Vital Questions to Ask 3PL Providers & Fulfillment Centers

How can you be sure that the fulfillment provider you are considering truly has the capacity to consistently deliver the quality service you expect?

Since they will be responsible for receiving, storing, picking, packing, and shipping your product to customers, your choice of fulfillment company is the key to maintaining the integrity of your brand.

Shopping for any business service is a high-stakes evaluation, especially one that affects the value delivered to your customers. For e-commerce businesses, one of the critical arteries supplying the lifeblood to your businesses is the choice of fulfillment provider. After all, the chosen fulfillment company will be responsible for receiving, storing, picking, packing, and shipping your product to customers. Essentially, the fulfillment company is responsible for ensuring that the value created by your marketing team, web developers, product engineers or procurement team, and customer service representatives, is actually delivered to your consumers in the expected condition, as fast as possible, without any flaws.

Consider asking the questions below before deciding on the best partner for your business. A reliable, secure, and reputable fulfillment provider should be transparent and forthcoming about the details of their operations.

Getting Started

How does account setup work, and what happens if it’s not a good fit?

• Do you have a free 30-day unconditional trial period?
• Do you offer free account setup?
• Do you offer free Account Management?
• Do you have a no long-term contract agreement?
• Is there a minimum contract period?
• Where is your location? Do you have multiple locations?

Overall Reliability

Are you committed to the success of my business?

• Do you offer an Order Accuracy Guarantee?
• What is your pick-error rate?
• If you make an error on an order, will you pay an error penalty fee on top of correcting the mistake?
• Do you offer an Order Processing Guarantee?
• If you don’t ship an order on time, will you pay a penalty fee for your mistake?
• Do you offer a 100% no data loss Guarantee?
• Do you have a “no hidden fees” policy?
• Do you have off-site data servers with access via multiple backup service providers?
• How long have you been in business?

Operations

Do you offer flexible, custom solutions that can be tailored to my specific business needs?

Receiving

• Is there a fee for receiving my merchandise at your warehouse?
• Is inventory received within one business day?
• Do you offer a Receiving Guarantee?

Storage

• What are your storage fees?
• Do you offer flexible inventory storage pricing options based on palletized or non-palletized items?
• Do you ever offer discounted storage fees?

Inventory Services

• Do you provide Inventory Management and Control services?
• Do you offer free SKU Management?
• Do you have a policy on inventory shrinkage or damage?
• What is your shrinkage rate?
• Do you offer an Inventory Accuracy Guarantee?
• How does your company handle stock counts and inbound receivers? Do you provide stock count information monthly? How often do you check and count stock and adjust system quantities?

Packing/Order Fulfillment

• What are your order fulfillment fees? Are there any additional flat fees per order?
• Do you offer value-add services including kitting, labeling, inserts, etc.?
• Please indicate other billable items such as stock counts, cold packs, insulated liners and any other fees.
• How do you optimize box sizing in order to minimize the outbound carrier cost?
• Do you help consult on product packaging for e-commerce fulfillment?
• If a box is half empty, will you automatically use filler to protect the contents from moving around?
• Do you offer flexible pricing plans that can be tailored to my business needs?
• Please provide outbound shipping pricing
• Please provide picking and handling pricing
• Please provide pricing for your preferred carriers with zones for a) next day, b) two-day shipping, c) Ground and d) other methods
• Can we personalize our shipments? (For instance, do you offer tape or label customization?)

Shipping Options

• Do you offer multiple shipping carriers to choose from?
• Do you provide international shipping?
• Do you provide shipping discounts?
• Do you provide shipment email confirmations for my customers?
• Do your shipment email confirmations contain tracking information?
• What are your retail procedures for shipments?
• Does your system allow for exclusion zones (Hawaii, International, and Alaska)?
• Can you guarantee FEFO (First Expiry, First Out)?
• Do you offer same business day order processing with a cutoff of 5pm EST?
• Do you reach over 70% of Americans within 2 days via ground shipping from your facility?
• Do you reach over 80% of Americans within 3 days via ground shipping from your facility?

Returns

• Do you offer Returns processing services?
• What do you charge for items that are returned by my customers?

Technology/Systems/Integration

Will your systems interact seamlessly with my business?  

