Finding The Right 3PL Provider Can Be A Logistical Nightmare. Founders Tell Us How They Did It.
Investor Tina Bou-Saba has chatted with the founders of thousands of beauty and wellness brands, and she rarely comes across one completely satisfied with their third-party logistics provider. To help brands pin down a quality 3PL provider, she suggested we explore how founders in our community identified theirs.
So, for the latest edition of our ongoing series posing questions relevant to indie beauty, we asked 16 beauty and wellness brand founders and executives the following questions: How did you find your third-party logistics
-
Stephanie Morimoto Owner and CEO, Asutra We love our 3PL, Cobalt Packaging. We were referred to them by a customer who uses them to kit products for the hospitality industry. Our first criterion for our 3PL, as with all our external partners, is that they believe in our mission at Asutra of making self-care a possibility for all and operate in line with our core values.
Additional criteria were the ability to manage multiple retail fulfillment requirements cost effectively, being willing to own and when necessary pay for mistakes and being nimble enough to help us take advantage of opportunities (for example, doing a large “Good Morning America” Deals & Steals segment). Cobalt Packaging meets all of these criteria with flying colors.
Finally, as a woman-owned business, we loved that Cobalt is also a woman-owned business.
- Sherrel Sampson Founder and CEO, Canviiy
At Canviiy, it was important that we secured a 3PL located in our region as they are an extension of the company’s operation. When finding a third-party logistics provider, we conducted online research, but also requested recommendations from supply chain partners in our network.
Our criteria consisted of vetting if the company had extensive experience in CPG goods handling, maintained climate-controlled storage environments, offered a tech-enabled inventory management portal and strong cycle count/quality assurance processes. All in all, it’s essential to maintain a great working relationship with your 3PL partner because errors will occur and the ability to quickly problem solve will depend on strong business relations.
HNM Global Logistics is a 3PL partner with stellar processes and top-notch customer service. We have had to switch providers in the past. However, we’re ecstatic to partner with HNM Global Logistics that has the internal expertise to help us scale our domestic retail and healthcare channels along with offering best logistics practices as we navigate global expansion in the future.
- LIN CHEN Founder, Pink Moon
Pink Moon fulfillment started out in my one-bedroom NYC apartment. Luckily, USPS, FedEx and UPS are all within two blocks from me, but it was getting to be too much packing all the orders myself, taking multiple trips to the post office a day on top of operating and scaling the business.
After one year into the business, I finally made the decision to move to a 3PL. I found my current 3PL through an angel investor I spoke to, and he was initially involved with the business, but I'm actually in the midst of moving to another 3PL right now, the main reason being that I want to move somewhere more bespoke and where the team is familiar with beauty brands' standards.
The current 3PL—Shipology (fka The Happy Package)—grew very fast, and it felt like we were paying for their growth (increased fees, surprise costs, constant mistakes, lack of transparency). Pink Moon is one of few beauty clients there (I believe we were their first one actually), and they seem to have mostly food, beverage and home goods brands. Thus, we were noticing mistakes here and there that I know beauty industry experts would not make.
My criteria for a 3PL has definitely changed after my experience working with the current one. When it came time to research other 3PLs, I specifically was looking for one that had primarily beauty clients. Then, I wanted to work with one that was more small business friendly and emphasizes transparency. Lastly, I wanted a 3PL that was closer. The current 3PL is in Upstate NY, a costly Amtrak ride or a two-and-a-half drive up.
I learned about the one we're moving to–MicroBeauté–through a fragrance brand founder. After meeting over Zoom and receiving the proposal, I visited the facility with a fellow founder friend, who is also moving from the same 3PL. We both had a positive strong gut feeling about MicroBeauté and its owner Lauren.
MicroBeauté is everything we've been looking for in a 3PL partner. Their team truly cares about the clients as if the brands were their own, which we felt at the beginning with the current 3PL, but not anymore after they grew.
- Aishetu Fatima Dozie Founder and CEO, Bossy Cosmetics
In our five years running this brand, we’ve had four different 3PLs, and it never really went well. We got recommendations from friends and also ask distribution partners for recommendations, but we never got the service that we felt was high touch for the sort of customer base we are focused on delighting.
Last year, as our omnichannel business grew—DTC, Amazon, wholesale—we decided to move out of my house and get a studio/warehouse space to work in. That opened up the opportunity for us to fulfill on our own, and it’s been an amazing experience for us.
