Want to streamline your eCommerce logistics? Here’s how to choose the right 3PL partner for your DTC brand.
- Why it matters: A 3PL (third-party logistics) provider handles your inventory, packaging, and shipping. Their performance directly impacts your customer satisfaction and brand reputation.
- The challenge: With over 24,000 3PL providers in the U.S., picking the right one can feel overwhelming.
- The solution: Use this checklist to evaluate 3PLs based on service coverage, delivery speed, technology compatibility, costs, and experience.
Key Steps to Find the Right 3PL:
- Evaluate Service Coverage: Ensure warehouses are near your customers to reduce shipping costs and delivery times. Look for multi-warehouse setups to avoid costly long-distance shipments.
- Check Delivery Speeds: Customers expect fast shipping (same-day or two-day). Verify the 3PL’s ability to handle seasonal spikes and future growth.
- Assess Technology Integration: Ensure the 3PL integrates seamlessly with your eCommerce platform (e.g., Shopify, WooCommerce) and offers real-time inventory tracking and automation tools.
- Review Costs Transparently: Request a detailed pricing breakdown to avoid hidden fees. Compare monthly minimums, storage rates, and pick/pack costs.
- Verify Experience: Look for a proven track record in DTC fulfillment, relevant certifications, and strong client reviews.
Quick Tip: Tools like Forthmatch can help you compare 3PL providers based on location, pricing, and platform compatibility.
Why it’s worth it: Choosing the right 3PL can reduce costs, improve delivery times, and boost customer satisfaction. Start evaluating today to scale your business efficiently.
How to Pick a 3PL - 6 Key Essentials to selecting your Third Party Logistics Company
Check Service Coverage and Delivery Options
Your 3PL's warehouse locations and delivery capabilities play a huge role in keeping customers happy. To ensure you're choosing the right partner, it's crucial to evaluate whether they can meet your geographic and delivery speed requirements.
Review Warehouse Locations and Delivery Areas
Having warehouses in the right spots speeds up delivery and cuts costs. When your inventory is closer to your customers, shipping becomes faster and more affordable. Take a close look at the 3PL’s warehouse network to see if their locations align with where your customers are.
Start by mapping out your customer base by state and city. This will help you determine if a 3PL’s warehouse setup can effectively serve your key markets.
Coverage varies widely between 3PLs. For example, a 3PL based in Kansas City can reach 85% of the U.S. within two days due to its central location. Similarly, Spartan Logistics has strategically positioned fulfillment centers in Lewisville, Flower Mound, Las Vegas, and Hagerstown to ensure quicker deliveries, lower shipping costs, and efficient inventory distribution across major regions.
The U.S. shipping system divides the country into eight zones, with Zone 8 being the farthest from your starting point. Using multiple warehouses can help you avoid costly Zone 7 and Zone 8 shipments by keeping inventory closer to customers, saving both time and money.
When assessing warehouse locations, consider these factors:
- Proximity to major population centers: This ensures you can serve larger customer groups more efficiently.
- Access to transport infrastructure: Locations near highways, airports, and shipping hubs make it easier to move orders quickly.
- Regional weather risks: Areas prone to extreme weather, like hurricanes or snowstorms, can disrupt operations during peak seasons.
If you need to visit warehouses often, you might prefer a 3PL near your business. However, don’t let convenience outweigh strategic coverage, especially if your customers are spread across various regions.
Once you’re confident the warehouse locations align with your customer base, it’s time to evaluate delivery options.
Test Delivery Speed and Growth Capacity
After reviewing warehouse locations, make sure the 3PL’s delivery speeds and scalability match your business goals.
Fast delivery is non-negotiable for today’s customers. Many expect same-day or two-day shipping, so your 3PL must offer a range of shipping speeds to meet these demands.
Ask potential 3PLs about their same-day, two-day, and standard shipping options. Companies like GoBolt offer same-day delivery from their centers, while ShipBob’s network supports two-day shipping for eCommerce businesses.
Two-day ground shipping works best when warehouses are close to customers. If you rely on a single warehouse, local orders will arrive quickly, but deliveries to distant regions may face delays.
Also, check if the 3PL can handle seasonal spikes, like Black Friday or Cyber Monday. Ask about their past performance during these periods and what contingency plans they have in place to manage high volumes.
Scalability is just as important as current capabilities. As your business grows, you’ll need a 3PL that can expand with you. Top providers offer access to nationwide fulfillment networks, allowing you to store inventory closer to new customer groups as your reach expands.
Check US Shipping Requirements
Beyond speed and location, your 3PL must comply with U.S. shipping standards to ensure smooth operations.
