What is a 3PL – and how can you find fulfillment in your logistics partnership?

Ever find yourself wishing you signed a prenup…with a warehouse? 

It might feel less romantic than a marriage proposal, but choosing the right logistics partner is a decision that can make or break an ecommerce business. It’s akin to finding a life partner, says Matt Hertz, an expert in the ecommerce logistics space. 

Hertz, who built out supply chain operations at Rent the Runway and Birchbox, took the stage for a recent AMA with The SOP Community where he dove into all things 3PL. 

What is a 3PL?

It’s common for a growing ecommerce brand to reach a point, sometimes with little warning, where warehousing and fulfilling orders in-house is no longer an option. That’s where a third-party logistics company (3PL) might come in. There are many links in the supply chain — transporting finished goods to warehouses, storing and tracking inventory, processing and shipping orders — and a 3PL is a team that carries out one or multiple of these tasks. 

If a brand finds the right match, a good 3PL partnership can provide meaningful leverage, allowing merchants to offload logistics processes to a purpose-built entity. With reliable infrastructure in place for inventory management, warehousing, and fulfillment, a brand can turn its focus to refining its other core competencies.

But the benefits of this outsourcing depend on the quality of the relationship. Hertz cautions against simply “Googling ‘best warehouse in Chicago’ or ‘best warehouse in Reno.’” He likened this approach to walking into a bar and asking, “Who’s single and 25?” without digging deeper. “This is a huge decision,” Hertz stressed. “This is a decision that you will be stuck with, for better or for worse, for a number of years.”

Building strong 3PL partnerships

Through his experience matching brands and 3PLs over years of consulting, Hertz has a super clear idea on what creates the foundation of a fruitful 3PL partnership. He’s identified three pillars that will help brands get there: communication, technology, and transparency.

1. Communication

Communication is paramount. As Hertz explained, “Most 3PLs are fairly competent, but the reason why brands hate their 3PL is because it stems from bad matches, not because that 3PL is bad.” He emphasized the importance of finding a 3PL that you can communicate with day in and day out, one that shows they care about your business.

“Visit the facility, tour the facility, talk to people, see how they communicate, see how they interact,” Hertz advised. “Imagine if you decided on marrying your partner just by communicating over Zoom or over a dating app. That would be silly.”

2. Technology

The second pillar of a strong 3PL partnership is technology. Hertz highlighted the importance of 3PLs embracing modern warehouse management systems and returns management solutions. “The moment that you embrace different types of modern technology, whether it’s a warehouse management system, whether it’s returns management... that immediately signals to the brand that you get it.”

Ecommerce brands today are accustomed to the sleek, user-friendly experience provided by platforms like Shopify, and they expect the same level of sophistication from their 3PL partners. Hertz warned that 3PLs with archaic technology will struggle to retain and attract new business.

As ecommerce continues to evolve, Hertz is optimistic about the emergence of innovative logistics tech startups that are poised to solve some of the industry’s long standing challenges. From modern returns management solutions like Two Boxes to data workflow automation platforms like Parabola, these new players are empowering brands to streamline their operations and forge stronger, more sustainable 3PL partnerships.

3. Transparency

The final pillar is transparency. 

Hertz encouraged brands to scrutinize their 3PL partners, especially in light of recent industry consolidation and high-profile bankruptcies. “It’s fair game in this market, given all these high-profile bankruptcies that we’ve seen just this year alone for a brand to say, ‘Hey, I wanna see your financials.’”

Brands should also look for 3PLs with a proven track record, not “fly-by-night operations.” Hertz emphasized that if you’re tying your business to a 3PL for years to come, you want to be confident in their solvency and long-term stability.

Finding 3PL fulfillment

Settling on the right 3PL match might mean returning to first principles: What are the priorities of the business? Ecommerce logistics is an ever-changing landscape, and it can be tempting to chase the increasingly high bar set by Amazon’s lightning-fast shipping. But this is not the right model for every brand. Hertz points out that while long shipping quotes can lead to cart abandonment, “trying to compete with Amazon in that same-day, one-day, two-day sphere is just not scalable.”

In short: Just be yourself. As in a romantic partnership, strong communication, thoughtful use of technology, and financial transparency are key, but where are you going to celebrate Thanksgiving? What if you want kids and they just want cats? Understanding your brand’s unique needs will allow you to find a 3PL partner that shares your priorities, and unlock the true potential of your ecommerce operations.

Ultimately Hertz’s insights underscore the importance of approaching 3PL selection with the same care and diligence as finding a life partner. By prioritizing communication, technology, and transparency, brands can navigate the complex logistics landscape and unlock the true potential of their ecommerce operations.

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