A 3PL provider checklist helps a small online seller compare warehouses on facts, not promises. A third-party logistics firm, or 3PL, stores your stock, packs your orders and often ships them. You hand over a core part of your business, so ask hard questions first. This list covers the five areas that cause the most trouble.
1. Fees: ask for every line
Ask for a full rate card in writing. A low pick-and-pack price can hide high charges elsewhere.
- Receiving fee: per pallet, per carton or per item?
- Storage fee: per pallet or per bin, and when does the clock start?
- Pick and pack fee: is the first item priced differently from extra items in the same order?
- Packaging: who pays for boxes, tape and inserts?
- Minimums: is there a monthly minimum, and what happens in a slow month?
- Long-term storage: is there a surcharge for stock that sits too long?
Then ask for a sample invoice from a client of your size. Compare it with the rate card, line by line.
2. Stock accuracy: ask how they count
Your stock is your cash. If the system says 40 and the shelf holds 38, you will oversell and upset customers.
Ask how often the warehouse counts stock. Ask whether it uses barcode scanning at receiving, picking and packing. Ask what accuracy rate it reports, and how it measures that rate. A good partner can answer in numbers.
Ask what happens when a count is wrong. Who tells you, how fast, and who pays for lost items? Ask to see how it keeps inventory records, how often it runs stock checks and how quickly it reports differences to you. Put those promises in the contract.
3. Returns: ask for the full process
Returns are where small sellers lose the most time. Ask for the steps in writing.
- Who receives the parcel, and how long until it is checked?
- Is there a fee per return, and a fee to restock?
- Who decides if an item can be sold again?
- How do you see the photos or notes on damaged items?
- Can the warehouse send items back to a supplier or dispose of them?
Handling returned goods is a standard part of what many 3PLs offer, often called reverse logistics. It is still a separate service, so check that it is in your contract and price it.
4. Integrations: test before you commit
Orders should flow to the warehouse without you retyping them. Ask which shopping carts and marketplaces connect directly. Ask which ones need a custom link, and who pays for it.
Ask for a test. Place five orders in a trial account and watch them move from your store to the warehouse screen. Check that stock levels return to your store and that tracking numbers reach your customer.
Also ask what happens when the connection fails. Is there a support contact, and what is the response time? Ask about the carriers it uses and whether you can choose your own. Ask how you export your data if you leave.
5. Liability and contract: read the small print
Most warehouses limit what they will pay if something goes wrong. That limit is often far below what your stock is worth.
- What is the liability cap per item or per pallet?
- Is it based on your cost or your selling price?
- Does the warehouse carry insurance, and can you see the certificate?
- Do you need your own cover as well?
- How long is the contract, and how much notice do you need to leave?
- Who holds your stock if there is a dispute over fees?
If you sell across borders, ask who acts as importer, who handles customs paperwork and who pays duty and tax. Get these answers in writing before the first shipment arrives.
Quick scorecard
Score each firm from one to five on fees, accuracy, returns, integrations and liability. Any firm that will not answer a question in writing should lose points. Visit the warehouse if you can. Look for tidy aisles, labelled bins and a calm packing area. Start with a small trial shipment before you move all your stock.
A good 3PL will welcome these questions. A weak one will rush you to sign.
Sources
- TechTarget SearchERP, "3PL (third-party logistics)": https://www.techtarget.com/searcherp/definition/3PL-third-party-logistics