EP #288] [ENG] - Importance of choosing the right 3PL partner - Rachel Andrea G.

EP #288] [ENG] - Importance of choosing the right 3PL partner - Rachel Andrea G. Unknown Speaker: Welcome to The Ecommerce Lab By Ecomcy. This is the place for everything related to Amazon private label and e-commerce. Learn exactly what you need to start or scale your business. Get insights from the top industry experts who will discuss the latest trends and best practices in the world of Amazon. From choosing products and sourcing from a supplier to setting up your Amazon account and marketing your business, you will hear it here. Let's get started. Here is your host, Vincenzo Toscano. Speaker 2: Hello guys. Welcome to another episode of The Ecommerce Lab By Ecomcy, the place where everything related to Amazon FBA, private label and e-commerce. My name is Vincenzo Toscano, founder and CEO of Ecomcy and today we bring you another special guest. Her name is Rachel and she's the marketing director I'm an FBA prep where they specialize on everything that has to do with being your partner in terms of logistics and being your 3PL. This is actually something super important for Amazon sellers. We always see how sellers spend so much time and money sometimes Trying to figure out how they can be effective with the logistics. FBA can be your perfect solution for that. And today I actually want to talk about that. We want to talk about all the things that you need to consider in terms of changing your partner when it comes to that. What are some of the tips and the signs of actually you need a 3PL and much more. So I'm sure you're going to get a lot of value of this episode. So Rachel, pleasure to have you today on the show. How are you doing? Speaker 1: I'm doing well. Thank you so much for having us. And I'm so excited to chat about this. What some would say boring topic, but I think it's I'm sure your audience also thinks it's very interesting. Speaker 2: So, yes, I think it's going to be a very interesting conversation because I know for a fact after having conversation with our clients, You know, sometimes choosing the wrong logistic partner can be something that can break your business and I saw that through this Q4, like sometimes, you know, not having everything set up properly can bring you so many costly mistakes and not only from the perspective of, you know, the fact that it's going to hurt you financially in the shape of overpaying, but also on your Amazon business and the dynamic of Amazon works. If you are left out of stock or you Deliver things with their own timelines. Not only is it going to penalize you in terms of positioning, but also in terms of the health of your account, which we know is the most important thing. So today I'm going to ask you, you know, a couple of things I had in mind, even from a seller perspective, that I'm sure a lot of people are going to appreciate. And then we'll make sure we're aligned, especially with Q1 that just across the door. I want you to, you know, start thinking about that. So I guess before we go into that, give just a quick intro about my FBA prep for those that might not know you. And then let's go from there. Speaker 1: Sure. So my FBA prep is, as you've probably guessed from the name, specializes in FBA prep. However, we do do like multi-channel logistics, so we can do retail replenishment. If you need to prep for other marketplaces or your own, you know, D2C sales channels, we can handle that as well. A lot of merchants come to us for my FBA prep and then expand out just because their experience has been I'm so good. And because we can customize since most of our merchants are enterprise sellers or like the top Amazon sellers, every contract is really unique and really different because that's just how businesses are. They're all pretty unique and different at that level. So yeah, My FBA Prep is essentially any logistics service that you need anywhere in most of the world that you need it. Yeah, at the scale you need it. Speaker 2: Love it. Now, I think one of the beauty of the fact that Q1 is a closed door is that actually it's an opportunity for you to change things that are not working, right? And that's definitely some of the things that can connect with changing your logistic partner. I think, of course, Q4 is not really a good idea to change your logistic partner to a Q4, but Q1 is a perfect moment for that. And I guess I want to ask you the question regarding why that's usually the case, because sometimes people struggle to figure out when is the best time to really change the logistics around their business. And it would be good to get your insights about, you know, why you see them at my FBA prep and why you guys recommend usually Q1 is the preferred period to do that. Speaker 1: Sure. So let me preface that by saying if your logistics like your inventory is on fire, then the best time to change is now. Speaker 2: Right. Speaker 1: But Q1, if you have the if you have the ability to plan out your logistic switches or your analysis or, you know, revisiting your your planning and what's working and what's