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3PL Returns: How Outsourced Returns Actually Work and Where Brands Lose Money

In this article+

26 minutes

Introduction to Ecommerce Returns
What 3PL returns means operationally
The journey of a returned package through a 3PL facility
Common reverse logistics disposition paths and their economic implications
SLAs and where they break down
Hidden costs in 3PL returns operations
Benefits of Outsourcing Returns
What brands should control versus what to outsource in returns management
Common failure modes impacting customer satisfaction and how to prevent them
Best Practices for 3PL Returns
Technology and integration requirements
When to keep returns in-house versus outsource
Future of 3PL Returns
Frequently Asked Questions

Most brands outsource returns to a 3PL expecting cost savings, but returns fail when disposition rules, SLAs, and audit controls are undefined. 3PLs can help brands save money by reducing logistics costs and achieving reverse logistics cost savings, especially by optimizing returns processing and warehouse operations. The real risk in 3PL returns is not software, but loss of visibility and accountability after the package arrives. Industry data shows that returns processing through 3PLs can take 10-14 days on average, with some operations extending to 20+ days during peak seasons. When brands lack defined disposition logic, clear SLAs, and audit mechanisms, they discover hidden costs through inventory shrinkage (2-5% of returned goods), delayed restocking that creates phantom stockouts, and billing disputes that can reach thousands monthly. High labor costs are a significant burden on third-party logistics providers in the logistics industry, and outsourcing returns to a 3PL can help mitigate risks associated with handling returns, such as high labor costs and inefficiencies.

For mid-market Shopify brands processing hundreds or thousands of returns monthly, understanding what actually happens inside a 3PL’s reverse logistics operation determines whether outsourcing reduces costs or simply moves complexity out of sight. The operational reality is that returns management requires as much strategic oversight as outbound fulfillment, regardless of which entity physically handles the packages.

Introduction to Ecommerce Returns

Ecommerce returns are an unavoidable aspect of running an online business, and how they are managed can make or break customer satisfaction and operational efficiency. The returns process involves much more than simply accepting products back—it requires careful coordination of receiving, inspecting, and processing returned items, all while keeping customers informed and happy. For many ecommerce companies, handling the entire returns process in-house can be time consuming and resource-intensive, especially as order volumes grow. This is where third party logistics providers (3PLs) play a critical role. By leveraging the expertise and infrastructure of third party logistics, ecommerce businesses can ensure a smooth process for both their operations and their customers. Effective management of ecommerce returns not only supports maintaining customer satisfaction but also drives operational efficiency, helping ecommerce companies stay competitive in a demanding market.

What 3PL returns means operationally

3PL returns refers to outsourcing the reverse logistics process to a third-party logistics provider who receives, inspects, processes, and dispositions returned merchandise on behalf of the brand. Unlike outbound fulfillment where the workflow is straightforward (pick, pack, ship), returns involve decision trees that directly impact inventory value, customer experience, and financial reconciliation.

The operational scope typically includes receiving returned packages from customers or carriers, performing initial inspection and condition assessment, executing disposition decisions based on predefined rules, updating inventory systems to reflect returned stock, processing refunds or exchanges according to brand policies, managing defective or damaged items, coordinating liquidation or disposal for unsellable goods, and providing reporting on return reasons, processing times, and disposition outcomes. The use of return merchandise authorization (RMA) numbers is standard practice to track and manage returned items throughout the entire process, ensuring transparency and efficient reverse logistics.

What 3PL returns does not automatically include unless explicitly contracted: customer-facing return portal management (this often remains with the brand or a separate software platform), return policy definition and updates, disposition logic creation, fraud detection and investigation, customer service for return inquiries, and strategic decision-making on how to handle edge cases.

The handoff point is critical. The entire process starts when a customer requests shipping details for reverse logistics, typically through the brand’s system (Shopify, a returns app, or custom portal), receives a prepaid return shipping label, and ships the package back. Once the return shipment arrives at the 3PL warehouse, the items are logged against their Return Merchandise Authorization (RMA) number. The 3PL’s responsibility is to process returns, manage refunds, and handle the returned merchandise according to the brand’s policies. Everything before arrival remains the brand’s operational responsibility unless additional services are contracted.

For brands accustomed to controlling outbound fulfillment details, the mental shift required for returns outsourcing is substantial. You cannot inspect what you cannot see, and once packages enter the 3PL facility, visibility depends entirely on the systems, processes, and SLAs you established upfront.

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The journey of a returned package through a 3PL facility

When a return arrives at a 3PL warehouse, it enters a multi-stage process where each decision point creates opportunity for value recovery or value loss. The receiving stage involves scanning the return label or RMA number to log receipt in the warehouse management system, visual inspection of outer packaging for damage, and sorting into processing queues based on priority (date received, product type, or customer tier). Returns fulfillment often takes longer than initial order fulfillment due to the additional steps required in returns processing.

Initial inspection and condition assessment follows, where warehouse staff open the package and verify contents match the return authorization, inspect product condition against predefined criteria (new, like new, damaged, defective, missing components), photograph items when condition is questionable or high-value, and flag discrepancies between what was authorized and what arrived. A dedicated return warehouse with trained staff enables more efficient returns processing and professional handling of returned goods, reducing errors and processing time.

This inspection stage represents the first critical control point. 3PLs typically employ one of three inspection models: basic visual inspection taking 2-3 minutes per item, detailed inspection with functionality testing taking 5-10 minutes per item, or automated inspection using standardized checklists or AI-assisted imaging. The inspection depth directly correlates with accuracy of disposition decisions and restocking rates.

Disposition execution follows the inspection. Based on predefined rules (which should be documented in the 3PL contract), items are routed to restock (return to sellable inventory), refurbish (cleaning, repackaging, or minor repair before restocking), liquidation (sell to secondary market buyers at discounted rates), donation (transfer to charitable organizations), or destruction (dispose of unsellable, hazardous, or brand-protected items).

Inventory system updates should occur simultaneously with disposition, but this represents a common failure point. Many 3PLs operate on batch update cycles (end of day or end of shift) rather than real-time updates, creating windows where inventory shows as unavailable even though inspection determined it’s sellable. Reliance on manual processes in these updates can introduce inefficiencies and delays, impacting inventory management and operational speed. For high-velocity SKUs, a 12-hour lag between physical inspection and system update can trigger stockouts and lost sales.

