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The Step-by-Step Guide to Switching 3PLs to Increase LTV
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Cathy Carpetta
April 19, 2024
In today's e-commerce landscape, third-party logistics (3PL) providers play a crucial role in the success of e-commerce and omnichannel brands.
As the e-commerce market continues to evolve and competition intensifies, working with the right 3PL provider can make a difference based on the post-purchase experience.
Why are 3PLs so important? They handle the storage, transportation, delivery of goods and product returns, allowing companies to focus on their core competencies and grow their customer base.
One of the key reasons for switching to 3PLs is to take advantage of new technologies and services that can improve fulfilment and shipping processes.
For example, using a 3PL with advanced tracking and reporting capabilities can help businesses better understand their customers' purchasing behaviour and make more informed decisions about inventory management.
A recent survey found that nearly 80% of customers are willing to pay more for faster delivery. Bigblue clients using Fast Tags (rapid and free delivery badges) in the product pages observed a 26%+ conversion increase.
Source: Retail Touchpoints and Bigblue
Following the steps outlined in this guide, businesses can smoothly transition to a new 3PL and see a significant increase in their e-commerce LTV.
This increased revenue can be reinvested into marketing and other growth initiatives, leading to even greater success in e-commerce.
What you will discover in this guide:
The right time to change your fulfilment partner depends on various factors. You can ask yourself these questions:
The right time to change your fulfilment partner is when your current partner is no longer meeting your needs and hindering your business growth. By switching to a new partner, you can improve customer satisfaction, reduce costs, and achieve your business goals.
If you are experiencing any of the following issues, it may be time to consider switching to a new fulfilment partner:
61% of businesses cited the inability to scale as a reason for switching fulfilment partners.
Source: Survey by Practical E-commerce
As your brand grows and expands, your fulfilment partner must be able to keep up with the increased demand. If your current 3PL cannot handle the volume of orders or the pace of growth, it may be time to consider switching.
For example, suppose you are experiencing a surge in sales during a holiday season or due to a successful marketing campaign. Your fulfilment partner should be able to handle the increased volume without any issues. If they can’t do so, it could lead to shipment delays, inaccurate orders, and frustrated customers.
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On the other hand, if you have a fulfilment partner that can scale with you, they can help you efficiently manage the growth of your business. This could include adding warehouse space, hiring more staff, and implementing new technology to streamline operations.
❌ 63% of consumers will unlikely return to a retailer after a negative fulfilment experience.
Source: eMarketer
If your fulfilment partner frequently makes mistakes with orders and consistently fails to meet your service level agreements (SLAs), it can lead to unhappy customers and lost revenue.
Some common performance issues that may indicate a need to switch 3PLs include:
🔁 25% of consumers have returned an online purchase due to receiving the wrong item.
Source: survey by Forrester.
⏰ 90% of consumers expect to receive their orders within 5 days or less.
Source: Invesp
💸 29% of consumers have abandoned an online purchase due to a problem with the delivery process.
Source: eMarketer
According to a survey by Logistics Management, 59% of businesses cited poor performance as a reason for switching to 3PLs. If you are experiencing any of the issues listed above or are simply not satisfied with the performance of your current 3PL, consider a change.
35% of businesses cited the need for a 3PL with local expertise as a reason for switching providers.
Source: survey by eMarketer
If you are launching your brand in a new market, consider partnering with a 3PL familiar with the market's specific requirements and regulations. Here are some examples of how a 3PL with experience in your target market can benefit your business:
Bigblue Tips
At Bigblue, we use Royal Mail and UPS, the UK's two preferred carriers, for orders shipped from our Kûehne+Nagel warehouse in the UK.
If you work with Bigblue, you can also leverage our fulfilment centre across Europe, we have six warehouses in France and one in Spain!
Use Bigblue to quickly start selling in new countries and expand your potential customer base.
👉 Discover Bigblue’s international warehouse network
Companies that use advanced analytics to track and optimise their supply chain operations experience an average of 28% higher profit margins than those that do not.
Source: Accenture
Is your 3PL supporting your growth or hindering it? Does their technology help you make strategic decisions to increase savings and turnover?
Bigblue Tips
Bigblue’s TMS provides real-time updates on the status of shipments and proactively communicates in the event of delays or disruptions.
👉 Discover Bigblue’s TMS
Bigblue Tips
Unlock efficient logistics with Bigblue's smart carrier offer. Leveraging AI-powered delivery options, we ensure the best shipping method is chosen to boost conversions and optimise pricing. In 2023, they outperformed standard carriers' on-time delivery by 9%.
👉 Discover Bigblue’s smart carrier offer
In 23% of cases, damaged packaging will hurt customer perception. And to make matters worse, there is a more than 70% chance that the customer will not order from you again.
Source: Raja
Products such as perfumes, food, and fashion need specific storage and shipping processes, as well as compliance with regulations. A knowledgeable 3PL can manage these efficiently.
If your current logistics provider lacks these processes, switching to a new fulfilment centre can bring the following improvements:
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