Why Do 3PL Companies Experience Customer Turnover?
Like any type of organization, 3PL companies can experience customer turnover. This lack of retention can be due to typical problems that arise in any client-customer relationships, namely: unkept promises, lack of consistent communication, delayed processes, or no attention to detail. When it comes to 3PLs, customers expect specific and detailed service level agreements, such as strict delivery times, so when 3PLs fail to fulfill these SLAs, that can mean constant churning. Of course, losing customers is never a good sign and can impact a 3pl’s bottom line and reputation.
But we wanted to dig deeper into the reasons competent, well-intentioned 3pls have problems with customer turnover. We conducted a poll with the question: Why do 3pls experience customer turnover? The results were fascinating; the top reason, with 39% of the vote, was that a 3pl’s technology does not align with a customer’s vertical. With supply chain technology constantly changing and offering new, innovative ways to fulfill orders, it can be difficult for 3pls to keep up. However, we’ve outlined below what three of the biggest verticals are looking for in terms of technology and a surefire way to keep your customers happy and using your services again and again.
3PL Technology and Services by Vertical
These types of brands are often looking for technology that aligns with small package D2C fulfillment, since most beauty companies are often shipping orders directly to customers. Automation and robotics may be key to keep this vertical happy. In addition to D2C capabilities, B2B capacity is a must, since so many beauty brands experience rapid growth. Ensure that you have room to let a beauty brand expand as needed. Moreover, a beauty brand that is growing rapidly will expect integrated systems that offer order visibility across shopping carts, marketplaces, and other sales channels, in addition to easy data procurement. Finally, a beauty brand is all about packaging; the ability to use their own branded packaging and access kitting capabilities are requirements to avoid a beauty brand leaving their 3pl provider.
Apparel brands are keen on customized storage, since they want to seamlessly have their goods received and be ripe for selling. Some 3pls rely on manual processes to make this work, while others are better equipped, with customizable storage to fit carton size, increasing storage capacity and minimizing any hand sorting of product. Even more important than customized storage is the capability to handle a high SKU count; this is where automated technology for sorting, packing, and tracking is vital.
Additionally, a seamless returns process is a must, considering the high returns rate that occurs in the apparel industry. Apparel brands will want a 3pl’s WMS to integrate with any Returns Management Authorization Systems and have the ability to customize returns due to brand specifications. Finally, like beauty brands, capacity for growth and integrated systems are also key factors.
Electronics brands are focused on a 3pl’s ability to handle a variety of different SKUs, inventory changes, and the security of products. Because of the nature of electronic consumership, products quickly become old news as soon as the latest models are released. For electronics companies, this means a reliance on tracking inventory information, so they never over stock or experience a stock out; having 3pl technology that can give them this data, and provide forecasting, is vital.
Moreover, knowing products are secure can make or break an electronics company’s decision to partner with a 3pl. Having physical security and a dedicated space for electronics storage in the warehouse is one solution. Inventory management that can show, down to the number of SKUs sold in a single day, can also help. Even better, is technology built on blockchain. Blockchain’s decentralized and distributed ledger systems enable participants to check and validate the authenticity of a product, activate or validate the product across the global supply chain, and determine fraud. It also maintains the visibility of refurbished products with multiple returns traceability, visibility into the number of changes of hands, and any services. This could be a potential value-added system to track high-end electronics like mobile phones.
Solutions for Customer Turnover
So how can you mitigate customer turnover due to your 3pl’s technology not accommodating a specific vertical? One surefire solution is to partner with a network of 3pls, such as Verte’s Fulfillment Network. Our community of 3pls can offload poorly-fit customers to other fulfillment centers, while allowing you to still maintain a relationship with them. Conversely, our community of 3pls can help you attract the customers that do fit your technology, by introducing you to partners who need to offload their clients. We will match the ideal client to the VFN partner, determined by the Scope of Work. We will always present our VFN partners with well-suited fulfillment clients.
Furthermore, Verte offers proprietary unified commerce technology, including state-of-the-art integration, order, and warehouse management. Upgrade your systems with us and enter a new era of the supply chain.