not. Q1 is such a good time to do it because you have all the data from the last year. You have all the data from Q4. It is essentially postmortem time. You can figure out what And I'm here to talk to you about what your current logistics setup looks like under a stress test and see where you have succeeded, where you failed. And then you also typically have your plans or, you know, more or less your budgets for the coming year. So you can see what you can work with when it comes to your options. If you want a nationwide 3PL, if you want to start investing in your own fulfillment. The Ecommerce Lab is a great window for analyzing your logistic setup, switching it, possibly enhancing it or going hybrid because it gives you enough time to test and experiment new options before you hit the summer sales, before you hit the next prime day or the next Q4. So it gives you a lot of time to make the mistakes that are sometimes necessary to figure out your best logistic setup. Speaker 2: Yeah, I think on top of that, something that just comes to my mind is after talking to so many sellers and brands, they struggle sometimes to identify, you know, what are some of the signs that actually would allow you to identify if your logistic partner is a good partner or not, because if you're not really an expert when it comes to logistics, It's difficult to figure if the person you have hired is actually doing a good job or not. So what is usually some of those key signs that you as a seller should look into, especially during Q4, that will give you a signal, you know what, based on what Rachel is doing, Q1 is definitely the moment now I need to use to fix that and find another partner. Speaker 1: So I'm going to list out a couple of things that are the most common things that we hear and see with our own customers when they come to us with complaints. Um, and then I'm going to highlight like maybe two or three things that I want you to really focus on because those are kind of the, the most, um, important ones I would say. So you have missed delivery deadlines. Um, like basically things just didn't get sent or delivered on time. Things didn't get sent into Amazon on time or to your customers. Um, going out of stock. If you have a lot of returns or customer complaints, if your shipping costs are really high, um, you know, every, every year we, we see, you know, shipper, uh, shipping companies raise their rates and it doesn't go back down. It's, you know, it's, it's really just the new rate. It's not like a bump for Q4. It's just more expensive now. Um, but if it's going up, If you spend an unreasonable amount to the point where you are no longer sustainable or profitable, then you know it's, it's going to be a problem. If you notice that either your own staff or your logistics partner staff are overwhelmed or they don't have enough resources. Contracts and lack of flexibility that hinders your business growth. So those are the big ones. And I want to highlight that last point. Well, we'll start with the last point. If something happened in Q4, you went out of stock or you went viral and all of a sudden you need this bundle which went, you know, everyone wants it now kind of thing. Speaker 2: Is that good issue to have? Speaker 1: It is a good issue to have. But if you go to your 3PL and you say, hey, I need I need this bundle. I need you to get this or I need you to send more of this into this warehouse or, you know, to Amazon and then split it 50 50 with this other channel. And they say, you know, no, like we we don't support that or we don't have the capacity for that or it's not in our contract. That's a really big problem because it means that the way your business grows like the nature of your business and how flexible you need to be for success is not supported by the current partner that you have or the model that you have. Usually you'll see this in 3PLs. I mean not to like pun is not intended but a lot of the big 3PLs try to put their clients in a box and that's just because They earn with scale and you can scale more easily when every process looks the same, every item looks the same like pick, pack, you know, everything is already prepped and all of that. So keep an eye out for that because it's only going to get worse and you never know what's going to happen in the future. You will need that flexibility even more so. Like if you already need it now, if you already see the need for it in this Q4, it's only going to grow because you never know what's going to happen. Speaker 2: I agree. Yeah, I think that's super important just to put a parenthesis. I like that you mentioned that because sometimes not only about what is happening now, but the future of your business. So if you're thinking about the scale that your business is going to need and you're partnering with their own provider, then they're not going to be able to keep up with the pace that you need to be feeling the growth, you know, so super important. Speaker 1: And not to not to kind of And I don't want to put any of these practices in a bad light because sometimes the reason that a lot of 3PLs