In the CIS, such a service is still gaining popularity, but in other European countries and the United States they cannot do without it, especially if they want to start delivering goods abroad. Outsourcing of warehouse processes saves not only time, but also money for warehouse maintenance and cargo transportation. Free resources can be invested in the development of your company and monitoring routine tasks execution from the outside. The question still remains: how not to back the wrong horse when choosing a contractor.
In this article, Dropex experts will explain the most important criteria to focus on when choosing an order fulfillment center. So, pay attention to:
- Service cost
- Storage conditions for goods
- Delivery partners
- Warehouse solutions
- CRM system interface
- Support quality
- Accounts for payments
- Live reviews
Let us take a closer look.
1 – What do I pay a contractor for?
The first thing you need to do is to determine what the rates are based on and what is included in the price. A suspiciously cheap price list may not justify itself, because it will not include everything you need. You will then have to overpay for each individual service, so you need to immediately carefully study what the service offers. Does it provide legal support and assistance in paperwork? How does it process returns and have call centers? Can it brand packaging or attach promotional materials to a parcel? Does it check the quality of the goods? Does it take out insurance? Does it have transshipment warehouses for cargo transportation?
All businesses are individual and the price of cooperation is generally selected separately for each. Some organizations apply a single tariff for everyone. This is beneficial and insures 3PL operators against risks. Another common and convenient deal format is the percentage of the client’s turnover. They resort to it after both parties are convinced of partner reliability. You can consult with the fulfillment center manager about the option for you. Please note that for small businesses with irregular orders, it is better to focus on payment for operations.
2 – What about the storage conditions of goods?
Many 3PL centers offer square or cubic meters as storage units. This is not the most convenient option for a business, but it is beneficial for the operator. When stocks are reduced, shelves in warehouses will remain half empty, and payment will be considered the same as for full ones. If you are not ready to put up with such costs, choose organizations with payment for volume, not quantity.
3 – How many delivery partners should they have?
The main goal of logistics is fast and high-quality transportation of goods. To do this, it is necessary to correctly distribute delivery flows, as well as always have the required number of couriers at hand.
It is no good if the company cooperates with only one delivery service. This will limit your profits in the event of delays during an influx of orders. Couriers may not be able to cope with a large volume, customers will have to wait for a parcel for a long time (2-3 days or more) and negative reviews will appear. Too many contracts with delivery services are also not good, because it is more difficult to organize their work without interruptions. The optimal number of connected services is 4-5. Or you can choose an experienced provider who knows how to manage a large number of partners.
4 – From what perspective should I look at warehouses?
The number of warehouses and their location are very important factors.
If you are focused on international deliveries, you need storage facilities in other countries and local delivery in cities. It is better that the fulfillment center has its own premises.
If possible, visit the operator’s warehouse in person. When you start cooperation, operators usually do not provide free access there. It is very important to make sure under what conditions the cargo will be accepted and stored. Pay attention to cleanliness and order. See how the products are placed on the shelves. Observe how careful employees are with packages and how work processes are organized. Pay attention to the appearance of employees. It is not just about uniforms, but also about a healthy moral environment. Job dissatisfaction will increase the likelihood of theft or picking errors.
5 – What should the CRM system be like?
Request a demo version of the CRM system or ask them to show you how it works. The system should be simple and straightforward. Effectiveness of managing processes (e.g. orders, stocks, returns) from afar depends on this. Check how convenient it will be to view the following reports:
- Relevance of order status
- Turnover of commodities
- Financial processes on your virtual balance
Remember to clarify how quickly it will be possible to integrate the system via API.
6 – Do I need to check their support?
High-quality technical support is an important factor for both business owners and ordinary customers. The quality of the operators' work creates the impression of your store.
Seek advice on behalf of a customer and pay attention to several criteria. The first is how quickly managers respond to requests. According to the Live Chat Benchmark report, the average first response time in ecommerce is 113 seconds. If they answer you the next evening when you have already forgotten about your request, this is a reason to think twice.
The second factor is the quality of the operator’s work. Rate the informativeness and form of answer. If in the course of communication you have any comments, feel free to describe them to the contractor. The company will only be happy to know what can be improved in the service.
7 – What about delivery bills?
When choosing a 3PL provider, pay attention to shipping payment methods. Some operators use different accounts depending on the service. Fiddling with checks and their storage is an old-fashioned thing. It is much more convenient to use a single account. Most of the fulfillment centers operate by cash on delivery (CoD) model and provide all invoices every month. By the way, with this sales model, there will be fewer returns and it also inspires more confidence among customers, so it is best to work with cash on delivery. Payment for the goods is noted in the personal account of the CRM system and the funds are credited to your virtual account. This will make it easy to track and control your income.
8 – Should I trust the reviews?
Before you start a partnership, analyze the comments and feedback from other clients of the contractor. Do not limit yourself to what you find on the official website. For sure, all negative comments are deleted.
Thematic forums and communities will help you find out the real state of affairs.
Browse as many discussions as possible. This will help you make sure of the reliability of the future partner. Remember that other fulfillment organizations can use dirty methods to damage the reputation of competitors. If the forums are convinced that the warehouse employees are stealing or treating the goods carelessly, you do not need to take their word for it right away. Check negative reviews for fake news and find out what other people think.
Conclusion
The successful logistics of your business largely depends on how hard you try when choosing a contractor. All of these points will help weed out bad options and make the best choice. Many entrepreneurs choose to cooperate with the Dropex fulfillment center in Europe. The company has established itself as a responsible operator that has all the listed criteria of a reliable partner. If you are ready to start the transition to third-party logistics, Dropex managers will answer all your questions and help in filling out the necessary documents. To contact representatives of the center, fill out the call-me-back form or call the number indicated on the official website of the provider.