do you obsess over attribution models for your marketing spend but accept outdated weekly inventory counts? That's madness. Real-time inventory visibility changes EVERYTHING: • Confident marketing decisions • Better cash flow management • Proactive stock planning • Prevention of stockouts But the biggest unlock isn't technology — it's communication. We have 20+ dedicated Slack channels with our 3PL team, designed to help organize every possible scenario from customs delays to bundle changes. When something critical happens, we can text their leadership directly. We actually take it on step further with them and have our main rep, JOIN our weekly all hands. This way there are no surprises for them (or us). EVER. Now, tell me a 3PL that's willing to do that? This isn't standard. This is a TRUE partnership. Something you need to forge with your key supply chain vendors. The moment I knew we had something special came a few years ago... When we were about to stock out during a major promotion, our account manager called me at 11pm. But it wasn’t to report the problem, it was to share their solution. ❤️ Other reasons our 3PL works for us: → They're centrally located in the US, providing exceptional blended shipping rates. → Their pricing model has no surprises - we know our costs based on order volume. But most importantly, they treat Obvi like their own business. If you're in the market for a 3PL that truly understands DTC brands and can scale with you, DM me. I don't recommend partners lightly, but this relationship has been transformative for our business.

So your business is expanding or has blown up overnight....what should you be looking for in a 3rd party fulfillment (3pl) party. 1️⃣ Expertise and Specialization: Look for a 3PL provider with expertise in your industry and specialized services aligned with your needs. Whether it's e-commerce fulfillment, perishable goods handling, or specialized transportation, partnering with a company well-versed in your sector can offer tailored solutions and insights. 2️⃣ Technology and Innovation: Evaluate the technological capabilities of prospective 3PL partners. Advanced systems for inventory management, order tracking, and real-time analytics can significantly enhance visibility and streamline operations within your supply chain. 3️⃣ Scalability and Flexibility: As your business grows, your logistics requirements may evolve. Seek a 3PL provider capable of scaling operations seamlessly to accommodate fluctuations in demand and seasonal peaks. Flexibility in service offerings and contractual agreements is key to adapting to changing market dynamics. 4️⃣ Geographical Reach and Network: Consider the geographical reach and network of the 3PL provider. A robust network of distribution centers and transportation hubs can enhance speed-to-market and reduce transit times, ultimately improving customer satisfaction. 5️⃣ Operational Excellence and Compliance: Prioritize 3PL partners with a track record of operational excellence and adherence to industry regulations and compliance standards. Certifications such as ISO, C-TPAT, and TSA can signify a commitment to quality and security throughout the supply chain. 6️⃣ Cost and Value Proposition: While cost is a significant factor, focus on the overall value proposition offered by potential 3PL partners. Evaluate not only pricing structures but also the level of service, reliability, and added value initiatives such as sustainability practices or value-added services. 7️⃣ Customer References and Reviews: Finally, seek out customer references and reviews to gain insights into the experiences of other businesses partnering with the 3PL provider. Positive testimonials and case studies can provide confidence in the provider's ability to deliver on promises. Choosing the right 3PL partner is a strategic decision with long-term implications for your business success. By carefully evaluating these factors, you can identify a partner that aligns with your goals, enhances operational efficiency, and drives growth in your supply chain. #SupplyChain #Logistics #3PL #Operations #BusinessStrategy #SupplyChainManagement #Partnership