Financial reconciliation closes the loop, with the 3PL billing for receiving fees, inspection fees, disposition fees, storage fees for items awaiting processing, and any value-added services (cleaning, repackaging, photography). Simultaneously, the brand must reconcile inventory value changes (full-price restock versus liquidation recovery versus total loss) and update customer accounts with refunds, store credit, or exchange shipping.

Common reverse logistics disposition paths and their economic implications

An effective 3PL returns strategy relies on several key components: implementing automated return systems, establishing dedicated inspection areas, and leveraging technology for integration with inventory systems. These elements streamline reverse logistics, reduce processing costs, and improve value recovery.

Restock represents the optimal outcome where returned items re-enter sellable inventory at full value. Industry benchmarks suggest that 40-60% of ecommerce returns qualify for direct restocking, though this varies dramatically by category (apparel sees lower rates due to wear and hygiene concerns, electronics higher rates if unopened). The economic value is straightforward: a $50 item restocked recovers $50 in inventory value minus processing costs (typically $3-8 per item for 3PL handling).

The timeline matters critically for restocking value. An item returned, inspected, and restocked within 3-5 days maintains full sellability. The same item taking 14-21 days to process may face markdown pressure due to seasonality shifts, new model releases, or simply aging in fast-moving categories. Fashion and electronics face the steepest depreciation curves, where a two-week delay can reduce sellable value by 10-20%.

Refurbish or repackage creates a middle path for items that are functionally sound but cosmetically imperfect or missing original packaging. This might involve cleaning, replacing damaged packaging, bundling with new accessories, or light repairs. 3PLs typically charge $5-15 per item for refurbishment services, and brands must decide whether the recovered value justifies the cost. A $100 item that can be refurbished for $10 and sold for $85 delivers $75 net value versus $0-20 from liquidation.

Liquidation channels vary in recovery rates. Wholesale liquidators typically pay 10-25% of retail value for bulk lots. Recommerce platforms (B-Stock, Optoro, Liquidity Services) may achieve 20-40% through competitive bidding. Direct-to-consumer outlets or flash sale sites can reach 40-60% if the brand controls the channel. The key variable is volume and product category. High-demand consumer electronics recover more than generic apparel. Large consistent volumes command better rates than sporadic small lots.

Destruction represents complete value loss plus disposal costs. Beyond the lost inventory value, 3PLs charge $2-10 per item for disposal depending on whether special handling is required (hazmat, data destruction, witnessed destruction for brand protection). Some categories demand destruction: recalled products, expired consumables, counterfeits, or items where brand integrity requires preventing secondary market sales. One brand reported destroying $50,000 in returned goods annually to prevent liquidation channel conflicts with authorized retailers.

The strategic decision framework requires calculating total value recovery across all paths. If 50% restock at 100% value, 30% liquidate at 25% value, and 20% destroy at 0% value, average recovery is 57.5% before processing costs. Processing costs of $6 per item average reduce net recovery to approximately 45-50% for a $50 average order value product. These economics explain why high return rates (above 20-25%) can eliminate profitability entirely for margin-constrained categories.

SLAs and where they break down

Standard 3PL returns SLAs typically promise 3-5 business days for inspection and disposition after receipt, 95-98% inventory accuracy in system updates, and 24-48 hours for reporting on return reasons and disposition outcomes. These SLAs sound reasonable but obscure critical gaps.

The “after receipt” qualifier creates the first gap. Receipt means when the 3PL scans the package into their facility, not when the customer ships it. If a customer ships Monday and the carrier delivers Thursday, that’s three days before the SLA clock starts. If the 3PL then takes five business days to process, total time from customer shipment to disposition is 8+ business days. For the customer expecting a refund, this timeline feels unacceptable even though the 3PL met their SLA. Effective communication during the returns process is essential for reducing customer anxiety and maintaining customer trust, as timely updates and transparency help reassure customers and foster loyalty.

Inventory accuracy SLAs measure whether the system reflects physical inventory correctly, not whether disposition decisions were correct. A 3PL can achieve 98% inventory accuracy while making poor disposition choices (liquidating items that should restock, or restocking items that should liquidate). The accuracy metric confirms the database matches the warehouse, not that the warehouse made optimal decisions.

Peak season carve-outs represent another common gap. Many 3PL contracts include provisions allowing extended processing times during Q4 (November-December) when return volumes spike 200-400%. These clauses may extend the 5-day SLA to 10-15 days, precisely when customers are most sensitive to refund timing. One Shopify brand reported 18-day average processing during December 2024, creating massive customer service burden and refund inquiries.

The most critical SLA gap involves exception handling. Standard SLAs govern routine returns, but 15-25% of returns are non-routine: wrong item received, damaged in transit, fraudulent return, missing components, or condition that doesn’t match inspection criteria. Most 3PL contracts don’t define SLAs for these exceptions, leading to items sitting in “pending review” queues for weeks while the brand and 3PL exchange emails about disposition authority.

Enforcement mechanisms for SLA violations are often weak. Contracts may promise “service credits” for missed SLAs, but these credits typically cap at 5-10% of monthly fees. If poor returns processing causes $10,000 in lost sales due to inventory delays, a $500 service credit provides inadequate remedy. The real cost of SLA failures isn’t the contractual penalty but the operational impact on inventory availability and customer satisfaction. Continuous improvement in returns management is vital for maintaining customer satisfaction and operational efficiency, ensuring that processes evolve to meet changing expectations and reduce recurring issues.

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Hidden costs in 3PL returns operations

Shrinkage represents the most insidious hidden cost. Industry averages suggest 2-5% of returned inventory disappears between customer shipment and final disposition, with higher rates in certain categories (small valuable items like jewelry or electronics accessories). Shrinkage sources include theft, misplacement within the warehouse, incorrect disposition (items destroyed that should have been restocked), and data entry errors where items are written off in the system but physically present.

The financial impact compounds when shrinkage affects high-value items. A 3% shrinkage rate on $100,000 monthly return volume equals $3,000 monthly or $36,000 annually. Many brands don’t discover this loss because they lack independent audit mechanisms. The 3PL reports “received and processed 1,000 returns” and the brand accepts this number without verification against customer shipping data or carrier delivery confirmations.