The U.S. market comes with unique shipping challenges. Each state has its own tax rules, shipping restrictions, and delivery requirements, which can complicate logistics. Your 3PL should be well-versed in these regulations, including state tax policies, product labeling rules, and any region-specific shipping restrictions. This is especially important if you sell products that require special handling or ship to states with complex tax structures.
Regional shipping partnerships matter, too. Your 3PL should have strong relationships with major carriers like UPS, FedEx, and USPS, as well as regional carriers that might offer better rates or services in specific areas. These partnerships often determine delivery options and pricing.
"A 3PL with deep regional knowledge can navigate location-specific logistics challenges, such as geographic constraints, customs clearance, and local carrier partnerships." - Adayra Lopez, Vice President of Sales at InterFulfillment
Geographic constraints can pose challenges in remote areas like Alaska, Hawaii, or rural regions. These locations often require special handling or extended delivery times. A reliable 3PL should clearly outline their capabilities and limitations for such areas upfront.
Ask about their carrier diversification strategy. Relying on a single carrier can be risky if that carrier experiences delays or disruptions. The best 3PLs maintain relationships with multiple carriers, allowing them to reroute shipments when necessary.
Lastly, ensure their technology is up to the task. Features like address validation, carrier rate comparisons, and automated shipping zone calculations can optimize costs and improve delivery accuracy across all 50 states.
To compare 3PL service coverage more easily, tools like Forthmatch can help you visualize delivery areas in real time and filter providers based on regional coverage and platform compatibility.
Review Technology and Platform Connections
Having a well-matched technology stack is critical for smooth operations like order processing, inventory management, and shipment tracking. Without proper system compatibility, you risk wasting hours trying to manage disconnected tools instead of focusing on growing your business.
Test eCommerce Platform Connections
Direct integration with eCommerce platforms is a must for efficient direct-to-consumer (DTC) operations. Your third-party logistics (3PL) provider should seamlessly connect with platforms like Shopify, WooCommerce, BigCommerce, and Amazon through APIs or middleware solutions. When considering a potential partner, request a live demo of their API integration to confirm that orders, inventory, and shipment data sync in real time.
During the demo, ask the 3PL to guide you through the setup process, covering API configuration, order routing, and real-time data syncing. The integration process should be straightforward, with clear documentation and support readily available. Pay close attention to how quickly orders from your store appear in the 3PL’s system. Real-time order transmission helps avoid delays and ensures customers receive accurate shipping updates. Additionally, verify that product details - such as SKUs, descriptions, and any special handling instructions - transfer accurately between systems to prevent shipping errors.
This level of integration lays the groundwork for efficient order management and real-time inventory tracking.
Check Order Management and Inventory Tools
A robust order management system (OMS) is essential for handling orders, managing sales channels, and overseeing fulfillment operations seamlessly. Look for features like real-time inventory tracking, clear order status updates, and easy-to-read reporting dashboards. The system should also effectively manage exceptions, such as low stock alerts or return processing.
User-friendly systems save time by reducing the need for extensive training while improving automation. As you evaluate, test the interface to ensure you can quickly locate critical information and that reports are intuitive. Dashboards that can be customized to your needs are especially helpful, as they allow you to focus on what matters most - whether it’s tracking the performance of specific products, monitoring shipping costs, or analyzing return trends.
Finally, assess the system’s API capabilities and automation features to ensure they align with your operational needs.
Test API Access and Automation Features
Strong automation and API functionality are what separate basic 3PLs from top-tier providers. If your business has unique needs or uses specialized software, you’ll require robust API access to build custom workflows and integrations. Request detailed API documentation and confirm that developer support is available. Check that the API setup includes error handling, backup systems, and supports automated workflows.
Identify which automation features are essential for your business. For example, you might need automated reorder points, custom shipping rules based on product type or destination, or automated return processes. Ensure the 3PL can handle data mapping and transformation to maintain compatibility across different systems and formats. The technical complexity of integrating systems should fall on the 3PL, not your team.
Ask about the API’s error handling and alert mechanisms. Reliable 3PLs monitor API performance closely and have backup systems to prevent disruptions. They should also have alerts in place to notify you of any connection issues.
"Leaders must make emerging technologies like 3PL automation an intrinsic part of their services offering, especially in warehouse and distribution centers, material handling, and storage." - Gartner
If you’re looking to streamline the evaluation process, platforms like Forthmatch can help you filter 3PL providers based on platform compatibility and integration features, making it easier to find a partner that fits your technical requirements.
