- Hey guys, welcome back.
And if you're new here, I'm Davie,
I've done over $200 million in sales on Shopify.
Today's episode is gonna be a full guide on fulfillment.
And I'm gonna take you around the tour
of one of our top 3PLs.
You'll learn everything you need to know
about how to set up a 3PL,
the ins and outs of shipping rates,
and so you don't get ripped off.
And the red flags you should look out
when scouting for the best 3PL.
3PL stands for Third-Party Logistics.
They will manage all parts of the warehousing
and fulfillment process.
That includes receiving shipments from your manufacturer,
holding products in storage,
and shipping orders to your customers.
3PLs also handle packaging promotions,
returns, and other marketing elements.
Using a 3PL means you can focus on other things
that you know how to do.
The things that you are good at,
which includes growing your brand and marketing.
The whole point of getting a 3PL is to help you scale.
You've got your product,
you're starting to get orders,
you need to make sure your customers
are having a great experience
for you to be able to scale and get good reviews.
This is something that you can't do
when you're dropshipping.
You need a 3PL's help.
People are expecting shorter shipping times nowadays
and it's important to get this pillar
of your business set up.
Okay, let's take you around for a quick tour of our 3PL.
(dramatic music)
How do you figure out when you should use a 3PL?
One, if you're filling more than 10 to 20 orders per day.
Do some profit margin calculations
and estimate your potential growth.
If you are able to maintain a healthy profit,
what opportunities are you able to pursue
if you're able to outsource that fulfillment.
Two, if you're running out of inventory storage space
at home in your parents' garage
and you need to move into a bigger space.
Three, are you getting negative reviews
from your long dropshipping lead times?
You actually might be surprised that 3PLs
are actually much cheaper than dropshipping from China,
depending on your region and your size of goods.
All right, so now you've decided
that you need a 3PL,
let's get into how to set one up.
First, you do a quick Google search
for as many 3PLs as possible.
You can use an outreach template
which I'll put in the description.
Make sure you get all the dimensions of your products,
volume of the sales, and your SKU count.
This is the information that they'll need
to give a quote.
A key thing I learned with my own business
is there in Australia, specifically,
going cross border
can really increase your rates dramatically.
Try to get a 3PL with warehouses
in multiple states and countries.
So you can expand with ease as your business grows.
One of the massive advantages of working with Fulfilio
is the fact that you've got warehouses in Sydney,
Melbourne, Perth, Queensland,
so we can get out orders to our customers quicker.
Can you explain a little bit about distributed inventory?
- Yeah, So, Fulfilio platform has inventory
in each of the locations right across the country.
And as customers' orders comes in,
it says that this customer lives in New South Wales,
and so it'll send the order to New South Wales
instead of sending it to Victoria,
which increases the cost for transport.
So it gets it to the customer quicker and also cheaper.
- For sure, yeah, the main thing definitely for us
was that cost saving and also our customer satisfaction.
We're getting more reviews
because it was getting to them quicker.
- And so distributing materials works really well
for same-day fulfillment and same day delivery.
So you can take advantages
of some of these wonderful services
about through our cross town delivery.
- Make sure you demand a transparent pricing model.
A good 3PL will be very upfront
and you'll be able to understand
how the pricing model changes as you grow.
There should be no surprises.
If there are, that brings us into red flag territory.
Let's look at some red flags to look out for
when you're talking to these 3PLs,
so that you can figure out
which one's best for your business.
Red flag one.
A good 3PL will have a great integration
with shopping carts like Shopify
to automatically take your orders.
IT integrations are important part of 3PLs.
3PLs should have very good answers
about the ease of integration to reduce costs.
Red flag two.
They need to have clear standard operating procedures
as well, which you'll need to discover
during the onboarding process.
If the process is confusing at the start,
it's not gonna get any better from there.
It's a big red flag,
because it means that their processes aren't streamlined
and it's gonna make things more difficult for you.
If you can, go check out the facility.
It's not 100% necessary,
but when I first started the Oodie
I flew all the way to the UK,
just to see the 3PLs to make the right choice.
You wanna understand that delivery capacity,
the inbound capacity, and just how big that operation is.
So you can see all of the calming blankets
and Oodie orders stacked up here,
all the way to the roof and they stretch along here.
Can you explain how this all works?
- Yeah, so essentially, a lot of your product will come in
and it's put into a what we call a reserved location.
And so that's orders that are all product is sitting there,
and they're going to wait
and drop that down to the ground level.
And then we'll have people going through
on trolleys and picking orders.
So they're picking individual items
for individual customers.
You see these are all pick phases down the bottom
and the reserved up top.
- Red flag number three.
Make sure they requiring barcodes at all their products.
Some 3PLs will say they use barcodes,
but then they won't actually scan them
at each part of the fulfillment process,
making them useless.
If your 3PL doesn't use barcodes,
then there's no easy way to keep track of your inventory
and you're leaving yourself wide open
for guesswork and human error.
And one of the major red flags when using a 3PL
is if they don't actually require barcodes.
Can you explain what that is?
- Yeah, so barcodes are really important, you know.
Because you're picking via barcode
and that's for stock accuracy.
So you wanna make sure that you scan that barcode
and then it goes into the order correctly.
Otherwise, you're looking at a description,
some descriptions look similar,
colors look similar.
The barcode says exactly what the product is
and it's all done via the WMS system.
- You can buy barcodes cheaply,
just such UPC barcodes on Google.
So far that's the only barcode that we've ever had to use.
And we use 3PLs all around the world.
Then you just need Canva
to put your product title on top of the barcode,
SKU in the middle, and then put it onto your package.
Work with your supplier to make this happen.
Make sure that if you've got a box of 10 or 100 units,
you also put a MasterCard barcode on that box.
The 3PL will then be able to scan that Master barcode
and only charge you once.
That'll save you a ton of money.
Make sure you ask your 3PL about these processes
as well when you sign up.
Red flag number four.
Your 3PL should be able to provide
accurate real-time data,
which is why barcodes are so important.
If your inventory count online says there's 100 units,
you need to make sure that these units are available.
Otherwise, you'll oversell
and you'll get some really angry customers.
There should be a clear, stock on hand metric
to earmark stock.
To make sure that you know how many products
you can then sell.
Red flag number five.
You want access to clear stats and reports.
This is especially important with your financials.
As a business owner,
you really need to study the outgoing stock
to match it to your Shopify sales,
to make sure that they're not overcharging you.
Then match it to your 3PL rates
that they quoted to you when you signed up.
Red flag number six.
Now, in terms of order fulfillment,
you want orders to fulfill FIFO, first in, first out.
What this does is it prevents, again, from overselling.
You want the stock allocation
to go to the customers that have ordered.
Red flag number seven.
Another thing that you really wanna do
is understand the communication from your 3PL.
Do they have good customer service?
What is their average response time to your inquiries?
Because that response time
is then gonna be sent to your customer.
And if they have to wait a long time,
it's gonna reflect badly on you.
Make sure you're getting all this information
in writing when signing up.
Because then you can reference it
if things ever go badly.
To be honest though,
things are not rosy all the times with 3PLs.
Logistics are really hard to nail,
even for big companies.
Just know that you need to be realistic
when working with a 3PL.
They're going to give you greater capabilities,
but do expect teding problems to be quite normal.
Just make sure they share the same values,
which is the customer is always right, customer first,
and constantly trying to fix problems.
All right, guys, thanks for watching this.
Make sure you subscribe.
If you need some help, email me davie@davie.co.
I will help you with your warehousing questions.
Cool.