Delayed restocking creates opportunity cost that doesn’t appear on 3PL invoices. When a bestselling SKU shows out-of-stock but 50 units sit in the returns processing queue, every day of delay costs potential sales. For an item selling 20 units daily at $40 margin, a one-week processing delay costs $5,600 in lost contribution margin. The 3PL’s processing fee might be $250, but the total cost to the brand is $5,850.

Billing complexity and disputes consume operational time. 3PL invoices for returns typically include per-item receiving fees, per-item inspection fees, per-item disposition fees that vary by path (restock cheaper than refurbish or liquidate), storage fees for items pending processing, special handling fees for exceptions, and miscellaneous fees for photography, additional packaging, or customer service inquiries.

Reconciling these invoices against actual return volume and expected costs requires dedicated financial operations resources. One mid-market brand reported spending 15-20 hours monthly on 3PL invoice reconciliation and dispute resolution, discovering overbilling errors averaging $800-1,200 monthly. Over a year, the discovered errors exceeded $10,000, but the labor cost to find them was nearly $8,000 (assuming $40/hour loaded cost).

Technology integration gaps create manual work and errors. If the 3PL’s WMS doesn’t integrate seamlessly with Shopify inventory management, someone must manually update stock levels, product condition codes, and disposition statuses. This manual work introduces lag (updates happen daily or weekly rather than real-time) and errors (data entry mistakes, missed updates during high-volume periods). Manual processes not only increase the risk of errors but also drive up operational costs, making 3PL returns less efficient and more expensive.

The quality control gap emerges when 3PL inspection standards don’t match brand standards. What the 3PL deems “like new” and restocks might fail the brand’s quality bar, leading to customer complaints, negative reviews, and returns of already-returned items. One apparel brand found that 15% of items their 3PL restocked were returned again within 30 days with condition complaints, effectively doubling the return rate and processing costs for those items. Poor returns management can directly result in negative reviews from customers, especially when expectations for product quality or refund speed are not met.

Many e-commerce businesses do not have the processes or staff in place for effective returns management, and returns management is often regarded as a major operational hurdle by warehouse operators.

Benefits of Outsourcing Returns

Outsourcing the returns process to a 3PL offers ecommerce businesses a range of strategic advantages. By entrusting the entire returns process to a specialized provider, brands can free up internal resources and focus on growth-driving activities. 3PLs are equipped to handle everything from receiving and inspecting returned products to processing refunds and restocking inventory, which helps reduce labor costs and improve inventory accuracy. Their advanced systems and processes also minimize errors and ensure that returned inventory is quickly made available for resale, supporting better cash flow and inventory management. Additionally, 3PLs provide valuable insights into customer return behavior and reasons for returns, enabling ecommerce companies to identify trends, address product issues, and optimize their operations. Ultimately, outsourcing returns to a 3PL enhances customer satisfaction by ensuring a fast, reliable, and transparent returns experience, giving ecommerce businesses a competitive edge.

What brands should control versus what to outsource in returns management

The strategic framework divides returns management into policy decisions (brand retains control), execution standards (brand defines, 3PL executes), and physical operations (3PL performs, brand audits).

Brand-controlled elements must include return policy definition (timeframes, conditions, refund versus store credit), disposition logic for each product category and condition, pricing for liquidation channels and markdown strategies, fraud detection thresholds and investigation protocols, customer communication templates and timing, and escalation procedures for exceptions requiring brand judgment.

These elements represent core business strategy and cannot be delegated without risking brand integrity and financial performance. A 3PL can advise based on industry benchmarks and operational feasibility, but the final policy decisions must remain with the brand owner.

Jointly defined execution standards include inspection criteria and condition definitions (what qualifies as “new” versus “like new” versus “damaged”), quality control sampling protocols, turnaround time expectations and prioritization rules, inventory system update timing and accuracy requirements, reporting frequency and metrics, and audit and verification procedures. Regulatory compliance is critical in returns processing, as the complexity of returns can lead to compliance issues that may result in delays and increased waste if not properly managed.

These standards should be documented in the 3PL contract with specific examples and photographic references. “Inspect for damage” is too vague. “Items with visible wear, stains, missing tags, or non-functional components must be photographed and flagged for brand review before disposition” provides actionable guidance.

3PL-executed physical operations include receiving and scanning returned packages, performing inspection according to defined standards, executing disposition based on brand logic, updating inventory systems, coordinating liquidation channel shipments, processing refunds and exchanges, and generating weekly or monthly reporting. 3PLs can also support sustainability by implementing efficient and environmentally responsible returns management practices, reducing waste and promoting operational efficiency.

The critical requirement is that 3PL execution follows brand standards, not 3PL convenience. If the brand requires same-day inventory updates but the 3PL operates on batch cycles, either the 3PL must change their process or the brand must find a different provider. Service requirements should drive vendor selection, not vendor limitations constraining brand operations.

Audit and verification mechanisms must be brand-controlled. Recommended practices include monthly physical inventory audits (comparing 3PL reported inventory to actual counts), disposition decision reviews (sampling 5-10% of processed returns to verify correct disposition), customer feedback monitoring (tracking complaints about refund timing or restocked item quality), financial reconciliation (comparing 3PL invoices to contractual rates and actual volumes), and performance metrics tracking (measuring actual processing times, restock rates, shrinkage, and customer satisfaction).

One sophisticated brand implements quarterly “mystery returns” where they ship known products in known conditions and track whether the 3PL correctly identifies the items, applies proper disposition, updates inventory accurately, and processes within SLA. This provides objective performance data beyond the 3PL’s self-reported metrics.

A simplified returns process not only enhances customer satisfaction but also encourages repeat purchases, supporting long-term customer loyalty.

Common failure modes impacting customer satisfaction and how to prevent them

The undefined disposition authority failure occurs when returns arrive in conditions not covered by the brand’s disposition logic. The 3PL doesn’t know what to do, items sit in pending queues, and inventory remains unavailable. Prevention requires comprehensive disposition matrices covering all realistic scenarios: new/unopened, opened but unused, light wear, moderate wear, damaged packaging only, functional defect, cosmetic defect, missing accessories, wrong item received, and suspected fraud.