We can move quickly and decisively to changes in the business, and we find that the ability to delight the customer is possible because we are in control of the last-mile movement of the product. Best decision ever!
- BENJAMIN FEYS Co-Founder, PrettyBoy
As a video my co-founder Kevin [Niehoff] did recounts, we recently had to switch due to exceptionally bad performance during a catastrophic event by our previous 3PL, JayGroup out of Pennsylvania.
They experienced a cyberattack that took their systems down for 10 days. During that time, we could not ship orders, had no insight into inventory and were flying blind, all during one of the highest spending months of the year for consumers. This created both an operational and customer service nightmare.
At the beginning of things going wrong, we weren't actually for sure going to leave them, but what really did it was the complete lack of customer support other than our account manager, who had very little ability to sway the current status. This company really left their customers out to dry, and we knew we had to make a change.
We found our new 3PL through an e-commerce forum after I posted trying to evaluate a couple of big names out there, ShipBob being one. After the first go-around, we really tried to focus on what was most important to us. There's a lot of noise when evaluating 3PL's (tech stack, various rates for individual line items, support packages, executive leadership presence), so we isolated what was most important to us:
1). Delivery times: The Amazon model influences everyone now, and brands are tasked with getting products to customers faster than ever before. Previously, we were seeing a median time to delivery of 5.6 days, but about 40% of our orders were falling six-plus days, which is unacceptable. We set a goal of distributing from the middle of the country (Chicago versus previously PA) to address this paired with a facility that was within one to two hours of the closest DHL hubs.
2). Size: Our business is super simple. We have one hero SKU and some merch. We don't need a lot of the fancy tech that comes with "sexier" 3PLs. All we need is someone who can consistently get our orders processed and out the door fast. This made our new 3PL (FullyBuilt) a much more attractive option. Brian (owner) is someone with 20-plus years logistics experience and also owns his own DTC brand with 1,000 SKUs. They are a no-frills 3PL, but they explained how our business model (subscription heavy, good returning customers and low SKU count) worked perfectly for their model. For us, a mom-and-pop shop was the right decision until we have a more complex fulfillment process.
3) Vibe check: This is just a continuation of the last point, but we are new at this, and we need someone we can trust, who can become a de facto part of our operations arm. Brian is a founder, an owner and has extensive experience. He participates in the same forums we do, subscribes to the same newsletters and is a Midwest dude. He never once tried to "sell" us beyond offering their services. He actually provided time on multiple occasions while we were going through the nightmare with Jay Group just to help us out and mentor us.
We come from a life of sales in our previous careers and do not appreciate being sold to. We want partners with a vested interest in our business and with experience to help mentor us, not just to be another number on their monthly revenue report.
To that point, one of the most disheartening parts of the events with JayGroup was when I had to tell the sales rep who brought us on that we were shopping for a new partner, and his response was, “Well that's unfortunate, you know I love you product, but if you have to leave us, I'll have to find a new one.”
My response, “Dude, are you serious? We're a self-funded startup. You want to penalize us because your massive company totally shit the bed and feel like now, during the middle of this event, is the right time to tell me that?" That's when we knew they were the wrong people for us.
The only other thing I'll call out here is that you'll notice I didn't mention costs. Costs are extremely important to all companies, and fulfillment is one that can absolutely drag down your overall financials, but, for us, the absolutely most important thing at this stage is A) customer experience and B) the ability to learn and grow.
We wanted better pricing and ultimately got that, but we were willing to stay at our same pricing for substantially better partner, service and delivery times.
- Anne Beal Founder, AbsoluteJOI Skincare
We are still small enough that we are not yet working with retailers who require EDI compliance. When that time comes, we were connected to a 3PL firm called MFABI Warehousing and Fulfillment in NY that came highly recommended by another larger fulfillment group.
I met the founder, Sade Jennings, who is very on point and experienced. Knowing that I have that connection, I can focus on business growth to get us to the point where we will need their services.
We are listed on Amazon, and they have a robust infrastructure for warehousing and DTC fulfillment that has been very useful. I think they are an excellent option, especially when starting out. Amazon also has a tool to integrate with our webpage to accept and fulfill our webpage orders.
The problem is their fulfillment is very utilitarian and does not allow us to provide the enhanced unpacking experience we want for our customers, but it does get the products to them in a timely manner.
