Selecting a Fulfillment Provider: Primer for the Mid-Sized Company

October 22, 2020 by Scott Guilmette

You’re an Etailer or direct sales company.  Demand for your product is increasing and you’re fulfilling more and more orders every month.  You may have even begun describing your business as “mid-sized” instead of small.  You are basking in this positive momentum but, if your business continues to grow, you’re going to need help, and soon. 

selecting a fulfillment providerIt is at this stage that you may want to consider selecting a fulfillment provider that can scale with your business.  Why?  Because it’s difficult to grow a business while simultaneously building the infrastructure needed to support that growth.

Something must give, and since your expertise and passion likely lean toward growth-related activities, you might be best served leaving fulfillment to experts who can create an efficient – and customized operation for your business.   

Selecting the Fulfillment Partner that’s right for you

When it comes time to select a fulfillment provider, there are plenty of third-party logistics (3PL) companies out there.  There are huge 3PLs that may be too big for your business, and small 3PLs that your company may outgrow quickly.  3PLs who have a long B2C track record, and others who have years of B2B experience but are new to B2C.  3PLs who specialize in a certain area like direct sales fulfillment or ecommerce fulfillment services, and 3PLs who claim to do it all.   

While there is no one-size-fits-all approach to selecting a fulfillment partner, there are certain criteria that every company should take into account. 

Scalability.  One of the first questions you want to address when considering a fulfillment partner is “Can this company scale with us?”  Your company is a certain size today, and will hopefully be bigger in a year, and 2 years, and so on.  Can the 3PL truly support your growth?  Does it have the capabilities and infrastructure to support your company today AND when you’ve doubled in size and volume?

Customization.  When presented with an array of fulfillment services, you may find yourself analyzing a line item and thinking, “this sounds good, but it would work better for us if _______.”  The best 3PLs can truly shine in this area and allow you to customize just about every aspect of fulfillment.  From packaging and shipping method, to warehousing and systems integration, most everything you ultimately sign up for can be adapted to meet your exact needs – if you chose the right provider.   

3PL Size.  It is easy to be impressed by the ‘bigness’ of the big 3PLs.  They have a name you’ve seen a million times, and warehouses that seem larger than many towns.  The problem: they’re not likely to give you the time of day unless you’re big, too. Even if they did, it wouldn’t necessarily be a good fit for a mid-sized seller.  Smaller fish can get lost in a big pond.

Conversely, a small 3PL will give you lots of personal attention.  But, going back to scale, small also might not be the best option for you.  Why?  Because you don’t want to realize you’ve outgrown your 3PL at a pivotal point in your company’s trajectory.  Every 3PL is going to have a capability ceiling; you just don’t want to have an up-close view of it. 

Interpersonal Relationships.  In talking about big and small 3PLs, we considered a key word: attention.  Here’s another key word: access.  After you sign on the dotted line, do the management-level folks suddenly disappear, or do you still have regular access?  Furthermore, even if you have the attention and the access you desire, it’s not going to matter much if you do not like or trust the people you’re working with.  So, it may be best to focus on another word: rapport.  When a good rapport exists between you and your 3PL, you can address hurdles and recognize/capitalize on opportunities quickly and effectively.  In these technologically-advanced times, good old-fashioned interpersonal rapport is still as important as ever. 

Technology and Infrastructure.  We’re combining these two critical terms into one criterion here because the way you look at them needs to be the same.  When a 3PL shows you its new order management system or an automated warehouse the size of 3 football fields, you need to ask, “how will it be used for my business?”  Because, quite often, the things that fulfillment companies will try to wow you with during a visit will never actually be used for your operation; they may not even be used for B2C business period. 

Of course, this is not to diminish the importance of fulfillment technology and infrastructure capabilities. Quite the opposite, in fact, as these are two of the most important capabilities that a 3PL can offer.  You need, however, to have a full understanding of what your fulfillment provider will do for your business (i.e., the service level agreement items), without getting enamored with features that may apply to companies drastically different than yours. 

Moving Forward with Fulfillment

There is more competition than ever in the 3PL space.  This is a good thing as it raises the quality of service higher and higher, providing more options and capabilities to sellers like you.  On the flip side, it’s easy to get overwhelmed with the choices. 

So, keep the focus on what matters most: your business.  Most 3PLs will have many capabilities that don’t apply to your company. Disregard them and focus on the ones that do.  When you’re checking references, ask about work the 3PLs have done with similar sized companies with similar products and order characteristics.

And, remember, as daunting as the selection process can be, keep your eyes on the prize.  Work with the fulfillment provider that can best help your business get to the next level. 

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Filed Under: Fulfillment Services