The inspection quality failure happens when 3PL staff lack training, time, or incentive to inspect thoroughly. Items that should liquidate get restocked and later returned by customers, or items that could restock get unnecessarily liquidated. Poor returns management can lead to disgruntled customers, damaging brand reputation and customer loyalty. Prevention requires detailed inspection protocols with photographic examples, quality control sampling by the brand, and financial incentives tied to restock rates and customer satisfaction rather than processing speed alone.

The inventory lag failure creates phantom stockouts where items are physically available but show unavailable in the system for days or weeks. Prevention demands real-time or near-real-time inventory updates (within 2-4 hours of disposition) and system integration rather than manual data entry.

The billing opacity failure leaves brands unable to verify if they’re charged correctly. Prevention requires detailed invoicing with line-item charges tied to specific RMA numbers or return IDs, automated invoice validation against contracted rates, and monthly reconciliation processes.

The peak season capacity failure occurs when the 3PL underestimates Q4 volume and processing times balloon from 5 days to 20+ days. Prevention involves contractual capacity guarantees, early peak season planning (by June or July for Q4), temporary staffing plans, and alternative disposition paths (like temporarily halting liquidation to focus on restocking high-value items).

The customer experience disconnect failure happens when customers contact the brand about return status but the brand lacks real-time visibility into where the 3PL is in processing. Prevention requires customer-facing tracking integration, proactive status updates at key milestones (received, inspected, refund processed), and empowering customer service teams with 3PL system access. Best practices for 3PL returns management focus on creating a seamless, transparent, and efficient reverse logistics process that streamlines operations and enhances efficiency in handling customer returns.

Customer feedback during the returns process can inform product improvements and better inventory decisions.

Best Practices for 3PL Returns

To maximize the value of a 3PL returns process, ecommerce businesses should adopt several best practices. Start by establishing clear communication channels with your 3PL provider, ensuring that roles, responsibilities, and performance expectations are well defined from the outset. Implement a streamlined returns process that prioritizes both efficiency and customer satisfaction, with standard operating procedures that minimize delays and errors. Regular updates and transparent reporting from the 3PL are essential, allowing the ecommerce business to monitor the returns process and quickly identify areas for improvement. It’s also important to choose a 3PL that offers flexible and scalable solutions, so your returns management can adapt as your business grows or as return volumes fluctuate seasonally. By following these best practices, ecommerce companies can ensure an efficient, customer-centric, and scalable 3PL returns process that supports repeat business and brand loyalty.

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Technology and integration requirements

Effective 3PL returns require integration between multiple systems: the ecommerce platform (Shopify), the returns management platform (if using dedicated software like Loop, Narvar, or Returnly), the third party logistics (3PL) provider’s warehouse management system, the brand’s inventory management system, the accounting system for financial reconciliation, and customer service tools. Third party logistics (3PL) providers play a crucial role in managing supply chain operations, including transportation, warehousing, inventory management, order fulfillment, and especially returns, ensuring an efficient supply chain for business success.

The minimum viable integration provides daily inventory updates via CSV or API, weekly returns reporting with disposition data and return reasons, and monthly financial reconciliation data. This enables basic operations but creates significant lag in inventory availability.

The optimal integration provides real-time inventory updates within 2-4 hours of disposition, real-time return tracking visible to customer service teams, automated financial reconciliation with anomaly flagging, and API-based data exchange eliminating manual data entry. Data feedback loops in returns management help identify product defects and marketing inaccuracies, allowing for improvements that lower future return rates and reduce future returns.

The technical capability gap often emerges here. Many 3PLs, particularly smaller regional providers, operate on legacy WMS platforms with limited API capabilities. They can provide data but only through manual exports and email. Advanced 3PLs may use AI-driven systems to detect return fraud, such as item swapping, during the inspection process. Brands accustomed to real-time ecommerce platforms find this unacceptable, but switching to a more technically capable 3PL may cost 20-30% more in processing fees.

The strategic question is whether the operational benefit of real-time data justifies the cost premium. For high-velocity businesses where inventory turns weekly and stockouts cost thousands in lost sales, the answer is typically yes. For slower-velocity businesses with longer planning cycles, daily batch updates may suffice.

When to keep returns in-house versus outsource

The decision framework balances volume, complexity, and strategic importance. For an online retailer, several key components must be considered when deciding whether to outsource returns, including the impact on customer loyalty. In-house returns make sense when monthly return volume is below 200-300 units (below this threshold, 3PL minimum fees often exceed in-house costs), when product inspection requires deep brand knowledge or specialized equipment, when return reasons provide critical product development feedback, when the brand operates its own warehouse for outbound fulfillment, or when tight control over customer experience and refund timing is competitively critical.

3PL returns make sense when monthly volume exceeds 500+ units and the brand lacks warehouse infrastructure, when returns processing distracts from core business operations, when seasonal volume spikes create capacity challenges (in-house team can’t scale for Q4 then downsize), when multiple fulfillment locations require distributed returns processing, or when the brand wants to consolidate logistics operations with a single partner handling both outbound and returns. 3PL providers can automate return processes, which improves workplace productivity rates.

The hybrid model splits returns by type: high-value or complex returns processed in-house where brand expertise adds value, while commodity or straightforward returns go to the 3PL. This requires clear allocation rules and typically higher operational complexity, but it optimizes for value recovery on items where inspection quality matters most. A well-managed returns process can enhance customer satisfaction and encourage repeat business.

Future of 3PL Returns

The future of 3PL returns is being shaped by rapid technological innovation and evolving consumer expectations. As shoppers demand faster, easier, and more sustainable returns, ecommerce businesses and their logistics partners must adapt to stay ahead. 3PL providers are increasingly investing in automation, artificial intelligence, and advanced data analytics to support efficient returns management and deliver a seamless customer experience. These technologies enable faster processing, better inventory control, and more accurate insights into return trends, all of which contribute to higher customer satisfaction. Additionally, the focus on sustainability is driving 3PLs to develop greener reverse logistics solutions, such as optimizing transportation routes and reducing waste. To meet rising consumer expectations, 3PLs are also offering more personalized and flexible returns options, supporting both customer convenience and brand loyalty. By embracing these trends, ecommerce companies and their logistics partners can create a future-ready returns process that enhances operational efficiency, supports sustainability, and keeps customers happy.

