In today’s fiercely competitive e-commerce market, you must offer your customers efficient and reliable shipping options. Choosing the right 3PL (Third-Party Logistics) service can help your online store meet its delivery commitments and maintain customer satisfaction.

A third-party logistics service is a partner that assists manufacturers and e-commerce merchants by outsourcing logistics and distribution activities. Additionally, these service providers offer specialized solutions, including product packaging, door-to-door delivery, cross-docking, and inventory management, to cater to the unique needs of their clients.

According to a report by Allied Market Research, the global 3PL market was valued at $1.3 trillion in 2021, and it is projected to grow at a CAGR of 8.8% from 2022 to 2031, reaching a total valuation of $2.8 trillion by 2031. 

Thus, whether you’re a seasoned e-commerce business owner or just starting, you must select the best fulfillment partner to help your business grow and succeed. However, with numerous 3PL providers in the market, selecting the best one can be daunting.

This article provides seven essential tips to help you make an informed decision when choosing a 3PL service for your online store.

1. Assess Your Business Needs

Evaluating your current and future business requirements before partnering with a 3PL provider is essential. When determining your needs, you should consider factors such as order volume, shipping destinations, product types, and customer expectations.

Assessing your business needs will help you identify what services and capabilities you require from your provider, such as warehousing, inventory management, order fulfillment, shipping, and returns management.

By evaluating your business needs, you can select a 3PL partner to meet your requirements, streamline your operations, and help you grow your business.

2. Look for Industry Experience

A third-party logistics provider with experience in your industry will understand your business’s unique challenges and requirements, such as specific shipping regulations, packaging needs, and customer expectations.

An experienced 3PL fulfillment and warehousing partner will have established relationships with carriers, suppliers, and other industry players, which can help streamline your operations and reduce costs.

To evaluate their industry experience, you can ask for references from other clients or inquire about the provider’s track record in handling similar products or order volumes. Partnering with an experienced provider can help ensure your online store’s success and customer satisfaction.

An experienced provider like Red Stag Fulfillment can offer valuable insights and expertise to help you streamline your fulfillment process and improve your operations. Red Stag Fulfillment has been a well-established 3PL fulfillment service in the industry for several years.

The company specializes in serving eCommerce businesses and offers a range of services to help you meet the unique needs of your online store.

In addition, they provide a risk-free 30-day no-obligation trial, and new clients can benefit from free storage for the first 90 days. By partnering with an experienced provider like these, you can use their expertise to optimize your fulfillment process and enhance your customer experience.

3. Technology Capabilities

Technology capabilities are crucial when selecting a 3PL service for your online store in today’s digital age. A 3PL provider with advanced technology capabilities can help streamline your operations, reduce costs, and enhance customer satisfaction.

According to US NTT Data, third-party logistics providers constantly improve their technological and digital capabilities to enhance their services, optimize networks, and drive efficiency. 

According to a survey, 89% of shippers reported that their relationships with their 3PLs have generally been successful. Furthermore, an even higher percentage of 3PLs, 98%, agreed that their relationships with customers have been successful.

These findings suggest they effectively meet the needs of shippers and customers, demonstrating the value of outsourcing logistics and distribution functions.

As technology evolves and competition intensifies, they will likely continue innovating and improving their services. First, however, you should consider the 3PL provider’s technology infrastructure, such as their warehouse management system, order management system, and shipping software, to ensure they can integrate with your existing e-commerce platform and meet your business needs.

4. Scalability and Flexibility

As your business grows, you need a provider to scale its services and operations accordingly. Therefore, scalability and flexibility are critical when selecting a 3PL service for your online store.

A 3PL provider with a flexible approach can adapt to changing business needs, such as seasonal spikes in demand or new product lines, and provide customized solutions to meet your requirements.

A business with a nationwide or global network can provide you with access to new markets and shipping options, enabling your business to expand and thrive. By partnering with a 3PL provider that can scale and flex with your business, you can achieve greater efficiency, cost savings, and customer satisfaction.

5. Service Quality and Support

A 3PL provider with a reputation for high-quality service and support can provide peace of mind and ensure that your customers receive their orders on time and in good condition. You should evaluate their customer service, including their responsiveness, communication, and problem-solving abilities.

Additionally, you should consider the provider’s track record in delivering accurate and timely shipments and handling returns and customer inquiries. By selecting a third-party logistics business with excellent service quality and support, you can build a strong partnership that fosters growth and success for your online store.

6. Location and Network

According to IBIS World, there are 20,410 businesses currently involved in third-party logistics in the US as of 2023. However, these providers are located in different places, and the provider’s location can greatly affect the transit times and shipping costs. Hence, choosing a provider with warehouses and distribution centers in strategic locations is essential.

