As more grocery sellers move to add online channels, they’re quickly discovering that the third party logistics industry hasn’t yet built up the specialized muscle needed to store and ship their products with the care they need. The growth of grocery online has caught logistics professionals off guard, after all: very few people bought food online as recently as 2019.
Just two years before the COVID pandemic, eCommerce made up only 2.7% of US grocery sales. Now, market forecasters expect it to make up a full 20% of the grocery market in 2026, an astounding growth rate.
Source: Supermarketnews.com
Explosive growth can come with deep challenges, and many grocers that have added online channels have seen the promise of ecommerce turn sour due to high damage rates and inefficient shipping from their fulfillment partner. Unfortunately, many 3PL warehouses simply don’t know what it takes to offer top notch food logistics.
In this article, we’ll provide you with an inside look into what you need to look for in a 3PL that will support your profitable growth as an online food seller with food grade warehouses.
What You Need From Your Food 3PL
While there are many similarities between fulfilling online orders for the food industry and general consumer packaged goods, food products have special needs that many third party logistics warehouses (3PLs) aren’t equipped to handle.
In this section, we’ll break down the added requirements that 3PLs need to excel in to provide excellent food grade order fulfillment.
FDA approved food grade warehouses
In 2011, the Food Safety Modernization Act (FSMA) raised the standards for manufacturing, processing and storing food. An FDA certified warehouse is a storage facility, food manufacturing plant, or order fulfillment center that is officially registered with the FDA to safely store food in accordance with the FSMA.
The certification process ensures that the warehouse has a host of plans and procedures designed for the safe storage and handling of food products. Some elements include sanitation and cleaning procedures, glass and clear plastic policies, and pest control.
Relying on an FDA approved warehouse as your food 3PL gives you the peace of mind that knowing that your food is stored safely, minimizing the chance of spoilage or contamination that could hurt customers and your ecommerce business.
Thanks to Cahoot’s unique peer-to-peer ecommerce model, we have warehouses that don’t just occasionally work with food products, but instead have specialized in food order fulfillment for decades.
Climate controls
One of the most important considerations when choosing an ecommerce fulfillment company is the type of climate conditions that your products will require. More than most other verticals, many food products have strict temperature limitations that must be followed or products will be damaged. Many sellers assume that if they don’t need refrigeration, then any 3PLwarehouse will do – but they learn the hard way that isn’t true.
Unfortunately, many 3PLs maintain warehouses at warmer temperatures in order to save money on air conditioning – which makes them too warm for many food items. Especially in summer months and in the southern US, many warehouses rise into the 80s or even 90s, which can irreversibly damage many food items and lead to a big write-down.
And product loss in the warehouse isn’t where the problem ends. Your outsourced warehouse team may not realize that products are damaged before they ship them out. Say you sell chocolates, and you have a product line that ships in opaque boxes. The warehouse team wouldn’t be able to see damage, and if the warehouse temperature rose to melt the chocolate, shipments would continue without pause. That leads to a mass of customers all receiving damaged products at once, and when they take to social media to complain, it will create a lasting negative impression of your brand.
Therefore, it’s critical that the 3PL warehouse that you choose is equipped to handle, store, and ship your food items in optimal climate conditions so that your customers are able to receive the very best version of your product.
A good rule of thumb is to ask your 3PL warehouse whether they guarantee their warehouses at or close to room temperature. Since the most commonly shipped food items are designed to be stored in cool, dry conditions in a cupboard, they’re usually safe at 72 degrees. That being said, know your product! This of course doesn’t apply to refrigerated items, and some other products don’t need refrigeration, but do need more careful heat regulation than room temperature.
Careful packaging for safe and efficient shipping
One metric defines online seller profitability more than any other: customer lifetime value. With digital advertising becoming increasingly expensive, most sellers lose money on new customers. They’re only able to earn a positive bottom line through long-time repeat customers.
Unfortunately for online food merchants, it’s more difficult to safely ship fragile foods and glass than it is to ship other goods. Without a food 3PL that knows how to treat such delicate items, your margins will quickly be ruined by unhappy customers demanding refunds for damaged goods.
In addition to limiting damage, a 3PL warehouse that knows food logistics inside and out also knows that orders come in many more shapes and sizes than they often do for other merchants. Grocery orders tend to consist of many different items and many different quantities. This introduces significant packaging uncertainty for untrained order fulfillment personnel, and it can lead to inefficiently packed boxes that inflate shipping cost.
Cahoot uses a combination of intelligent packing software and responsive customer service to get packaging right for the toughest goods to ship. We optimize for two things: we keep the package as small as possible to minimize shipping cost, while also getting damage rates as close to 0% as possible.
Our warehouses that specialize in food have a direct line to discuss tricky packing challenges with our control team, and this leads to a process of continuous improvement. Our software is constantly learning new ways to reduce damage rates and costs. In this way, you save money on shipping while also ensuring that your customers are delighted when they open up their products every time.
Responsive customer service
Though responsive customer service is important for all online sellers, it’s especially important for a food 3PL given the above additional needs. You need to be able to get in touch with your customer service team quickly to feel confident that they know how to excel with your products and to troubleshoot solutions for tricky challenges.
You need a 3PL company that offers you a real person to work with your account and multiple ways to get in touch with them. Cahoot clients love our easy-to-reach and proactive customer service team. Our team is based in the USA, and they take the time to get to know your ecommerce business, so you don’t have to start at square one with a new person every time you submit a ticket. The close relationship we forge with our sellers is foundational to our ability to go above and beyond as a food 3PL.
Cahoot: Experienced Food Grade Warehouses
Cahoot is different from other 3PLs. Our innovative peer-to-peer model sets us apart by enabling us to offer low-cost, fast order fulfillment by design for a huge variety of specialized industries.
So, how do peer-to-peer ecommerce services work better than old order fulfillment networks?
We recruit top-tier ecommerce merchants with their own warehouses to join our network as fulfillment partners, and then our intelligent shipping software and control team keeps the whole system connected and running efficiently. Since we’re unlocking excess order fulfillment capacity that was lying idle, we’re able to offer lower costs. And crucially for online grocers, we’re able to recruit merchant operated warehouses that already specialize in fulfilling their own food – and thus they’re already specialized as food grade warehouses.
Unlike other 3PL warehouses that are building cookie-cutter warehouses designed to store easy-to-fulfill goods, we have specialists in temperature-controlled fulfillment, hazmat, and more. Our flexibility is part of what distinguishes us and makes us the best choice for sellers seeking a reliable food 3PL.
Our technology further improves our ability to power food-grade logistics by constantly optimizing how we pack orders. The shipping software partners with human judgment to learn the best packing combinations for tricky food orders, so we’re able to minimize damage rates and use small packages to limit shipping cost. And of course, since our merchant operated warehouses know how important special handling is for food products, they take extra pride in ensuring that your products are safely stored and moved.
If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We’ll design a custom order fulfillment service for you that will meet your exact food grade needs.