will say like, no, sorry, we can't do that. Sometimes their reasons are really valid. It's just a different business model. So just keep that in mind. It's sometimes a mismatch of, you know. And then the last thing I'm going to point out is kind of a combination of two. It's you want to look at your return rate and your customer complaints and what they're what they're complaining about. So if you see a lot of people sending in returns because they got their item too late to give as a present or sending in returns or complaining because they got the wrong item, wrong variation, like wrong size or they got a broken item. You need to look into why that's happening. The Ecommerce Lab is something to do with your logistics process. Like there's something that is going wrong that is causing a higher occurrence of returns. It's not just, you know, people are buying gifts and they don't know what their friends and family wants. Their friends and family are like, you know, you know, that kind of thing. It's this is the wrong item. This got sent to the wrong person. It never arrived. That kind of stuff you want to look into. Speaker 2: Awesome. Now, when it comes to going through all these different setups, I think there's always going to be some challenges associated with that, right, especially during the Q4 kind of period. So what are some of those? You know, really complexities you see people struggling when it comes to doing the setup because I'm sure it's going to depend on the type of business as well, but there's definitely some of them that are repetitive across the board. So what are some of those that you can, you know, highlights of sellers are aware of that and what to expect as well. Speaker 1: So good question. Let's to do this. Let's break it down into different setups, right? So you have your in-house fulfillment, which is very common for bigger brands who want the most control. You have 3PLs and that's either nationwide 3PLs or like mom and pop shops that are a little bit smaller. Some merchants drop ship and some have hybrid, hybrid fulfillment models. And here's what you want to pay attention to for each and And today we're going to be talking about really like common challenges you want to be aware of so you can avoid them. So for in house, it's, it is more control but it is so much more work. You need to, first of all, figure out what the best place for that warehouse location is. Like, look at your client district, look at your demand, where are your customers located? And then you have to figure out where the best place to store your inventory is. If it's one node or two nodes, like how important is next day delivery for you? Or how quickly do you need to get things into an FBA warehouse? And then you have just the You're a brand, you're not really a logistics company. And so all of the experience that comes running a logistics company means that you have your processes down, you have automation down. And that's not something that a brand that is just moving into having their own in-house fulfillment normally has. Which brings me to my next point. Another common challenge if you want to do in-house fulfillment is getting the right people in place. Yes. It really takes years to build the right team because it's trial and error. It's getting to know each other. It's getting that harmony, the right communication methods and tools like learning how people how to reach people if there's an emergency. Is it WhatsApp? Is it email? You know, like all of those things. So you have more control, but you have to handle staff, warehousing, all of the like intelligence and data like analysis that comes with figuring out where you should be, having your inventory, how many nodes, how much percentage of which items should be where, so all of that. Speaker 2: So keep that in mind. Speaker 1: I can go on to like, you know, the 3PL, but if you have a... Speaker 2: No, actually, I wanted to ask you just very quickly on this one. So in terms of the teams, and that's why I wanted to stop you now, is what I see people ask me sometimes is when they bring a 3PL solution on board, And they feel sometimes they have to have like a 3PL or a logistic person in-house so they can communicate with the 3PL kind of a service provider so they can have a preferred match. But I know for a fact that that's not definitely the case. So can you just briefly explain that, you know, to work with a 3PL you don't really need somebody in-house to do that communication bridge, right? Speaker 1: So I can speak from the My FBA Prep perspective with the caveat that it might not be the same whoever you work with. So I chat with our customers. I try to do it once or a couple times a month just to stay on top of how we're doing. And what I often hear is their favorite thing about working with us is that one person in our team feels like they're part of their team. So ideally you want You want that versus the other way around but right because you don't have the overhead cost of like an additional employee and who is usually probably very highly skilled and likely has a higher salary because