ECommerce businesses often turn to 3PL companies to help with fulfillment, shipping, and logistics. Your 3PL company is an important link in your supply chain. Slow or inaccurate third-party logistics can damage your business. You need to choose one of the best 3PL companies to keep your customers happy with accurate and on-time order fulfillment.
Red Stag Fulfillment has been considered one of the best 3PL companies in the US, year after year. However, our services aren’t the right fit for every eCommerce seller. Choosing the best 3PL company also means choosing one that is a good fit for your business.
We’ve compiled a list of the best 3PL companies to give you a head start on 2021. But first, let’s start with the 3PL basics.
What is a 3PL company?
Third-party logistics, or 3PL, most commonly refers to fulfillment operations. A 3PL company will handle warehousing and order fulfillment. Your 3PL will receive shipments from your factory. When orders come in, your 3PL will pick the products, pack them, and hand them off to a shipping company for delivery.
The word logistics, in manufacturing and eCommerce, refers to the movement of products from supplier to end customer. While freight is usually considered 2PL, we have included some freight companies in our guide because they are an important element of logistics for some companies.
We have also included some of the top logistics companies. Logistics can include supply chain management, which would generally be classified as 4PL.
Most 3PL companies specialize in warehousing inventory and picking, packing, and shipping orders. Therefore, the main focus of this guide is on the best 3PL companies for eCommerce fulfillment.
Best 3PL companies for order fulfillment
The best 3PL companies provide accurate order fulfillment, excellent customer service, and on-time performance. For example, Red Stag Fulfillment offers accuracy guarantees, and we will pay our clients $50 on the rare occasions when we make a mistake (plus correct the mistake).
While we work very hard to be one of the best 3PL companies, we know that Red Stag Fulfillment is not the best choice for every eCommerce business. In fact, we refer almost 90% of the people who contact us to other 3PL companies. We are committed to helping your eCommerce business find the best 3PL company, even if it’s one of our competitors. That’s why we created this resource.
In this guide to the best 3PL companies for 2021, we profile seven 3PL fulfillment companies:
- eFulfillment Service
- Rakuten Super Logistics
- Red Stag Fulfillment
Your third-party logistics company is one of your most important business partners. Top-notch order fulfillment is essential to keeping your customers happy. Before you choose your 3PL, it’s important to talk to the company. If possible, visit the warehouse. There’s no substitute for personal connections and communication. But, you can narrow down your search first by understanding the types of services each company offers.
This guide outlines some of the metrics that can help determine which of the best 3PL companies might be a good fit for your business. We hope, by the end, that you have enough information to know where to start your search.
How to find the right 3PL company for your fulfillment
Every 3PL company has strengths and weaknesses. At Red Stag Fulfillment, for example, we have built our warehouse with extra-wide aisles and heavy-duty equipment to accommodate bulky and heavy products. We use our oversized shipping expertise to help our clients reduce their dimensional weight shipping charges. Our experienced warehouse staff packs and ships everything from paddleboards to office chairs.
However, if your business sells clothing, books, beauty products, or other small products your best 3PL company will probably be one that specializes in shipping products just like yours. The right fit will also depend on the size of your business, how many different products (SKUs) you sell, your growth trajectory, and where in the world you ship your orders.
How many SKUs do I have in my product line?
Every individual SKU needs space on the shelf, whether you sell two of that item per month or 2,000. To maximize warehouse space, some of the best 3PL companies require a minimum SKU-to-order ratio.
ShipBob’s required ratio is 5:1, and Fulfillment.com asks for a 7.5:1 order-to-SKU ratio. That means, if you sell 100 SKUs, you’d need at least 500 orders per month, on average, to meet ShipBob’s requirement. For Fulfillment.com, your 100 SKUs would need at least 750 monthly orders.
The other 3PL companies in our guide don’t set a required SKU-to-order ratio. However, this metric is an important KPI for your business. If you have so many SKUs that your ratio is very low, you may be spreading your product line too thin. It could be time to consolidate around your best-selling items.
Selling a lot of different SKUs isn’t automatically a negative thing. Broad product selection can increase your appeal and your customer base. If you have too few items in your line, you may lose sales. Finding the right balance between the number of SKUs you stock and your monthly order volume is a delicate dance. Ask the experts at your 3PL company for help with this piece of the inventory management puzzle.
Monthly order minimums
How many orders does my business ship per month?
Order volume minimums are a proxy for the type of business that a 3PL company generally works with. Some of the best 3PL companies are happy to work with startups that may not ship many orders each month as they get off the ground. Others focus their business model on working with more established companies that can meet a monthly minimum order volume.
