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E-commerce businesses have grown increasingly popular in recent times because of the convenience it brings.
Online shopping allows the elimination of intermediaries that hike up prices and lowers costs for businesses. In addition, the growth in e-commerce will enable enterprises to venture into other markets, which requires them to consider partners in other countries.
Buyers can now track the progress of their orders from the factory up until the delivery to their doorsteps.
The duty to complete order fulfillment quickly and efficiently is monitored closely by the customer and affects customers’ experiences of the company. Businesses can select a logistics partner to team up with to handle deliveries.
What does a logistics partner do?
Logistics partners (or 3PL logistics) are hired by your business to handle the storage and delivery of products to your customers. They are responsible for making sure your customers receive the products safely and undamaged. Some services they proceed with are the shipment, storage and ground shipment of products.
The two types of logistics provided are:
- Forward – where the customer receives their order from the company
- Backwards – when a customer returns a product.
How to partner with a logistics company?
Partnering with a logistics company first requires you to choose the right company for your business. Determine the needs of your company so you’ll know the criteria to look out for in your logistics partner.
Consider your business expansions and select companies that will grow with the vision of your company.
Your company may require a logistics company when you’re experiencing business growth or if you’re expanding into a new market. You may be looking for a logistics partner in the US if you’re a foreign business looking to market your product in the US.
Things to consider when choosing the right logistics partner
Your logistics partner also represents your company and affects your brand image. The abundance of logistics companies in the markets makes choosing the right one a difficult task. Take time to consider your options and be wary not to fall for the cheapest fees.
Here are a few selection criteria for your checklist when hiring a logistics partner.
1. Company reputation and stability
The reliability of your company’s products lies in the hands of your logistics provider. Therefore, you want to choose a reputable and stable company. Look out for reviews both from partners and customers about the kind of service your logistics company offers.
Finally, choose a company that has honor and integrity when dealing with its clients and employees.
Choosing the cheapest company might be tempting but be sure that you’re not trading off price for low-quality service. Companies that have been around slightly longer and have established market presence will give you a sense of confidence in them.
2. Shipping efficiency
A logistic partner’s primary role is to provide efficient and careful shipping. You want a provider who is able to deliver your parcels accurately in a timely manner.
How long does it take for the company to process orders once it is received?
How accurate is the picking process?
Customers don’t like having parcels delayed and also get quite upset when they receive the wrong items. Take note of the shipping carriers your outsource company chooses to partner with.
What is the average shipping timings of these carriers?
Each locality usually has carriers that are ranked higher than others. Some companies are known to be quick but unsafe, while others have missing packages.
3. Warehouse locations
Warehousing locations also determine the efficiency of delivery and accessibility to your customer base.
The US is a big country, and ideally, you’ll want a company that has warehouses on both the east and west coasts. Having centralized operations is an efficient way to run operations but could cause a delay in shipping.
Even if your customer base is only located in a specific location, it helps to hire a company that has multiple warehouses for when you decide to scale up.
Logistic providers who are able to work in diverse areas will also be able to offer strategic solutions to cope with your specific needs over time.
Additionally, having an integrated warehousing management system will help in automating your logistics without much manual intervention and errors.
Read our article on: What Is Warehouse Management
The use of technology to automate processes is a step in the right direction towards a digital future. Your logistic provider’s ability to work with technology will also affect your business as you try to optimize the digital systems by syncing them.
Linking your management systems with the logistics provider enables you to get real-time data on inventory, processes, packing and shipping details. Incorporating technology also increases productivity in the warehouse and eases information transfer.
5. Packaging options
Two main reasons for wanting packaging options are the ability to customize them and fully utilizing the packing boxes.
Does your logistics partner have the ability to customize your packages so your company stands out?
Some companies want to make an initial impression right from their packing, so this would be a pivotal option to look out for.
On the other hand, if you’re pretty comfortable with standard packaging, you might still want options for different types of items. Packaging makes transportation more accessible and makes storage more convenient.
Packaging is important to ensure that your products reach end consumers in good conditions, especially if the products are fragile. Good packaging also help to reduce return rates due to damage during delivery.
6. Returns management
There are logistics companies that only handle shipping and don’t take care of returns. This can be troublesome for your customers when they need to return products and annoying for your business to set up a separate system just to handle returns. Returns processes should be clearly outlined for your customers.
It is much more efficient to have a logistics company that handles this for you because returns can be quality controlled and returned back into inventory quickly if it is undamaged. Customers appreciate the assurance of being able to return items and having a simple system to follow.
7. Customer service
Customer service shows the genuineness of companies in handling problems that might occur. While companies will claim to be responsive, look out for reviews that speak of the communication and problem-solving abilities of the company.
It is impossible to have no mistakes, and customers understand that, but the effort that is put into solving the problem counts. Ask for references from previous customers and notice if the company has a loyal following of prior customers.
8. Area of expertise
Each company has its strengths and a process that they do remarkably well compared to other firms. Specializing in a specific industry is also standard practice because different products would need different types of care.
For example, furniture would need to be stored in warehouses that are temperature sensitive so as not to grow mold.
Make sure the expertise of your logistics provider matches the needs of your business. The list of capabilities that they offer should fit both your short and long term needs. Beware of companies that claim to do everything well as they may be over-promising on what they can deliver.
Warehouse and logistics practices should value the safety of its employees and products stored. Review the safety standards of your logistics provider and ask about the safety policies that they have.
There should be safety training for employees, safety warnings in the warehouse areas, and facilities should be checked often.
Warehouses that prioritize safety also give you, as a client, the guarantee that your products will also be treated with care. The cost of replacing damaged materials can be both monetary and time, so you should be careful to choose a company that will keep your materials safe from damage.
10. Pricing transparency
Common errors could be choosing companies that claim to have low pricing but then add hidden charges later on. This could turn your profitable business to a loss when you check your billing.
The price you’re paying should include all the warehouse operations, shipping fees and monthly minimums.
Get to know what you will be charged and then compare the services between different partners. Decide on the most suitable company that gives you value for money. Don’t just go for the cheapest option because you don’t want to lose quality over a slight difference in pricing.
The difference between a logistics partner and a fulfillment partner
A fulfillment partner essentially provides the same services as a logistics partner but has value-added services. End to end fulfillment agencies go one step beyond, to liaise with e-commerce brands, market your product, follow the sales cycle, sort out legislation and get you through to customers.
If you’re a manufacturer looking to expand your business in the US, check out the article how do manufacturers expand their businesses in the USA through dropshipping. You could also work with a 3PL (third-party logistic) companies for your exports.
The task of finding the right logistics partner for your business is not easy. Each of these selection criteria is important, but only you will be able to determine which one is the most vital to your business.
Do your due diligence. Research companies and trust your gut when making your decision. If you’re ever in doubt, it could help to speak to other businesses to see what they think of the logistics companies you’re thinking of hiring.