Frequently Asked Questions

What does 3PL returns actually mean and what do they handle?

3PL returns means outsourcing reverse logistics to a third-party logistics provider who receives, inspects, processes, and dispositions returned merchandise. The 3PL’s scope typically includes receiving returned packages, inspecting item condition, executing disposition decisions (restock, refurbish, liquidate, destroy), updating inventory systems, and providing reporting. What it doesn’t automatically include: customer-facing return portal management, return policy definition, disposition logic creation, customer service for return inquiries, or fraud detection. The 3PL’s responsibility typically begins when returned packages arrive at their facility, not when customers initiate returns.

What happens when a returned item arrives at a 3PL warehouse?

The package enters a multi-stage process: receiving (scanning return label, logging in WMS, visual inspection of outer packaging), initial inspection (opening package, verifying contents, assessing condition against criteria, photographing questionable items), disposition execution (routing to restock, refurbish, liquidation, or destruction based on predefined rules), inventory system updates (returning sellable items to available inventory), and financial reconciliation (billing for processing fees, updating inventory values). The critical control point is inspection quality, which determines whether items are correctly dispositioned for maximum value recovery.

What are common return disposition paths and how much value do they recover?

Restock returns items to sellable inventory at full value (typically 40-60% of returns qualify, recovering 100% of inventory value minus $3-8 processing costs). Refurbish involves cleaning or repackaging for $5-15 per item, recovering 70-90% of value. Liquidation sells to secondary markets, recovering 10-40% of retail value depending on category and channel. Destruction represents total loss plus $2-10 disposal costs. Average recovery across all paths typically reaches 45-50% of original value after processing costs. Timeline matters critically as items taking 14-21 days to process face 10-20% value depreciation in fast-moving categories.

What are typical 3PL returns SLAs and where do they break down?

Standard SLAs promise 3-5 business days for inspection and disposition after receipt, 95-98% inventory accuracy, and 24-48 hour reporting. Breakdowns occur because “after receipt” starts when the 3PL scans packages (not when customers ship), adding carrier transit time. Peak season carve-outs extend processing to 10-15 days during Q4. Inventory accuracy measures system accuracy, not disposition decision quality. Exception handling (15-25% of returns) often lacks defined SLAs, causing items to sit in pending queues. Enforcement mechanisms are weak, with service credits capping at 5-10% of fees while operational impacts from delays can cost 10-100x more.

What hidden costs appear in 3PL returns that don’t show on invoices?

Shrinkage averages 2-5% of return value ($36,000 annually on $100,000 monthly returns) through theft, misplacement, incorrect disposition, or data errors. Delayed restocking creates opportunity costs when bestsellers show out-of-stock while units sit in processing (one week delay on a 20-unit/day SKU at $40 margin costs $5,600 in lost sales). Billing reconciliation consumes 15-20 hours monthly, discovering $800-1,200 in overbilling errors. Quality control gaps cause 15% of restocked items to be returned again with condition complaints. Technology integration gaps require manual updates introducing lag and errors.

What should brands control versus outsource in returns management?

Brands must control policy decisions including return timeframes, disposition logic, liquidation pricing, fraud thresholds, customer communication, and exception handling. Jointly define execution standards including inspection criteria, quality sampling, turnaround times, inventory update timing, reporting metrics, and audit procedures. Outsource physical operations including receiving, inspection (following brand standards), disposition execution, system updates, liquidation coordination, and refund processing. Maintain audit mechanisms including monthly inventory audits, disposition decision reviews (sampling 5-10% of returns), customer feedback monitoring, financial reconciliation, and performance metrics tracking. The 3PL executes operations, but the brand defines standards and verifies compliance.

Written By:

Rinaldi Juwono

Rinaldi Juwono leads content and SEO strategy at Cahoot, crafting data-driven insights that help ecommerce brands navigate logistics challenges. He works closely with the product, sales, and operations teams to translate Cahoot’s innovations into actionable strategies merchants can use to grow smarter and leaner.

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DSCO Fulfillment Explained: What Sellers Still Get Wrong

In this article+

15 minutes

What DSCO actually does vs what it does not do
Why sellers confuse EDI compliance with fulfillment readiness
Order Fulfillment Strategies
Retailers that rely heavily on DSCO
Cancellation and late-shipment penalties tied to DSCO metrics
Real operational examples sellers underestimate
The role of 3PLs in DSCO success
What “DSCO readiness” actually looks like in practice
Strategic takeaway for operations leaders
Frequently Asked Questions

DSCO fulfillment is where strong EDI still loses to weak execution. DSCO can standardize retailer communication, but it cannot make your warehouse hit SLAs. If you are onboarding to retailer drop shipping, the most common failure mode is treating EDI compliance as the finish line instead of the starting gun.

DSCO’s commitment to operational excellence and providing reliable, innovative logistics solutions sets it apart in the fulfillment landscape.

DSCO is valuable because it creates a common language between retailers and suppliers: order routing, inventory integrations, shipment confirmation, and tracking updates are standardized so a retailer can scale drop ship without custom one-off connections for every brand. That standardization is real. DSCO’s features, such as real-time validations and robust data standardization, further enhance order fulfillment efficiency and accuracy. It is also the reason the operational gaps show up so fast. Once DSCO orders start flowing, retailers judge you on what customers actually experience: ship speed, cancellation rate, tracking reliability, and whether returns and post-purchase support work cleanly.

DSCO provides 100% data standardization with over 70 real-time validations to ensure inventory, product, and shipping data accuracy.

The hard truth is simple. Sellers fail DSCO programs when their warehouse operations cannot meet retailer SLAs, not because of EDI issues.

What DSCO actually does vs what it does not do

DSCO sits in the “communication and compliance” layer of drop shipping. It helps retailers and suppliers manage the entire process of order processing across channels without relying on manual email threads and spreadsheets. In practice, dsco order fulfillment typically includes:

Receiving sales orders from retail channels in a standardized format
Passing updates back to the retailer on acknowledgments, cancellations, shipments, and tracking
Synchronizing inventory levels so a retailer site can decide what to sell
Supporting consistent status events that feed vendor scorecards and customer service workflows

The integration manager feature of DSCO allows users to track inventory levels and order status in real-time.