ShipMonk and eFulfillment Service are good choices for startups. They have no monthly order minimums. However, ShipMonk does have a minimum monthly pick and pack fee of $250. ShipBob asks clients to meet a monthly order volume of 200. Red Stag does not have firm monthly minimums, however we’re best suited to help companies that need to fill hundreds to thousands of orders per month. Rakuten Super Logistics works with clients who ship at least 1,000 orders per month. The minimum for Fulfillment.com and Floship is 1,500 monthly orders, on average. Floship’s order volume minimum for crowdfunding fulfillment is 2,000.
Typical parcel weight
How heavy is my typical order?
Some 3PL companies have weight limits for the types of products they work with. Even among those that will ship parcels of any size or weight, most do the bulk of their work within a size range. Rather than looking at the average parcel weight, which could be skewed by a few items that are much lighter or heavier, this metric looks at the typical parcel weight for each company.
Most eCommerce parcels weigh under 10 pounds. If your orders are in that range, you have a lot of choices.
A typical package at Floship weighs between 1 and 2 pounds, and most of their orders are less than 5 pounds. Floship has a weight limit of 22 pounds (10 kilos) or less. EFulfillment Service also ships mostly lighter orders and limits package size to no more than 36 inches. Most of the orders shipped by ShipMonk, Fulfillment.com, and Rakuten Super Logistics are between 1 and 10 pounds.
ShipBob’s typical parcel ranges up to 20 pounds and the 3PL will also handle larger items. A typical package at Red Stag Fulfillment weighs around 30 pounds, and we specialize in shipping products that weigh 20 pounds or more. Red Stag doesn’t have an upper weight limit (at least not that we’ve found yet).
3PL warehouse locations
How can I best reach my customers?
One of the most compelling reasons to work with a third-party logistics company is warehouse location. Most eCommerce businesses that self-ship use warehouse space close to company headquarters. That can be a problem, particularly if you’re located on one of the coasts.
It can take five days or more to ship a ground package from Los Angeles to New York. A more centrally-located warehouse can reach either coast in two or three days.
Many of the best 3PL companies give you the option of placing your products in more than one warehouse location. That can get you even closer to your customers. Placing your products near your customers saves you more than days in transit. When your orders travel through fewer shipping zones, you’ll pay less for shipping. This can reduce the need for expedited shipping. Lower delivery costs may also make it easier for you to offer the gold standard of eCommerce: free shipping.
If your products reach an international eCommerce market, you might want to choose a 3PL company like Floship or Fulfillment.com, which have warehouses outside of the United States. If you have a high order volume, it could make sense to choose a company that has many warehouse locations, like Rakuten Super Logistics.
However, a smaller number of well-placed warehouses can give you fast and inexpensive delivery while keeping your inventory management simple. For example, Red Stag Fulfillment can ship to 97% of US addresses in two days or less from just two warehouse locations. ShipMonk, eFulfillment Service, and ShipBob all offer fast and efficient services from their warehouse locations.
Here are the warehouse locations of the best 3PL companies for 2021.
Red Stag Fulfillment
Rakuten Super Logistics
Best 3PL companies: logistics
The warehousing/order processing/fulfillment combo isn’t the only type of 3PL company. Some of the best 3PL companies combine warehousing and supply chain management with trucking and transportation services. This list is just a sampling. If you need 3PL services with a focus on logistics, there are many other top companies to choose from.
Ryder Supply Chain Solutions
Ryder Supply Chain Solutions provides reliable transport as well as state-of-the-art warehousing services.
DHL Supply Chain North America
Based in Germany, DHL is best known for international deliveries. If you need help with international logistics, DHL can help you out in almost any country on the planet.
UPS Supply Chain Solutions
UPS does more than deliver packages. The company’s logistics arm helps companies effectively manage their supply chains, offering a range of services.
Best 3PL companies: freight
Many freight companies do more than just trucking. They can help with multi-modal transport, logistics, warehousing, and other services that take them into the 3PL space. As with the logistics 3PL companies listed above, this list is just a small sample.
FedEx Supply Chain
FedEx delivers packages and freight, and its supply chain arm provides 3PL solutions for eCommerce companies of all sizes.
ABF Freight and Panther Premium Logistics are just two of the businesses under the ArcBest banner. With a focus on transportation, ArcBest can help you solve your logistics challenges and get your products where they need to go.
XPOLogistics offers truckload freight and air transportation services as well as warehousing and distribution.
More tips on finding the right 3PL company for your eCommerce business
Once you have narrowed your search for the best 3PL company, your work is not done. There are many other factors you may want to consider. Kitting services are important if you want to sell a set of products under a new SKU. You may want your 3PL to handle returns or customer service. The 3PL you choose needs to have a dashboard that connects with all your eCommerce platforms.
You will have a lot of questions when you’re looking for the best 3PL company for your business. But there’s only one question you’ll regret: the one you didn’t ask. To help you cover all your bases, Red Stag Fulfillment has put together a fulfillment company questionnaire. Feel free to use it, whether you end up working with us or with one of the other best 3PL companies. The most important thing is to make the best choice for you.