The Top 3 Pitfalls When Searching for a Warehouse Solution

When searching for a 3PL provider, warehouse space, or related services like warehouse insurance, there are three major pitfalls that could cost you up to 6% in ongoing commissions—often without your knowledge. The digital marketplace is rife with tactics that can manipulate your business decisions to benefit others, not you. Below, we reveal the top three pitfalls and how to avoid them, potentially saving you up to 6% or more in ongoing fees.

For a quick overview of how to avoid these costly mistakes, watch our short video below:

Pitfall 1: Using a Broker Disguised as a Consultant

One of the biggest traps in the warehouse and logistics industry is the use of brokers who often disguise themselves as consultants or matchmaking services. These brokers charge ongoing commissions, typically between 3-6%, sometimes for years or even in perpetuity.

Many brokers claim to offer “free” services but have undisclosed agreements with preferred vendors who pay them significant commissions when you sign a contract. These brokers often recommend vendors not because they are the best fit for your business, but because they pay the highest commission. For example:

• One broker referred clients to a 3PL on the verge of bankruptcy.
• Another broker recommended a fulfillment company previously owned by its president.
• Others promote unproven, newer 3PLs simply because established providers refuse to pay excessive commissions.

While larger companies with substantial warehousing needs may benefit from legitimate consulting services, for most businesses, the costs and conflicts of interest involved in brokered deals far outweigh any potential benefits.

How to avoid this: Avoid brokers. Look for transparency in any 3PL’s business model you’re considering, and choose providers who offer transparent, upfront pricing without hidden commissions. Complete a brief form to get connected with our expert-vetted providers.

Pitfall 2: Referrals from Other 3PLs

It’s common for a 3PL to refer you to another provider if they can’t meet your needs. While this may seem like a helpful gesture, such referrals are often monetized, with the referring company earning commissions of 3-6% if you sign a contract with the recommended vendor.

These commissions can lead to biased referrals, pushing you towards vendors who are paying for leads rather than those who are best suited for your needs.

What you should do: Be wary of referrals that aren’t transparent. Always research the referred company independently to ensure it’s the right fit for your business. Complete a brief form to get connected with our expert-vetted providers.

Pitfall 3: Fake Top 3PL Lists

Beware of “Top 3PL” lists and directories found online. These often prioritize companies that pay to be featured or that give kickbacks for referrals in the form of commissions. Some lists are even created by the vendors themselves, ranking their own services as the best!

Given the thousands of 3PLs available, it’s impossible to definitively rank the best providers. Trust only sources that are unbiased, independent, and transparent.

Pro Tip: Instead of relying on lists, you can just dig deeper into reviews, customer feedback, and industry reports to make sure the vendors you’re considering are reputable. Complete a brief form to get connected with our expert-vetted providers.

The Cost of Commissions

Even if commissions aren’t charged directly to your business, they still affect you. Vendors may increase fees to cover commissions, or they may prioritize higher-margin clients over your business. Additionally, a broker may push a 3PL to make decisions that favor the broker’s interests over yours. These factors can undermine your profitability and operational efficiency, especially in an industry like logistics, which operates on thin margins.

For example, in 2024, the average profit margin for a warehouse was 9.37% (according to our latest survey). Commissions of 3-6% (one third to two thirds of the 3PLs entire profit!) erode these already slim margins, forcing vendors to either raise prices or risk financial instability. Commissions are charged for up to 3-5 years. Typically, 3PLs willing to enter commission-based deals are either new, struggling, or desperate for clients—hardly the ideal partners for your logistics needs.

How to Avoid These Pitfalls

To avoid these traps:

1. Ask upfront if the referral service charges commissions.
2. Look for transparency from vendors and matchmaking services. Ensure that they are truly independent and not incentivized by high commissions.
3. Seek fact-based, objective ratings rather than lists or recommendations driven by financial interests.

At WarehousingAndFulfillment.com, we do not earn commissions. We provide truly unbiased recommendations, and vendors pay us a nominal one-time fee of less than $50 for successful connections. You pay nothing for our services, ensuring that our matches are made based on what’s best for your business, not ours. Contact us today for trusted, hand-picked matches tailored to your needs.

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