That is what DSCO does.

What DSCO does not do is what most sellers secretly need it to do:

It does not pick, pack, and ship orders
It does not control your fulfillment centers, labor planning, or cutoffs
It does not prevent inventory mismatch between your systems and what is physically on the shelf
It does not force a carrier scan to happen on time
It does not protect you from shipping costs caused by poor cartonization or service level mistakes
It does not fix reverse logistics or improve your returns disposition process

DSCO can streamline the connection and make data flow faster. It cannot make execution better. If your warehouse can only ship in two to three business days, DSCO will not change that. If your inventory accuracy is weak, DSCO will not magically reconcile it. DSCO is a mirror. It reflects your operation back to the retailer with timestamps.

Efficient logistics integration with DSCO ensures that product data, order fulfillment, and inventory levels are accurately synchronized across all sales channels.

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Why sellers confuse EDI compliance with fulfillment readiness

This is the single most common operational misunderstanding in dsco fulfillment.

Sellers spend weeks or months getting certified, validating test transactions, and proving the connection works. The integration feels like the “hard part” because it involves outside teams, project plans, and unfamiliar concepts. Once the platform connection is live, everyone wants to believe the account is ready to scale.

But EDI compliance is about message correctness. Fulfillment readiness is about outcome reliability. Efficiently and reliably fulfilling orders is critical for successful dsco fulfillment, as it ensures customer satisfaction and supports business growth.

You can be perfectly compliant and still fail a drop shipping program in your first week if:

You acknowledge orders on time but ship late
You send inventory feeds on schedule but oversell due to bad counts. Real-time inventory synchronization is essential for DSCO users to avoid overselling products.
You generate labels quickly but miss carrier pickup windows
You provide tracking numbers that do not scan for 24 hours
You ship partials or substitute SKUs to “save the sale” and trigger chargebacks

Retailers do not grade you on how clean your integration looks. They grade you on the DSCO metrics tied to customer experience: ship on time, ship complete, ship accurately, and keep cancellations low. DSCO makes these metrics measurable, not negotiable.

Order Fulfillment Strategies

Order fulfillment is the backbone of any successful ecommerce business. In the world of DSCO order fulfillment, the right strategy can mean the difference between scalable growth and operational headaches. For ecommerce stores, the challenge isn’t just about getting products out the door—it’s about doing so cost effectively, with real-time tracking, and without hidden fees eating into your margins.

One of the most impactful moves is partnering with a third party logistics (3PL) provider. Companies like LMS Logistics Solutions have demonstrated that leveraging a comprehensive suite of fulfillment services—such as those offered by 3PL Central—can drive efficiency and accuracy. With inventory integrations that automatically update inventory levels and real-time tracking numbers, businesses can maintain near-perfect inventory accuracy and keep customers informed every step of the way.

When evaluating a fulfillment partner, look beyond the upfront cost. Scrutinize for hidden fees, reverse logistics capabilities, and the ability to scale with your business. Cost savings aren’t just about the cheapest rate—they’re about the total cost of ownership, including support, integration, and the flexibility to adjust as your operations grow. Solutions like Extensiv’s DSCO integration offer step integration specific instructions, making it easier to connect your ecommerce order sources, manage inventory, and streamline the entire process from order to delivery.

Drop shipping is another strategy that can help ecommerce businesses expand their assortment without the burden of holding inventory. By working closely with suppliers and retailers, you can fulfill orders directly from the source, reducing shipping costs and allowing your business to focus on sales and growth. This model is especially useful for businesses with limited storage or those looking to test new products without a large upfront investment.

Shipping labels and tracking numbers play a pivotal role in customer satisfaction. Providing real-time tracking and clear communication builds trust and reduces customer service overhead. Whether you’re using your own fulfillment centers, a 3PL, or leveraging Amazon FBA to tap into Amazon’s distribution network, the ability to offer reliable shipping and tracking is non-negotiable.

Distribution strategy matters, too. By creating a network of fulfillment centers—either through your own operations or with a 3PL—you can reach customers faster and more cost effectively, no matter where they are. This is especially important for high-volume products or when serving a wide geographic area.

Ultimately, the most successful ecommerce businesses treat fulfillment as a core competency, not an afterthought. They work closely with their fulfillment partners, suppliers, and retailers to ensure seamless integration and communication. They commit to going the extra mile for customers, providing real-time support, and adjusting their processes as the business scales.

In summary, order fulfillment strategies are not one-size-fits-all. Whether you’re leveraging DSCO integrations, drop shipping, 3PLs, or Amazon FBA, the key is to build a flexible, cost-effective operation that prioritizes customer experience. By focusing on the right partnerships, technology, and processes, your ecommerce store can fulfill orders efficiently, support growth, and stay ahead in a competitive market.

Retailers that rely heavily on DSCO

You do not need a long list to understand the implication, but it helps to name the pattern.

Several large retail programs use DSCO or DSCO-connected infrastructure to run drop ship at scale, particularly in categories like apparel, footwear, accessories, home, and specialty retail. DSCO also supports e-commerce and digital sales channels, enabling smooth management and fulfillment of online orders. You will often see DSCO in the background for retailers that run high-SKU catalogs and rely on brands to fulfill orders directly to consumers under tight standards. Integration with various e-commerce order sources allows for streamlined fulfillment and efficient inventory tracking. The operational theme is consistent across these programs: the retailer owns the customer experience, and you are expected to execute like a first-party warehouse.

DSCO connects to over 60 order destinations, including major retailers like Nordstrom and Kohl’s, simplifying data exchange.

If your team is used to marketplace fulfillment or slower B2B shipping cadences, DSCO-based drop shipping can feel unforgiving. That is because it is.

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Cancellation and late-shipment penalties tied to DSCO metrics

DSCO is often described as “communication standardization,” but the commercial teeth are in the scorecard.

Retailers use DSCO metrics to calculate:

Cancellation rate
Late shipment rate
On-time carrier scan adherence
Tracking timeliness and validity
Sometimes, defect proxies like returns, customer contacts, or delivery exceptions

When you miss, the consequences are usually economic before they are relational.