Review Costs and Contract Terms
Once you've assessed service coverage and technology integration, it's time to dive into the financials and fine print. Carefully reviewing costs and contract terms is essential to avoid surprises and protect your bottom line. Pay close attention to pricing structures, hidden fees, and billing practices, as well as the flexibility of contract terms.
Get Detailed Pricing Breakdown
Ask for a full breakdown of all fees associated with fulfillment services. This should include costs for storage, picking and packing, packing materials, kitting, receiving, technology integration, returns, and any surcharges. These fees can vary widely depending on the provider, so clarity is key.
Hidden fees can catch you off guard if you're not vigilant. Watch out for charges like account setup fees, minimum monthly costs, inventory management fees, long-term storage penalties, peak season surcharges, expedited order processing fees, and account management costs.
When comparing pricing models, think about what aligns best with your business. For instance:
- Per-order vs. per-item pricing: Choose based on your order volume and cost structure.
- Flat-rate vs. pay-as-you-go: Flat rates offer predictability, while pay-as-you-go models provide flexibility but can lead to fluctuating costs.
Monthly fulfillment costs can vary significantly depending on your business size. For example:
- Small businesses with low-volume orders might spend $500 to $2,000 per month.
- Mid-sized businesses with moderate order volumes range from $2,000 to $10,000 monthly.
- Large enterprises with high volumes and custom needs often exceed $10,000 per month.
Check Contract Terms and Options
The terms of your contract are just as important as the costs. They define your flexibility, renewal terms, and exit options, so it's crucial to review them carefully.
Focus on termination clauses to ensure you have a clear exit strategy. Most contracts require a 30- to 90-day notice period for termination. Early termination fees should decrease over time, as the 3PL recoups onboarding costs, offering more flexibility as the partnership progresses.
Pay close attention to renewal terms. Contracts should specify if they auto-renew, for how long, and at what price. Ideally, they should include annual review periods, allowing you to renegotiate terms as your business evolves. Multi-year agreements with built-in review periods often come with better rates.
Scalability provisions are another must-have. These should lower per-unit costs as your volume increases and guarantee space during peak seasons, even if it requires paying a premium. Without these guarantees, you could face capacity issues during your busiest times.
Transition assistance clauses are equally important. If you decide to switch providers, the contract should outline how inventory and data migration will be handled, including timelines, export procedures, and any associated costs. This ensures a smooth transition and prevents disruptions.
"The goal isn't winning the negotiation - it's creating a framework for mutual success. When both you and your 3PL partner win, your customers win too." - Dana Madlem
If you're hesitant about committing, consider asking for a trial period or a low-commitment contract to test the provider's services before locking in a long-term agreement.
Check Billing and Invoice Practices
Transparent billing practices are a hallmark of a professional 3PL. Accurate and timely invoices help you maintain control over your costs. Ensure that billing statements clearly detail services provided, rates, fees, discounts, and adjustments.
Look for providers that use advanced billing software. The system should handle billing activity, configure rules, create invoice templates, and generate worksheets automatically. Integration with your CRM and HRM systems is also important for maintaining efficiency.
Establish clear protocols for reviewing and resolving discrepancies. Ask how the provider handles billing questions and their response times. A reliable 3PL will have documented procedures and trained staff to address financial inquiries quickly and effectively.
Regularly review invoices to catch errors, inefficiencies, or delays. Use analytics tools to track fulfillment costs, storage fees, and shipping expenses over time. This data can help you identify trends and negotiate better rates during contract renewals.
Lastly, ensure the 3PL complies with all applicable regulations, including tax laws and data privacy requirements. Setting cost benchmarks and reassessing pricing periodically will help you stay competitive. Tools like Forthmatch can simplify the process by comparing pricing structures and contract terms across multiple providers, making it easier to find the best fit for your business needs.
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Check Experience and Track Record
Once you've gone over costs and contract terms, it's time to dig into the 3PL's experience in direct-to-consumer (DTC) fulfillment. A solid track record in this area can make all the difference in ensuring smooth operations. To gauge this, look at client feedback, certifications, and their overall expertise in handling DTC fulfillment.
Review DTC Experience and Product Handling
DTC sales are expected to hit $186.6 billion by 2025. With more 3PLs stepping into this space, it's crucial to choose a provider who truly understands the specific demands of DTC fulfillment. This includes offering services like personalized packaging, direct shipping to customers, and a strong focus on delivering a great customer experience. Many 3PLs specialize in specific product categories. For instance:
- Nutragem: Health and wellness products
- Red Stag: Heavy or fragile goods
- Selery: Subscription boxes
- Allpoints: Omnichannel fulfillment
When evaluating a provider's DTC expertise, ask about their client portfolio, the average number of orders they handle daily, and their ability to manage seasonal spikes in demand. As Chaz Flexman, CEO and Founder of Starday Foods, puts it:
"What DCL excels at is flexibility... I think a big part of the partnership is being able to tackle things together."