A 3PL provider with a nationwide or global network can provide you with access to new markets and shipping options, enabling your business to expand and thrive.

A service with established relationships with carriers and suppliers can negotiate better rates and improve shipping efficiency. In addition, selecting a provider with a strong location and network can improve your logistics operations and enhance customer satisfaction.

7. Cost and Contract Terms

You should evaluate the pricing structure and compare it with other providers to ensure that you are getting a competitive rate. You should also review the contract terms, including minimum order volumes, payment terms, and termination clauses, to ensure they align with your business needs and goals. 

Finally, it’s essential to consider the total cost of ownership, including any hidden fees or additional charges, when comparing the third-party logistics providers.

By selecting a 3PL provider with transparent pricing and favorable contract terms, you can reduce costs and improve your bottom line while maintaining high-quality service and support.

Conclusion

Choosing the right 3PL service is a critical decision for the success of your online store. By considering factors such as your business needs, industry experience, technology capabilities, scalability and flexibility, service quality, support, location, network, and cost and contract terms, you can select a 3PL provider to streamline your logistics operation. You can also reduce costs and enhance customer satisfaction.

You must do your due diligence and evaluate multiple providers to ensure you get your business’s best value and service. By partnering with a reliable and experienced 3PL provider, you can focus on growing your online store and delivering an exceptional customer experience.

Business performance can be defined as the ability of a business to achieve organizational objectives by implementing effective strategies. It is regarded as an important way for companies to analyze how effective management is at achieving goals. Constant changes in market conditions mean it is essential to monitor business goals and performance to remain competitive.

Key performance indicators (KPIs) are used to help measure this and can include:

Traffic generated by a website, labor productivity, sales growth, customer satisfaction ratings,

order delivery and fulfillment speed.

By understanding how the different areas of a business are performing, it is possible to assess where it is strong, establish areas of weakness and thus adjust models and strategies for the organization to become more effective and profitable.

Getting the right qualifications

When entering or working within the business world, gaining relevant experience is key, as is personal development and studying for the best qualification to help progression in the long term. It’s vital that students make the right choice when choosing the best online mba uk for their needs. Aston University’s online MBA is designed to develop a relevant skills portfolio to improve performance, achieve goals and equip students with the breadth of knowledge to deal with any challenges that lie ahead in their working life.

Modules include measuring and enhancing financial performance, creating, and delivering customer value, and crafting organizational strategy. The degree is recognized by employers all over the world, and over the past twenty years, Aston University has consistently been ranked as a top university for graduate employability.

Online studying is perfect for those who are not able to attend campus and want to enjoy greater flexibility in how they learn and where they do it, whether it be at a local university or one situated in another country that offers the best fit for what the candidate has identified they need.

Methods of measuring performance

Firstly, a business needs to have a clear idea of its goals, and if it is adjusting them, it should set them so that they can be easily understood and measured. It could be that a company wants to find new customers, improve customer satisfaction, and generate more traffic to its website. So, it is essential to determine exactly what needs to be measured to understand how well a strategy is performing once it is implemented. Other examples of business goals could include more lead generation, increasing sales, increasing profit margins, or capturing a larger share of the market.

Critical success factors and key performance indicators

Once goals are decided, it is vital to establish critical success factors, or CSFs, which are the specific conditions of the key activities a business needs to focus on to be successful. These are a few areas that should receive constant attention from management, in which satisfactory results will ensure that an organization is competitive and business will flourish. They will also give staff focus, ensuring projects and tasks are aligned across all departments and teams.

The four main CSFs are:

Industry factors. These result from the characteristics of the industry in which a company is a part and must be done to remain competitive within a market. A tech start-up, for example, may identify innovation as a CSF.

Environmental factors. Factors such as the economy, competitors, the business climate, and technology.

Strategic factors. These stem from a company’s competitive strategy and could be how the business markets itself.

Temporal factors. Factors that are short lived and influenced by a business’s internal changes.

Critical Success Factors (CFS), although sometimes used at the same time as Key Performance Indicators (KPIs), are different measurements. The CSFs are taken from a company’s objectives and mission and could include factors such as becoming more sustainable or improving employee engagement. These are often similar to other organizations’ CSFs.

Following the identification of CSFs, it is then possible to develop KPIs, the specific criteria used to measure performance which will differ from business to business. Once clarified, they allow managers to decide whether CSFs have been met and goals achieved. KPIs can be used both to focus on personal and team objectives and clarify business-wide targets and are more quantitative and detailed than CSFs.

