How to choose the right logistics company in 2024?

How to choose the right logistics company in 2024?

Reza Mokdad

Reza Mokdad

May 20, 2019

With the growth of technology, artificial intelligence and machine learning. There are two realities that we cannot ignore:

  • The first is that e-commerce has become a selling model on its own and is growing bigger and bigger each year.
  • The second is the important role that the physical response play in e-commerce. While all the transactions happen online, products need to be shipped to customers using different transportation means. The products delivery is a basic component of e-commerce and this can represent either a huge asset or a clear pain for your business.

While it can be an easy task at the beginning of your e-commerce journey when you just have 20 orders to fulfill per day, managing your logistics can get a bit complicated as your business grows. There are stocks, warehousing, transportation, delivery, licenses and customs to consider. It is time consuming as you’ll have to deal with so many things out of your area of expertise. That’s why we believe the perfect solution is turning to a third party logistics or tech solution.

3PL is an abbreviation of Third-Party Logistics, it is used in logistics and supply-chain management to refer to outsourced part of a business’ distribution and fulfillment services such as warehousing or transportation.

Using a 3PL or a Tech Solution that integrates all the logistics processes allows you to focus on your core activity.

It can help increase efficiency, cut costs and improve customer service. Now the hardest part is to find the right logistics provider for your business and that is why we designed a list of indicators that you should consider before choosing the best option for your e-commerce.

1. The business needs:

You first need to define what are your needs in logistics.

  • Do you need a warehouse to store your products?
  • Where do you ship your products? Locally? Nationally? or Globally?
  • Which regions do you ship to?
  • Do you ship products that require refrigeration? Do you have large products to ship?
  • Do you have large volumes of orders to fulfill?
  • Do you have a lot of B2B order or B2C order? Are you partnering with retailers a lot?
  • Do you have a delivery time to respect?

Answering these questions will help you determine which type of services you need and will save you some time during your logistics provider research. This is also the perfect solution to clearly define your expectations from your future partner.

For example, let’s imagine that I have an e-commerce website where I sell statues of movie characters. I’ll for sure need a warehouse to store the products.

My shipments would require a lot of care as they’re fragile. The products are large and they need to be treated carefully. By answering these questions I determined my needs and thus which type of services I want from my logistics provider.

2. Area of expertise:

Most logistics providers have a special expertise in a certain area (activity) of logistics whether it is transportation, warehousing or distribution. (Don’t worry, there are still some who do cover and master all of the logistics activities).

For example: some are experts in returns such as Coliback, others like UPS are experts in transportation and some like Bigblue integrate all of these solutions into one platform.

So once you define your needs and you get to know what are the strengths and weaknesses of each provider, you can finally target and shortlist the 3PLs or Tech solutions that meet your short-term and long-term needs.

3. Customer Service:

Your customer probably doesn’t see any difference between the company delivering their order and the company they’re buying their products from; for him it is all the same experience. Your logistics provider then represents your brand.

So choosing a provider that offers a good customer service by managing claims, tracking deliveries and answering your customer’s queries will help you reduce your workload and allow you to reallocate your resources to other core activities such as your marketing or your website development.

A good customer service can be a real value proposition, it helps increase customer satisfaction and thus increase sales and brand recognition.

Remember: A happy customer is a loyal customer.

4. Scalability:

At the very beginning of your journey, it is better to manage your logistics by yourself as you have a small number of orders to fulfill but as soon as you gain momentum and orders start to flow. The best solution is to look for a logistics provider to work with over the long term. It takes time to find the perfect fit and you don’t want to repeat the process again in six months.

That's why your logistics provider needs to be able to handle your current needs, as well as the needs you’ll have in the future as you continue to grow. So flexibility and scalability are key.

Finding a partner who has the capacity to scale with your business is crucial for the long run as you both will probably need to adjust your processes to meet the demand without compromising your performances, efficiency, revenues and quality of service.

You also need to make sure that the logistics provider is flexible enough and has the right infrastructure to sustain that growth over time. For example:

  • Can your logistics provider immediately take extra inventory?
  • Can they expand along with you if you reach new markets?
  • Can they support you during your peak seasons?
  • Can they scale back down when your peak season is over?

To reach this flexibility level and grow together, you’ll need to both work really closely to understand your planning and forecasting.

5. Technology and integrations:

Every e-commerce delivery includes the information flow that goes with it. So for customers, e-commerce owners or logistics providers, it is important to get the right information at the right moment.

Choosing a partner who’s using the latest management software is highly important as it enables you to have real-time data and thus take the right decisions quickly and optimize the quality of service.

Logistics providers who invest in technology have the necessary resources to make the right changes to adapt their processes to your needs. It is also a proof that they’re always on point with the latest innovations which means that you’ll have access to software and hardware innovations that you wouldn’t be able to invest in by yourself.

Another important factor to take into account is the integration of these systems with the current CMS you use to manage your store.

6. Relationship:

When you choose a logistics provider, you entrust them with your brand, so it is crucial to partner with a company that understands and accepts your company’s purpose, values and behaviors.

The right logistics service provider for your business will get to know your needs and use their expertise of the industry to align their goals with yours.This will help both of you build trust, which is a critical factor in fostering quality business relationships and shared long term success.

So before choosing your future logistics provider, make sure to also understand their culture and vision by answering the following questions:

  • Why they do what they do?
  • What is their purpose?
  • How do they treat their employees?
  • How do they treat their customers?
  • What are their values and beliefs?
  • How do they see themselves in 5, 10 or 15 years?

Answering these questions will give you a clear idea of your potential partner’s culture and mindset. Partnering with a like minded businesses ensures that you go together in the same direction while supporting each other to grow.

7. Price:

The market is highly competitive and you’ll find a big range of offers with different pricing.

Make sure to select a logistics provider with a transparent pricing policy and who provide an offer with no hidden charges. You also should consider all cost items in order to compare apples to apples.

Price while important is not the main factor to take into consideration. Choosing the cheapest price might not be the perfect solution for your business. For example, shipping everything from China will for sure be ship but like the case of drop shipping companies, you can encounter many weeks of delay.

Companies with significantly lower prices than those of the market are often less reliable and usually fall short on customer service, that’s why you should double check all of the previous factors if you consider working with low price provider.

Don't forget that choosing a cheap price isn't the best solution if your products aren't delivered on time, or if you have to reallocate your resources to resolves claims and problems, or if you customers aren't satisfied with the service. Losing profitability and revenues due to a cheap but poor logistics service isn't worth the shot.

Look for a provider that offers the best optimum between service, purpose and cost.

Finally, investing in a logistics provider that will match your needs, help you satisfy your customers, enhance your brand image and can grow with you overtime is probably the best investment you can make to reach new heights with your e-commerce website.

And now let us know which factors you think e-commerce owners should consider before selecting their logistics provider ?

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