Read Reviews and Case Studies
Client feedback can give you a clearer picture of a 3PL's performance. Reviews and testimonials often reveal details about order accuracy, shipping speed, and customer support - things you won't find in their marketing materials.
For example, Shipfusion scores high with a 4.5/5 rating on both Capterra (29 reviews) and Trustpilot (20 reviews), where customers praise their strong support. Meanwhile, ShipBob has more mixed reviews, averaging 3.6–3.7/5, with some customers citing issues with order management and accountability. ShipMonk, on the other hand, is noted for its wide range of services and flexibility, though some users report challenges with customer service.
Case studies also provide valuable insights. For instance:
- ClearSTEM, a skincare brand, achieved 6,000% growth over four years by outsourcing fulfillment to ShipBob.
- Bloom Nutrition reached nine-figure revenue with ShipBob.
- Semaine Health cut costs by $2 per order and boosted order volume by 4x after switching to ShipBob.
For an even deeper understanding, talk directly to current or former clients. Ask how the provider handles peak seasons and resolves issues like inventory discrepancies. As one eCommerce Apparel Retailer shared:
"Every warehouse is not for everyone, however, the relationship with Barrett has been more of a partnership and an extension of our company versus a traditional client-customer relationship. It is invaluable to have a partner who is just as equally invested in your success."
Check Certifications and Security Standards
Certifications are another way to confirm a 3PL's capabilities and adherence to industry standards. These certifications ensure they follow best practices and meet regulatory requirements. Ask about their quality control processes and the certifications they hold.
Some key certifications to look for include:
- ISO 9001, ISO 14001, and ISO 45001 for quality and environmental management.
- SOC 1 and SOC 2 audits and ISO 27001 for data security. For example, Jay Group earned ISO 27001 certification in August 2024, highlighting their focus on protecting sensitive information. As they explain:
"When you work with a certified 3PL, you can be confident that information like shipping details, inventory statistics, and financial transactions are kept secure. We have systems in place to protect our clients from data breaches, hacks, and leaks."
Industry-specific certifications are also critical. For instance:
- Facilities handling food products should comply with FDA FSMA standards and obtain Safety Quality Food (SQF) Audit verification.
- Providers managing medical devices may need to meet FDA UDI requirements.
- Additional certifications like DEA Controlled Substances, Temperature Control, Dangerous Goods, and PCI compliance demonstrate specialized expertise.
Other certifications, such as C-TPAT, SmartWay, and General Purpose Foreign Trade Zone, can enhance supply chain security and show a commitment to environmental responsibility.
To simplify your search, tools like Forthmatch can help you filter 3PL providers by their certifications and areas of specialization, ensuring you find a partner that aligns with your needs.
Use Data Tools to Compare 3PLs
After evaluating service, technology, and cost, the next step is using data tools to refine your analysis. These tools help you organize and compare 3PL options, making it easier to identify the provider that best suits your DTC brand. With features like visualizing service coverage, assessing reliability, and side-by-side comparisons, these tools simplify decision-making.
Filter Providers by Your Needs
Platforms like Forthmatch allow you to filter 3PL providers based on delivery reach, platform compatibility, pricing, and specialization.
- Delivery Reach: Look for providers with strong networks in your key markets. For instance, if you primarily serve the West Coast, focus on 3PLs with warehouses in states like California, Oregon, and Washington.
- Platform Compatibility: Ensure seamless integration with your existing systems, whether you use Shopify, WooCommerce, or Amazon.
- Pricing: Identify providers that align with your budget by evaluating setup fees, order costs, and storage rates.
- Specialization: Narrow your search to providers experienced in handling products like yours. Some 3PLs specialize in areas like subscription boxes or fragile goods.
Industry trends show that many 3PLs are increasingly focusing on technology, ecommerce, specialized solutions, and broader supply chain services.
Once you’ve filtered your options, use visual tools and performance scores to evaluate the reliability of potential partners.
Use Maps and Trust Scores
Real-time service area maps are a great way to understand a 3PL’s delivery capabilities. These maps use isochrones and isodistances to show coverage zones, helping you quickly see which providers can meet your delivery speed needs - whether it’s same-day delivery within a 30-mile radius or two-day shipping to key regions.