As a small brand doing DTC, we started fulfillment ourselves. Then, as we grew, it quickly started to take too much time and energy and needed to be contracted out. After trying many, many options, we ended up bringing fulfillment back into the company, but hired a dedicated person who we trained and whose only responsibility is fulfillment.
During the holidays, the volume required others to pitch in and help, but, for most of the year, she is able to handle our needs, and we always have the option to fulfill orders through our Amazon integration when needed.
- MONICA WATSON Founder and CEO, Berlin Skin
We tried using a 3PL for a hot minute, and it didn't go great, lots of misses on orders which are costly, plus complicated software that was a headache to deal with.
Nothing compares to the care that one of your own employees will put into packing and shipping an order, and you have complete control over training them exactly how you want it to be done. We plan on keeping shipping and logistics in-house indefinitely.
- CHANTAL TREMBLAY Founder, Denéva Skincare
Denéva Skincare is currently close to determining which 3PL provider best suits our needs. Although we have not partnered with anyone at this point, we are happy to share the process and questions to think about if you are a beauty company owner who is building a brand and is ready to take the next step in your order fulfillment journey.
We are a Canadian skincare company that is developing a larger presence in the U.S. market. We currently ship from Canada, but want to decrease shipping time and costs. Our wish list in addition to the basic warehousing and distribution services includes:
- Two-day shipping: Amazon has conditioned consumers to expect fast, inexpensive shipping, so we need to offer a similar delivery service.
- Cost savings from closer shipping proximity: When your products are shipped from a warehouse that’s closer to the customer, it costs less, so the customer pays less and so do you.
- Reduced environmental footprint from shorter shipping distances: The less time a truck spends on the road carrying your product, the better it is for the environment.
- Ease of use by connecting to our Shopify store: We were looking for an automated service that would connect directly to our Shopify store and eliminate the potential for human error when forwarding orders from the website to the fulfillment center.
- Easy inventory control: When we can login to a dashboard that quickly allows us to see our inventory levels, we are able to keep products in stock and reduce the chances of running out of stock.
- Packing protocols: One of our must-have items on our list was working with a company that packed our products carefully the way we pack them to ensure they wouldn’t be damaged in transit.
- Return management services: The final piece of the puzzle was a company that would handle returns, restock the products that were resalable and handle the inventory management that followed.
You may also want to consider Amazon FBA, but there’s a whole other list of considerations when you take that journey. By embracing third-party logistics solutions, you can overcome operational hurdles, achieve cost efficiencies and unlock new avenues for growth. When you’re looking for a 3PL provider, start off with your wish list and then rank them against your list.
- KATIE ROERING Co-Founder and CEO, Fontana Candle Company
In 2019 during an event, we were approached by a local 3PL company that was piloting a program for smaller and emerging e-commerce businesses. Their aim was to demonstrate the effectiveness of their model with small companies, and they invited us to be one of their test brands.
During the first year, they delivered everything they had promised: Orders were shipped quickly and accurately, and a team of well-trained employees handled our pack-outs. At the time, our DTC volume was rapidly increasing as we collaborated with several prominent influencers. The 3PL effectively managed all surges in volume.
However, when the pandemic struck, many of their brands experienced rapid growth simultaneously, and they encountered challenges in staffing to meet the increased volume. Our core group of shippers were no longer assigned to our account, resulting in inventory mistakes, failure to follow pack-out instructions and delays of a week or more in shipping some orders.
Fulfillment of our orders is a crucial aspect of our brand experience for customers, and we lost confidence in the quality of service our customers were receiving. Consequently, we experienced a significant surge in customer service tickets and realized that a change was necessary. The 3PL made it evident that their focus was on their larger clients, prompting our decision to part ways in Q1 of 2022.
Currently, we handle all order fulfillment in-house and have employed two dedicated shipping professionals. We greatly value the control we now have over the pack-out process and the overall brand experience. Additionally, having order fulfillment under the same roof as our production enables us to swiftly adapt to changing circumstances.
- Robert DeBaker COO, Nakery Beauty
Find 3PLs that have a proven track record in your business category. Ask other brands for recommendations. Make sure 3PL has familiarity and strong relationships with your likely trade partners and their preferred carriers. Interview and visit any 3PL you’re serious about using. They should want to show off their work, and you need to get a feel for them.
Understand your balance between B2B and B2C sales, noting that each business has a very different cost structure. Top criteria for me are days to process orders, and performance versus retailer expectations. Retailer chargebacks for non-compliance to their rules can be huge.
