6 Signs It’s Time to Change Your 3PL (And How to Make the Switch)
For growing brands, partnering with a third-party logistics provider (3PL) is a strategic move that allows you to focus on what matters most – developing great products and building your brand. But as your business evolves, you may find your fulfillment partner no longer aligns with your ambitions. What started as a perfect match can begin to show signs of strain as your volume increases and operations become more complex.
Let's explore the six key signs that indicate it's time for a change, and how to navigate the transition successfully.
1. Technology That Holds You Back
In today's fast-paced ecommerce landscape, outdated technology isn't just an inconvenience – it's a competitive disadvantage. Modern fulfillment operations require sophisticated systems that can handle complex order routing, multiple sales channels, and real-time inventory management. Many growing brands find themselves held back by legacy systems that worked fine at lower volumes but create bottlenecks as order volume increases. When your team spends more time creating workarounds than focusing on growth, it's a clear sign that your technology foundation needs an upgrade. The cost of staying with outdated systems often far exceeds the investment required to transition to a more capable platform.
Watch for these warning signs:
- Limited inventory visibility
- Manual processes that should be automated
- Poor system integration capabilities
- Lack of real-time reporting
- Outdated order management systems
Modern fulfillment demands sophisticated technology that can scale with your growth and integrate seamlessly with your tech stack.
2. Missing or Inadequate KPI Tracking
Performance metrics are the pulse of your fulfillment operation, revealing everything from efficiency bottlenecks to cost optimization opportunities. Your fulfillment partner should proactively track, analyze, and report on key performance indicators that directly impact your bottom line. Without robust KPI tracking, you're essentially operating in the dark, making decisions based on gut feel rather than data. The best fulfillment partnerships are built on transparency and continuous improvement, using metrics to drive meaningful operational enhancements. When your 3PL can't provide detailed performance data or seems reluctant to establish clear benchmarks, it's time to reconsider the partnership.
Red flags include:
- Lack of regular KPI reporting
- No clear performance benchmarks
- Limited data accessibility
- Inability to track crucial metrics
- No continuous improvement plans
Without proper KPI tracking, it's impossible to identify areas for improvement or validate fulfillment performance.
3. Inability to Meet Customer Expectations
The ecommerce landscape has fundamentally changed, with customer expectations reaching new heights every year. What was considered exceptional service just a few years ago is now the bare minimum. Your fulfillment operation needs to match or exceed these elevated expectations to remain competitive. Fast shipping isn't a luxury anymore – it's a baseline requirement. When your 3PL struggles to meet standard delivery windows or can't provide the shipping options your customers demand, it directly impacts your brand reputation and customer loyalty. The best fulfillment partners stay ahead of market demands, continuously upgrading their capabilities to match evolving customer expectations.
Your fulfillment operation needs to deliver:
- Fast, reliable shipping
- Real-time order tracking
- Accurate delivery estimates
- Multiple shipping options
- Consistent service quality
If your current partner can't meet these expectations, you risk losing customers to competitors who can.
4. Rising Operational Costs
Cost increases in fulfillment operations should be predictable, transparent, and tied to clear value drivers. While some cost fluctuations are normal in the logistics industry, unexpected or poorly explained increases often signal deeper problems. A strong fulfillment partner should actively work to optimize your costs, leveraging their expertise and scale to identify efficiency opportunities. When costs rise faster than order volume or revenue, it's essential to understand why. Professional fulfillment partners provide clear cost breakdowns and work collaboratively to manage expenses while maintaining service levels.
Watch for these warning signs:
- Unexplained fee increases
- Limited transparency in pricing
- No economies of scale as you grow
- Hidden charges and surcharges
- Lack of cost optimization strategies
Your fulfillment partner should work to optimize costs while maintaining service quality, not simply pass along increases.
5. Persistent Service Failures
Service quality should improve over time as your fulfillment partner better understands your business and optimizes their processes. While occasional issues are inevitable in any operation, persistent service failures indicate systematic problems that typically worsen as volume grows. The true measure of a fulfillment partner isn't just their error rate – it's their ability to identify, address, and prevent recurring issues. When problems become routine rather than exceptional, or when your team spends more time troubleshooting fulfillment issues than growing your business, it's time to consider a change.
Be wary of:
- Frequent shipping delays
- Poor inventory accuracy
- Communication breakdowns
- Order errors and returns
- Lack of proactive problem-solving
Quality fulfillment should be consistent and reliable, not a constant source of concern.
6. Limited Growth Capacity
Growth limitations can manifest in subtle ways before becoming obvious operational constraints. A fulfillment partner should provide clear scalability pathways, whether through additional space, enhanced automation, or new facility locations. When your 3PL struggles to handle routine volume spikes or seems hesitant to discuss growth plans, it's often a sign they're approaching their capabilities limit. The best fulfillment partnerships include regular planning sessions to discuss growth projections and ensure the infrastructure and resources are in place to support your expansion.
Look out for:
- Limited warehouse space
- Insufficient peak season capacity
- Lack of multi-location options
- Resource constraints
- Inflexible scaling options
Your fulfillment partner should enable growth, not restrict it.
Making the Switch: A Strategic Approach
While changing 3PLs may seem daunting, a well-planned transition can set your brand up for long-term success. Here's how to approach it:
- Define Your Requirements
- Document current pain points
- Outline future growth needs
- Set clear performance expectations
- Identify must-have capabilities
- List preferred technology integrations
- Research Potential Partners
- Evaluate track records with similar brands
- Check technology capabilities
- Review service offerings
- Assess geographic coverage
- Consider cultural fit
- Plan the Transition
- Create a detailed timeline
- Identify potential risks
- Plan inventory movements
- Coordinate system integrations
- Prepare your team
Here at Capacity, we've helped numerous brands navigate this transition successfully. Our approach focuses on thorough planning, clear communication, and meticulous execution to ensure your fulfillment operations never miss a beat.
Looking Ahead
While changing 3PLs requires careful planning and execution, staying with a partner that can't support your growth can be far more costly in the long run. The right fulfillment partner should help engineer your success, not hold you back.
Ready to explore how the right fulfillment partner can support your growth? Let's talk about engineering a solution that matches your ambitions.