Trust scores provide another quick way to assess reliability. These scores combine factors like public reputation, domain credibility, and performance metrics into a single rating. Instead of reading through countless reviews, trust scores give you a snapshot of how other DTC brands view a provider’s performance.
"Great data sharing is the biggest factor in a successful 3PL relationship. You want all your customer details, tracking numbers, and billing information flowing into one place–i.e. Unleashed–then the appropriate data automatically flows through to your 3PL, which is easy to set up via Unleashed's API." – Greg Roughan, Content Manager, Unleashed
With these insights, the next step is consolidating the data into a comparison table.
Create a Comparison Table
Once you’ve narrowed down your choices to three to five providers, create a comparison table to finalize your decision. This table should include key details like pricing, services, and capabilities, making it easier to identify the best fit.
Here’s an example of how to structure your table:
| Provider | Setup Fee | Monthly Minimum | Pick/Pack Cost | Storage (per sq ft) | 2-Day Coverage | Shopify Integration | Specialty Services |
|---|---|---|---|---|---|---|---|
| Provider A | $500 | $1,000 | $2.50 | $8.00 | 85% US | Yes | Subscription boxes |
| Provider B | $0 | $500 | $3.00 | $6.50 | 70% US | Yes | Fragile goods |
| Provider C | $250 | $750 | $2.25 | $9.00 | 90% US | Yes | Custom packaging |
Include other factors like customer service, scalability, and technology. For instance, some providers may handle seasonal spikes better, while others might offer better support for international growth.
Finally, reach out to providers directly to confirm the details in your table. Pricing structures can be complex, and marketing materials often leave out hidden fees or conditions that could affect your costs.
Conclusion
Selecting the right 3PL partner is a cornerstone of success for any DTC brand. David Reifschneider, who oversees supply chain operations for over 40 Shopify stores under OpenStore's management, emphasizes this point: "Doing up-front diligence in reviewing a potential 3PL company will save you time and money, ensuring you're selecting the right service provider for your brand".
This diligence isn't just a formality - it directly impacts your operations. A poor choice in logistics partners can disrupt customer service, weaken brand loyalty, and create logistical headaches. On the flip side, the benefits are clear: 86% of shippers report improved cost-efficiency and 73% note better customer experiences when working with the right 3PL.
A structured evaluation process is key. By assessing factors like service coverage, technology integration, costs, and experience, you can avoid costly mismatches that waste resources and hurt customer relationships. Reifschneider cautions: "There are examples where we have chosen the wrong partner. It's important to recognize a mis-match early and before you fully integrate your inventory into their facility".
Tools like Forthmatch make this process easier by offering data-driven insights. They allow you to filter providers based on your specific needs, visualize service coverage with real-time maps, and access trust scores built on actual performance metrics. With 90% of Fortune 500 companies relying on 3PLs and 62% of 3PL warehouses prioritizing data and analytics, the industry is clearly shifting toward smarter, evidence-based decision-making.
FAQs
How can I make sure a 3PL provider can support my business as it grows and handle seasonal demand spikes?
To keep up with your growth and handle those seasonal rushes, it's crucial to partner with a 3PL provider that offers scalable operations and flexible warehousing options. This means they should have the capacity to increase storage and shipping capabilities during busy periods and adapt effortlessly as your business expands.
Look for a provider that leverages advanced technology like demand forecasting and automation. These tools help them anticipate changes and streamline operations for maximum efficiency. Be sure to ask about their experience managing high-volume seasons and how they ensure quick, accurate fulfillment during peak times. A partner with a strong history of scaling effectively can help you meet demand while keeping your customers happy.
What should I look for in a 3PL provider's technology integration capabilities?
When assessing a 3PL provider's technology integration, prioritize their ability to effortlessly connect with your e-commerce platform - whether it's Shopify, WooCommerce, or another system - and support real-time data sharing. It's important that their systems can grow with your business and provide secure, dependable IT infrastructure. Additionally, check for compatibility with automation tools and analytics platforms, as these can simplify operations and provide useful insights. These elements are key to maintaining efficient processes and enhancing the customer experience.
What key contract terms should I consider when choosing a 3PL provider to avoid hidden fees and ensure flexibility?
When evaluating a 3PL provider's contract, make sure pricing is straightforward and transparent to steer clear of unexpected fees. Pay attention to terms that clearly list any possible additional charges and define cost boundaries. It's also important to prioritize flexibility - contracts offering month-to-month terms or hassle-free renewal options can make it easier to adjust as your business evolves. Another critical element is the inclusion of renegotiation clauses, allowing you to address shifts in your operational requirements. By honing in on these aspects, you can reduce surprises and keep your logistics strategy firmly in your hands.