In all my work with 3PLs, the biggest thing I learned is that you have to have someone on your team who is going to work very closely with the 3PL. Get to know them inside and out, be in communication with them daily and build a very close relationship. You truly get out of this partnership what you put into it.
- JUSTIN SEIDENFELD Co-Founder and CEO, Canopy
Coming from Doris Dev, the product design and development company that incubated our brand, we had a preexisting expansive network of 3PL partners that we have worked with in some capacity over the past seven years. Initially, we selected a partner that was a family-run business that we knew would provide flexibility and care as we were getting off the ground. They were fantastic partners through the first few years of growth.
More recently, we transitioned to a more established, bigger 3PL partner with bicoastal footprint that services many high growth omnichannel brands. We were introduced to them by founders in the consumer space with businesses that had a similar profile and trajectory to Canopy.
The driver for our switch was to consolidate inventory management into a robust system of record that communicates with our point-of-sale platforms. We also wanted bicoastal footprint within a single partner as well as a partner that had experience shipping into Amazon and retail, as wholesale has grown and will continue to grow as an important portion of Canopy's distribution.
We look at some key performance metrics such as historical order accuracy, on-time shipment, real-time inventory visibility (i.e., being able to pull inventory reports), ability to ingest and process orders from multiple points (i.e., Shopify, retail EDI, Amazon), ability to handle ad-hoc and custom bundling/kitting and multiple locations in order to reduce shipping costs and transit time to end customers.
- NIKKI HUEBNER Founder, Endure Beauty, EndureLash and Endure Productive
My story is quite unique. The way I found my 3PL was through another brand founder that I happened to be friends with here in Raleigh, North Carolina. The previous 3PL company announced that they were closing their doors after 15 years of service, so I decided to buy the company, launch Endure Productive LLC and learn this side of the industry extremely fast!
That was challenging at first, but after I put my head in the sand and learned the processes, it has worked out to be an amazing asset to brand ownership. I was able to grow the sales under our roof at Endure Productive LLC rapidly by implementing processes and services that a brand owner wishes they could find in their 3PL relationship.
Taking a brand owners’ perspective on all things kitting/packaging/fulfillment/shipping really resonated with our clients and future clients. I actually “feel their pain” as it pertains to finding a 3PL partnership you know, trust and love. So, if you’re a brand and reading this, feel free to reach out, I will make sure your brand is serviced as if it is my own.
- KHADIDJA TOURE Founder, Kubra Kay Skincare
I found my 3PL via word of mouth. I have never switched my 3PL, but I have looked at alternative options as I have had conversations with major retailers, and the timelines would require quicker timelines than they have been able to deliver. My criteria for a 3PL are timeline and volume capabilities and ethical practices with their employees.
- MATT MULLENAX Co-Founder and CEO, Huron
We're on our second partner since we launched nearly five years ago. We outgrew our first 3PL partner, but have transitioned well to another player located in the Midwest.
Both parties were friendlies, which has allowed us to keep competitive pricing without sacrificing service. Within CPG, your shipping/3PL fees are a big line item, so keeping eyes-on is imperative to the growth and scale of the business.
- WHITNEY SWALES Owner and Perfumer, Wit & West Perfumes
All Wit & West perfumes and colognes are designed, formulated and handcrafted in small batches. In addition, we don’t outsource any of our fulfillment or logistics processes. Everything from ingredient and packaging sourcing, inventory management, and fulfillment is done completely in-house.
Not only does managing our logistics and fulfillment process in-house align with our brand identity, but it allows us to maintain greater control over our cost of goods. Both my husband and I have operations and manufacturing backgrounds, so this approach was a natural fit for us and one that we felt provided us with the greatest long-term flexibility.
As we continue to scale as a business, we will likely consider hiring additional staff to help with our fulfillment process, but I don’t think we would ever outsource it completely.
- Cherice Williams Founder, Blaq Luxury
We discovered our third-party logistics provider through a thorough search on Google. We took great care in choosing a reliable partner who could ensure timely delivery of our packages without sacrificing quality for quantity.
When selecting a 3PL provider, we prioritize factors such as reputation and industry experience, comprehensive insurance coverage, top-notch customer service, competitive pricing, and cutting-edge tracking and technology capabilities.
If you have a question you’d like Beauty Independent to ask beauty entrepreneurs and executives, please send it to editor@beautyindependent.com.
Leave a Reply
You must be logged in to post a comment.