• Do you have a customizable ERP system with easy integration capability?
• Do you offer free system integration?
• Does your fulfillment partner have the IT staff and resources to establish (and troubleshoot) IT integration between their fulfillment database and your ecommerce storefronts?
• Do you offer a selection of cutoff times for order processing?
• Is there a test site or portal where we can log in and experience your Dashboard?
• Do we need training before using your system? Is there a cost for this training?
• Does your dashboard offer any type of reporting tools? Sales? Stock in? Stock out? Average Sales rates? Slow moving stock by SKU?
• Does your system allow user-specific, permission- based login to business account information?
• Do you offer an API for my Shopping Cart? Is there a charge for this?
• Does your fulfillment partner offer list management services?
• Are you set up for collections from your warehouse? How is this billed?
• Will we be able to make changes to orders that have been placed or are these changes not allowed once the orders flow into your 3PL system?
• Can the technology track problems and resolutions and measure performance?
• What reports does your fulfillment partner offer, and do they provide the visibility and metrics you need to analyze and budget your operations?

Warehouse Security

 What measures do you take to ensure that your operation is secure and my products are safe?

• Is your warehouse operation secure?
• Does your facility have a 24-hour monitored security camera system?
• Do you have metal detectors at all ingress and egress locations?
• Does your facility have 24-hour camera coverage of every square foot of operation?
• Is the security camera coverage recorded and stored?
• Does your facility have an individualized access control system with on-site management?
• Do you have multiple redundant security systems?
• Do you have a backup power generator so the facility and systems are always online?
• Does your facility security system have multiple power source backups?
• Have you tested your backup power generator within the last 6 months?
• Do you offer fenced or gated secure inventory storage areas?
• Do clients have access to your facility for visits?

Environmental Controls

How well is your facility protected from fluctuations in temperature, humidity, etc.?

• Is the facility climate-controlled?
• Please indicate all your warehouse locations and temperature maximums experienced at each of your warehouse locations. (Please indicate if these include Alaska and Hawaii.)
• Are we able to add cold packs or insulated liners during the hotter months?
• Do you have insurance for damages due to natural disasters?

Data Reliability/Security

How reliable is your website/database?

• Do you have website security with 100% uptime?
• Do you have multiple Internet service provider backups for continuous information flow?
• Do you have a wireless ISP as a backup?
• Have you tested your ISP backups within the last 6 months?

Customer Service and Problem Resolution

Are you dedicated providing excellent customer service? 

• Do you have a fast and easy way to communicate with your clients?
• Do you have customer service response via phone or a 24/7 support ticket system?
• Are we covered with your insurance for losses? How do you handle lost stock, shipments sent to incorrect addresses, etc.?
• How do we communicate issues with your company? What is your typical response time on queries?
• If you make an error on an order, will you pay an error penalty fee on top of correcting the mistake?
• If you don’t receive a shipment into inventory on time, will you pay a penalty fee for your mistake?
• If any of my inventory is lost or damaged, will you reimburse me for the cost of that inventory?
• Are we able to telephonically call the fulfillment company if we have problems and talk to an actual live person? If so, is there a direct number that we can call?
• Do you have a Technology Team available to resolve any system or technology issues?

Orders and Reports

Do you offer comprehensive customer reporting?

• Once an order is placed, is the customer information retained?
• Can you provide month-end billing reports split by courier, handling and other costs clearly? Can please you email us an example of your monthly billings?
• Do you have web-based business monitoring and reports?
• Do you have KPI’s (key performance indicators) that you track?
• Does your fulfillment partner provide you and your sales reps with a web-based tool to place orders?
• Does your fulfillment partner have an IT platform that allows you to set and automate important notifications?

Staff

Are your employees dedicated to providing excellent service?

• Is your staff incentivized to meet or exceed certain performance metrics?
• Do you do full background checks on your employees?

Questions to Ask References 

• Have you ever had a bad experience with the company?
• Has the company ever missed any shipments?
• If there were problems, how did they react and handle those issues?
• Were you ultimately satisfied with the results?
• Would you consider this company to be one of the best fulfillment companies?

Many of the questions from this article were derived from experience with customers, from a resource put together by RedStag Fulfillment.

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