Common penalty mechanisms include:

Per-order chargebacks for late shipments or cancellations
Fee schedules tied to repeat SLA misses
Removal from drop ship eligibility after sustained underperformance
Reduced assortment visibility or limited product eligibility for high intent shoppers

Transparent pricing models are crucial in dsco fulfillment, as they help eCommerce businesses clearly understand the cost structures and avoid unexpected or hidden fees.

This is why dsco fulfillment problems rarely show up as an “EDI error.” They show up as margin erosion. A program can look profitable on paper until you layer in hidden fees from late shipments, expedited shipping used to recover SLAs, and cancellations that create customer service overhead.

DSCO validates supplier invoices for accuracy before routing them to retailers for payment, helping ensure financial accuracy and cost control.

The operational lesson is not “avoid penalties.” It is to understand that DSCO makes your fulfillment performance legible to the retailer. If your operation is not already built to hit strict shipping and accuracy targets, the fees are a symptom, not the disease.

Real operational examples sellers underestimate

Most DSCO failures are boring. They are also expensive. These are the patterns that repeatedly sink accounts. To avoid these common DSCO fulfillment failures, it is essential to integrate systems and processes between your e-commerce platform and third-party logistics providers, ensuring seamless data synchronization and operational efficiency.

Integrating DSCO with third-party logistics services helps to save time and money.

Late ship caused by warehouse reality, not system timing

A DSCO order arrives at 2:10 PM. Your warehouse cut-off for same-day picking is 1:00 PM. Your team treats the order like any other ecommerce order and plans to pick it tomorrow.

From the retailer’s perspective, that order is already aging. If the program expects shipment within 24 hours, you are now living inside a clock you did not design. Your integration might be flawless, but you are operationally late before anyone touches a box.

This is why operations leaders should treat dsco orders as a distinct order class with its own routing rules, labor priority, and exception escalation.

Inventory mismatch that turns into cancellations

Your inventory integration sends 42 units available. The warehouse actually has 19, because:

Cycle counts are infrequent
Damaged inventory is not quarantined properly
Returns are not reconciled quickly
Multiple order sources are drawing from the same pool without real time locking

The retailer sells 10 units. You can ship 8. You cancel 2.

That might feel like “normal ecommerce.” In a DSCO program, it is a scorecard hit. Repeat it often enough and you look unreliable. Retailers care about cancellation rate because cancellations are customer pain and customer service cost. DSCO simply makes that pain attributable.

Carrier scans that do not happen when you think they do

A seller prints labels and sends tracking in time. The packages sit on the dock until the carrier arrives the next morning. Tracking shows “label created” but no acceptance scan.

Some retailers treat the first carrier scan as the real shipment event. Your DSCO status says shipped, but the carrier data says not yet. This gap can trigger late shipment flags even when your team believes they complied.

Operationally, this is solved by pickup discipline, dock processes, and cutoffs aligned to scan reality. “Label printed” is not “shipped” in retailer math.

Wrong service level or routing details that create downstream cost

Retailer drop ship programs often specify service levels, label formats, and packing requirements. Sellers sometimes treat these as administrative details, then discover the penalties later.

A common example is selecting a shipping method that is too slow to meet delivery expectations, then paying to upgrade shipments reactively. Another is failing to include the required packing slip or return label, triggering customer contacts and chargebacks.

None of this is fixed by DSCO. DSCO will happily transmit the shipment confirmation for a shipment that will arrive late.

The role of 3PLs in DSCO success

For brands onboarding to drop shipping, the 3PL question is not about convenience. It is about capability. Strategic partnerships and tailored services for clients are essential in DSCO fulfillment, as ongoing communication and understanding each client’s unique needs foster trust and deliver value.

A strong third party logistics partner can make dsco fulfillment viable because they already operate at the tempo retailers expect. Choosing a 3PL for DSCO orders requires evaluating their industry experience and technological capabilities. The right partner can help with:

Cutoffs and labor models designed for rapid order processing
Warehouse discipline around scan compliance and dock flow
Inventory accuracy through tighter cycle counting and location control
Standard operating procedures for pack rules, labels, and routing requirements
Exception handling when a carrier misses pickup or an order needs intervention

A reliable 3PL should also offer modern integration technology to ensure efficient order fulfillment.

This does not mean “use a 3PL and you are safe.” Retailers hold the seller accountable, not the warehouse vendor. If your 3PL misses SLAs, your account takes the hit. The practical implication is that DSCO success requires operational governance regardless of who runs the building.

Operations leaders should treat the 3PL relationship like a program, not a purchase order. You need:

Shared SLA definitions that match retailer requirements
Daily visibility into backlog, late risk, and cancellation drivers
A process for inventory reconciliation and dispute resolution
Escalation paths for carrier issues and peak volume planning

Flexibility in scaling services is also important when selecting a 3PL for DSCO orders.

If you are running your own warehouse, the same governance still applies. The only difference is who you can fire.

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What “DSCO readiness” actually looks like in practice

Most sellers think readiness means the connection is stable. Retailers think readiness means the order experience is stable.

DSCO readiness in operations terms looks like:

Warehouse cutoffs aligned to retailer ship windows
Order processing that prioritizes DSCO orders without starving other channels
Inventory levels that reflect reality, not accounting optimism
Tracking that scans fast and stays valid through delivery
Clear playbooks for exceptions: backorders, damages, carrier misses, address issues
Reverse logistics that does not collapse customer confidence

Notice what is not on that list. It is not a step integration specific instructions document. It is not a deep dive into EDI schemas. The challenge is execution.

This is also why sellers get surprised by DSCO. DSCO makes it easy to start. It does not make it easy to be good.

Strategic takeaway for operations leaders

If you want one mental model for dsco fulfillment, use this:

DSCO standardizes communication. Retailers evaluate execution.

Treat DSCO like a spotlight, not a shield. It will highlight where your operation is strong and where it is fragile. If you are fragile, you will see it first through cancellation and late shipment penalties, then through lowered assortment access, then through program risk.