Some examples of KPIs include:

• Average time to complete a task
• Percentage of tasks completed on time
• Cost of service delivery
• Number of complaints received
• Volume of tasks per staff
• Order fulfillment cycle time
• Production yield
• Operating margin
• Debit-equity ratio
• Customer acquisition cost

They should always relate to things a business can control. For example, interest rates could be an important factor in performance, but individual companies cannot change what a central bank interest base rate is. However, an organization can control its exposure to fluctuations in interest rates, so this could be used as a KPI.

Implementing business performance targets

Each KPI that a company decides to measure should have a goal or target associated with it to gain a meaningful picture of how the company is performing.

The goals should be specific and based on questions such as what needs to be accomplished, who is responsible for it, and what steps will be taken to achieve the aim. Quantifying the goal inspires and motivates employees as they will know and understand precisely what is expected of them. The aims should also be realistic and time-bound with reasonable deadlines against which performance and progress will be assessed.

Once the targets have been set and communicated, responsibility for each of them should be assigned to the relevant manager or team, meaning they are clearly owned by an individual or department. Ensuring that the necessary resources are made available when required is vital, as is undertaking regular reviews to help motivate staff and allowing for changes if progress is not as hoped.

Making a planning cycle will enhance the ability to make changes in a company routine if necessary, allowing the management team to anticipate any problems and adapt to change more easily.

Establishing reporting processes will lead to regular and controlled data monitoring to help establish and produce valuable conclusions about a business’s performance. Data can offer business intelligence (BI) and business analytics (BA). BI enables managers to monitor current performance and can give insights into how various factors are influencing performance and how an organization has grown. It can help evaluate issues such as the strength of teams, gain insight into key customer information, and how to improve employee satisfaction. BA uses the data to inform business success in the future, allowing a company to measure current performance and encourage future profits, growth, and success

Benchmarking can help companies evaluate their success and performance against other businesses in the same market. Effectively measuring an organization’s performance often requires knowing how competitors are performing too. Establishing a benchmark for others’ performance and success can give valuable points of comparison and help gauge success against others.

It is also helpful to seek ways to be innovative in processes for measurement and monitoring and get the most value from these as companies evolve and grow. Using profits as the only measure will not give a holistic and practical insight into performance, whereas gaining a comprehensive perspective on every factor that informs performance, such as changing markets and employee retention, will give more wide-ranging information and, therefore, more effective measurements to make decisions for the future.

KPIs can be split into two types – leading and lagging and using both will provide the most holistic view of performance.

Market share

Market share is an illustration of the size of a company, which is a useful measurement of an organization’s competitiveness in its particular field. It is usually calculated as the percentage of company sales as compared to the total share of sales in its industry over a specific period. Understanding market share is important as it can influence a business’s operations, such as the prices it can offer for services and products and share performance.

When a company increases its market share, it can improve its profitability. With an increase in size, there is a change in scale, so that it can possibly offer lower prices affecting competitors’ growth.

A low market share is regarded as less than half of the market share of an industry leader, therefore if the leader has a market share of 40% and another company has 10%, then at less than 20% (half of 40%) it would be considered to have a low market share.

Thus, market share indicates how large a company is and how much influence it has within its own industry and can indicate growth and success. Companies can improve their share by offering customers innovative technology, hiring more employees, buying competitors, and strengthening customer loyalty.

Return on Investment (ROI)

Another measure of business performance is ROI, or Return on Investment, which indicates how much money is earned relative to the amount of money spent on an investment and is usually presented as a percentage. It is calculated by dividing the net profit from an investment by the cost of the investment.

It is a key performance indicator used to measure the efficiency and profitability of an investment, allowing investors to compare the profitability of their investment and help them to make decisions about where to put their capital. ROI is also used to measure the efficiency of an organization’s use of resources such as labor and materials.

It has a range of uses, such as measuring the profitability of stock shares to evaluate the success of a real estate transaction or to help decide whether or not to purchase a business. If an entrepreneur is looking at a new project, an ROI calculation can help them work out if the return they are likely to get is worth the money they will put into it, or if an investor is evaluating past and future stock purchases, it can be a speedy indicator of potential stock performance.

It does not, however account for how long an investment is held. When ROI calculations result in a positive figure, it means net returns are in the black, but when it is in a negative figure, it means the net return is in the red. It is easier to calculate in some instances than others – for example, stock share ROIs are easier to calculate than the ROI of a project under consideration.

ROI is a fairly uncomplicated metric which is easy to work out and understand and has become a standard, universal measure of profitability.

The importance of research

Measuring an individual company’s performance is important, but it is also crucial to understand external factors within the business world as a whole to put measures such as KPIs, market share and ROIs in their proper context.