it is like, you know, you have to know a lot of you have to have a lot of experience. Speaker 2: Yeah. Speaker 1: So like are your dedicated account manager will pretty much be like in your slack or in your whatsapp group or however your team communicates. They'll be there. And they're really on top of everything related to your brand so that when you feel like when you email them or you reach out to them, it's like you're reaching out to another employee or another member of your team. So that's just what I've heard like quite a few times. Speaker 2: That's why I wanted to ask you that. I know because it's usually a question I get a lot and I know you guys do that, which is why it makes you unique. But I just wanted to point that so people are aware that there's an option as well. Speaker 1: Thank you for asking because it's something that I'm not sure how heavily we push that, but it's something that I hear a lot from our customers. So when it comes to nationwide 3PL providers, you want to, again, as I mentioned before, look out for those inflexible contracts, hidden fees and communication gaps. And that's just because, you know, these 3PLs are working. If they're working with scale, they're trying to get as much customers as they can. They're going to want to eliminate unexpected, you know, unusual use cases. So just be careful of that. Although they do usually have like the reach that you need, the services that you need. And then what I would actually recommend is a hybrid model. So you do a little bit of in-house, a little bit of 3PL, obviously like a lot of Amazon FBA and like getting that prepped and everything. But for these, what you want to be careful with is any communication breakdowns. You don't want to play the blame game, any fragmented systems, and you want to make sure that your customer experience is uniform. So, however you prep for Amazon should be how you prep for GDC, how you prep for, you know, at least the quality of the unboxing and all of that. Speaker 2: The consistency. Speaker 1: Yeah. Speaker 2: Cool. Awesome. Now, another question I had for you, which is also goes ties to this to some extent, is regarding, you know, the different transitions that You're going to essentially go for because now I'm going to explain you for a little bit from the Amazon FBA side of things. The typical question I get is like sometimes people have the FBA approach, but then they want to combine it with a hybrid with FBM as well. Or they want to have maybe a little bit in the 3PLs and a little bit on inventory in Amazon. So there's different models of really doing this transition. And I want to hear really your take in terms of what are some of the most common ones. So do you have some insights about that as well? Speaker 1: Sure, I should mention that when we get insights and data, it is because something has gone wrong. And so that's where people are coming to us. So I don't hear about, you know, oh, we transition from this to that. And it went perfectly. I don't have that insight. But when merchants try to switch how they, you know, handle logistics, The most important things to keep in mind are what are the capabilities of your partner and what are your capabilities right so you never want to ask someone to go outside of their expertise. What I mean is. Again, we've seen this happen and people have come to us to help fix this issue is, for example, if you are drop shipping and you ask your manufacturer, hey, can you can you do FBA prep? Can you prep this item for FBA? Send it in so we can go directly to Amazon instead of, you know, our 3PL or like getting basically handled again. And what happens is if that manufacturer is not really good at FBA prep, if they are not on top of the ever-changing kind of regulations and requirements of FBA prep, they'll send something in and it'll take more time. And it'll be expensive because Amazon will basically catch like a loose sleeve that hasn't been attached to the box that could, you know, slide off. It's not, it's not allowed, right? And we've actually caught that at one point. We are the ones who came out, came back to our clients and were like, Hey, you know, FBA won't take this. Do you want us to put double-sided tape on it? Do you want us to remove it? Like, what do you want to do? Whereas, you know, a manufacturer would just be like, we send, we send this to all of our other customers and no, there have been no complaints, like, There shouldn't be a problem, right? So you want to, if you're switching 3PLs, if you're going from in-house to 3PL or vice versa, if you're integrating FBA prep into any of these existing kind of processes, know what your partners are good at. Know what they know and know what they don't know. Yeah. Speaker 2: Very good. Now, talking about transitions, about the mistakes, about the different type of things to consider, people might also ask themselves, what is the timeline to do this shift? Because some people might be concerned that it takes too long and or it might, you know, really create a lot of friction. So what is usually the periods that you see when