Reading business insights, whether global or local, will ensure an organization is able to manage and look ahead – looking at financial information, trading trends, and technological developments and doing market research is vital. It could be done simply by talking to people, reading industry papers, browsing relevant websites and online magazines, following the news, subscribing to industry news, and analyzing websites or social media output.

For market research, for instance, there are tools and techniques as well as specialist agencies that can enable a company to gather quantitative and qualitative data and put it together in an up-to-date report, gathering large quantities of consumer information which can then be utilized to set and measure specific KPIs.

A company could ask questions about its brand to evaluate the success of how it is presented and what image it brings to mind to compare it with competitors and assess whether consumers see the company how it aspires to be presented.

Running a business or working at an executive level at someone else’s company is an exciting and challenging thing to do. While long-term commercial success is hard to come by, the satisfaction it brings when it does occur is a wonderful feeling. Of course, being able to enjoy sustained success in business at senior levels comes with not only hard work but also having the right knowledge to rely on.

Picking up this type of useful knowledge is therefore crucial. If you pursue a doctor of business administration at an accredited university like Aston University, you will learn about the essential concepts of business theory and business practice. A degree program can even be completed online at Aston, which means students all over the world can master the latest business strategies from the convenience of their homes.

While business theory and practice might both sound like the same thing, they actually have some key differences. So, what is business theory and business practice – and how do they compare?

What is business theory?

Just as the importance of logos for business cannot be overstated, the key role of business theory in the commercial world cannot be stressed highly enough. This type of theory looks at how businesses work and includes learning about pre-defined models, principles, techniques and processes.

Business theories are common in key areas such as marketing, customer service, operations management and finance. Theories in business can also help set out how to drive organizational change or how to make strategic decisions in an effective way.

These theories are usually drawn up by respected academic figures (often with real-world experience in business) and can give entrepreneurs a framework to operate from within their own company. They are also valuable for teaching business owners more about how each part of their company works and setting out a roadmap for driving future improvements. A good example of a well-known business theory is Mayo’s Human Relations Theory.

What is business practice?

Business practice is any action your company takes to help meet its overall objectives. It can also refer to any method, process, regulation, rule or method your organization follows to hit its goals. The key thing to note is that business practice is about taking concrete action in the real-world to achieve more and often means putting business theories into action to see how they work out.

The introduction of business practices is considered key by the majority of companies because it helps them run more efficiently, improve performance over time and maintain an accountable structure. Common types of business practice approaches can include drawing up business action strategies, defining each employee’s role/accountability, setting targets for performance across the company and putting an effective communication plan into place. Many companies will also include the delivery of relevant training to staff as part of their business practice.

How do business theory and business practice compare?

As we have already noted, the theory and practice of business are alike yet different at the same time. But how is this possible?

In terms of differences, the most obvious is that business theory is entirely academic and involves merely thinking about what action you could take within your company. Studying the theory of business does not require you to take any physical action or make any concrete changes to your operations.

Business practice, on the other hand, is the exact opposite – it is about putting the theories you have learned into practice. As such, this means business practice involves taking concrete action. As a result, business practice can have a far bigger impact on how your company actually performs compared to business theory.

What similarities do they both share?

The core similarity shared by both business theory and practice is what their ultimate goal is. Both are focused on helping businesses improve overall and finding ways to refine what they do. Although theory may suggest how to do this and practice might involve putting it into place, their end objective is still the same.

The other obvious similarity is that both are designed to work within a business setting and across all industries. It is true to say that companies across all business sectors can make use of the best theories and the best practices to help drive improvement.

What benefits do business theory and business practice offer?

There is no doubt that learning more about the theory and practice of business is advisable for any savvy CEO or senior manager.

When it comes to business theory, learning about the most effective models to use in your own company can provide you with the knowledge to help boost operations. It can also be valuable if you need to improve in a key area of your business but don’t know how. Business theory is superb for setting out logical steps to follow in order to improve service, production or strategic decision making. In a personal sense, learning business theory can also make you a more well-rounded leader and add an extra skill to your resume.

For business practice, the value comes from the tangible effects it can bring to your organization. By putting the best business practices into action, you will be able to see them working in real-time and helping to drive up efficiency, productivity and customer support. Putting top business practice ideas into place is particularly good for a struggling business that is in need of real-world ways to make improvements.

Business theory and business practice both useful

As the above shows, business theory and business practice are both valuable things to learn more about in their own right. One gives you ways to refine your company or improve aspects of it, while the other sees you putting these ideas into action to get the best results. If you are a business owner or senior manager looking to find ways to drive future growth, both concepts merit deeper investigation.