somebody decides to change from one 3PL to another based on your experience? Speaker 1: So I will say that I'll give you an example of what actually happened because it is one of the best case scenarios like it's not I'm not gonna promise you can do this every time. We had someone reach out to us with a really urgent need because they had items on a ship coming in and they didn't have enough space for it. Now this was a large like a bulky item seller. They sold furniture. And so we basically scrambled to get them space in the warehouse, get things ready for prep and, you know, shipping out within within the time it took for the ship to arrive. Right. And again, they didn't call us and say, like, hey, we're sending something out. Do you have space for it? They were like, it's on the water. We need space like help us. So that's I'll give you that example. But I will say you want to allocate one or two months, like to be on the safe side, I would say like even two or three months just to work out all the kinks, especially if you are a larger seller. Now, what can help with this is if you sell down your inventory in your existing, you know, provider or your network, and then send new inventory into your new solution. But sometimes it's not feasible, you know, especially if they're making a lot of mistakes. But it's just it's one option and tip that I would give. Speaker 2: Cool, love it. And I think, as a last thing, because this will then of course be very important throughout the transition, let's say, taking all the recommendations you've been giving to the array about, you know, the mistakes, the things people should take into consideration when doing the shift and everything. What are some of, if you need to give one thing Rachel that they need to focus when doing the switch to a new triple, what would be the thing that you say that's the focus and that you need to put the most attention to make sure the transition goes smoothly? Speaker 1: Oh, one thing is hard. Okay, I'll give you one thing. But I'm gonna say on our we have a blog and like a very active newsletter. So I encourage you to go check like the full list of like, here's the step by step of what you want to do. But actually, what I found, most of our customers say is most useful, is getting referrals, like getting review, like talking to I'm an existing customer of any 3PL, any partner you're looking at. Asking, like, what do you like about them? What do you not like about them? When you got started, what went wrong? How did you move your inventory over? And all of that. And so all of our customers have said, like, that's been really useful to get the experience of someone who's also in the food and beverage industry, who's also selling supplements or, you know, any health and beauty supplies or who's in apparel. Because we have worked with, like, a shoe seller and he actually mentioned that We basically set up a warehouse for his items. Like we installed custom racks because D2C and you know prepping shoes with different sizes and it's just like a whole nother beast. And so him being able to talk to other apparel clients that we had to figure out what was even possible. It's very helpful to understand what your experience is going to be like. Speaker 2: Love it. Awesome, Rachel. So I think to be honest, you know, You gave us so much value and I appreciate that because I feel this is a topic that, you know, is something that people don't talk about a lot, but I feel so many sellers lately have been struggling with. So I'm sure all the insights you gave them are going to, you know, support their decision making in terms of, you know, what they have to do with QPL and how to move forward with that. And I'm sure they're also going to have a lot of questions. Maybe they want to have a deeper conversation. So tell us, Rachel, how people can reach out to you and the team and explore how they can work with you. Speaker 1: Well, the first place you can go is our website. It is myfbprep.com. And please, please, please sign up for our newsletter. We put every issue together, like by hand, there's no AI writing or anything like that. And we really read like everything that comes in. Even if like, you know, I'm not the right person to respond. I still forward it to like, you know, our co founder and like, hey, answer this kind of thing. So yeah. Please sign up for our newsletter. Speaker 2: Awesome. Thank you guys. I'm going to make sure to put all the information down in the description. Other than that, Rachel, it's been a pleasure. Wish you all the best for the remainder of Q4 and just keep in touch. Thank you so much for your value. Yeah. Speaker 1: Thank you. Speaker 2: All right. Thank you. Unknown Speaker: Thanks for listening to The Ecommerce Lab By Ecomcy. Be sure to subscribe so you don't miss an episode. While you are at it, we would appreciate it if you could leave an honest rating and review on Apple Podcasts, Spotify, or wherever you listen. That will make it easier for others to find out about the show and benefit from it. Want more? 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