The correct posture is not to obsess over the integration. It is to build a fulfillment operation that can meet retailer SLAs consistently, even during peak demand, even when a carrier misses a scan, even when inventory is tight. That is what retailers are buying from you when they approve you for drop shipping.

Frequently Asked Questions

What is DSCO fulfillment?

DSCO fulfillment refers to operating a retailer drop ship program where DSCO standardizes order, inventory, and shipment communications, while the seller still performs the physical fulfillment work.

What does DSCO do in drop shipping?

DSCO standardizes retailer and supplier communication for orders, inventory updates, shipment confirmations, and tracking so retailers can scale drop ship programs without custom integrations.

What does DSCO not do for sellers?

DSCO does not execute fulfillment. It does not pick, pack, ship, manage carrier pickups, correct inventory accuracy, or ensure you meet retailer SLAs.

Why do sellers fail DSCO programs even when EDI is working?

They confuse EDI compliance with fulfillment readiness. Retailers score performance based on cancellations, late shipments, and tracking quality, which are operational outcomes.

What DSCO metrics typically trigger penalties?

Retailers commonly penalize high cancellation rates, late shipment rates, missing or delayed tracking, and shipment events that do not meet required timing thresholds.

How do carrier scans impact DSCO performance?

Many retailers treat the first carrier acceptance scan as the proof of shipment timing. A label can be created and tracking sent, but if the package is not scanned promptly, it can still count as late.

How can a 3PL help with DSCO success?

A capable 3PL can improve ship speed, inventory accuracy, scan discipline, and exception handling. The seller must still govern the partnership to meet retailer SLAs.

What operational changes matter most for DSCO readiness?

Tight cutoffs, prioritized order processing, accurate inventory levels, consistent carrier pickups, reliable tracking, and strong exception handling matter more than integration effort.

Written By:

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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How Rithum Fulfillment Works (And How to Choose the Right 3PL)

In this article+

15 minutes

How Rithum evolved from two competing platforms into commerce middleware
The order lifecycle from retailer purchase to customer delivery
Retailer SLAs demand near-perfect execution with significant financial penalties
Why sellers struggle after Rithum implementation
What qualified 3PLs need to handle Rithum-connected orders
Integration architecture connects WMS to retail channels
Selecting the right fulfillment partner determines retail dropship success
Frequently Asked Questions

Rithum is the middleware providing the orchestration and data routing needed for seamless order fulfillment, routing orders between retailers like Target Plus, Nordstrom, and Walmart to your fulfillment operation. However, it won’t pick, pack, or ship a single product—those physical actions are handled by your 3PL, in-house warehouse, or Amazon’s Multi-Channel Fulfillment service. By accurately managing inventory levels and order quantities, sellers can feel confident in the reliability of their integrated ecommerce solution, knowing that Rithum orchestrates the entire order fulfillment process.

This distinction matters because retailers like Walmart require 99% on-time shipping with $5-per-order penalties for violations, while Nordstrom cancels orders entirely if shipment doesn’t occur within one business day. When inventory sync fails or carrier performance drops, Rithum’s orchestration capabilities become irrelevant. Rithum maintains real-time inventory levels across all connected channels to prevent overselling and automatically syncs your Amazon inventory quantities with your channels. Your 3PL relationship determines whether you meet these unforgiving standards or face suspension from programs that took months to join. Rithum uses machine learning to provide accurate delivery dates at the time of purchase, accounting for variables like carrier performance, but successful implementation also depends on having the needed information, configuration, and support in place.

How Rithum evolved from two competing platforms into commerce middleware

Rithum emerged in December 2023 when CommerceHub and ChannelAdvisor unified under a single brand following CommerceHub’s $23.10 per share acquisition of ChannelAdvisor in November 2022. The combined company also absorbed DSCO, a distributed inventory platform acquired in 2020, and Cadeera, an AI company. This consolidation brought together CommerceHub’s enterprise retailer integration strengths (primarily EDI-based connections with major retailers) and ChannelAdvisor’s marketplace listing and advertising platform serving 40,000+ companies globally.

The platform now operates three core systems under the Rithum umbrella. OrderStream from the CommerceHub legacy handles enterprise dropship and retailer integration through EDI and SFTP connections. DSCO provides a modern API-first architecture supporting dropship, marketplace, and buy-online-pickup-in-store workflows. The original ChannelAdvisor platform manages multichannel marketplace listings and digital marketing across 420+ marketplace integrations, allowing users to list products across multiple marketplaces and efficiently manage their catalog.

What unifies these components is their function as translation and routing software sitting between sellers and retail channels. Rithum normalizes purchase orders, inventory feeds, and shipment confirmations across different file formats and retailer-specific requirements. When Home Depot sends an EDI 850 purchase order or Nordstrom expects an ASN within 24 hours of shipment, Rithum handles format compliance and data routing, but the warehouse operations remain entirely your responsibility. To learn more about how these integrations work together, visit the dedicated Rithum fulfillment page or documentation.

If you want to learn more about the unified Rithum platform and how to list your products efficiently, visit this page for additional resources and support.

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The order lifecycle from retailer purchase to customer delivery

Understanding exactly how orders flow through Rithum reveals where seller responsibility begins and ends. When a customer orders from Target.com or Nordstrom.com, the retailer generates a purchase order transmitted to Rithum’s network. Rithum validates the order against product catalog and inventory data, then routes it to your designated fulfillment endpoint based on pre-configured business rules. Rithum provides an Order Summary page to help users manage their open orders. You can click on the Order Summary page to quickly see the status of all your open orders, which are categorized based on their current state in the order fulfillment lifecycle. Rithum provides real-time visibility into the entire order lifecycle from pick and pack to final delivery.

Your 3PL receives the order via SFTP, API, or EDI connection, typically as an EDI 940 warehouse shipping order. The 3PL acknowledges receipt, picks and packs the product, generates a shipping label, and ships with the carrier. Critically, shipment confirmation data (tracking number, carrier, service level, and ship date) must flow back through Rithum to the retailer via an EDI 856 advance shipment notice, often required same-day for retailers like Nordstrom.

The business rules you configure in Rithum determine routing logic. Orders can route based on warehouse proximity to customers, inventory availability at specific locations, carrier service levels required to meet delivery promises, or cost optimization. You can set quantity buffers to hide listings when stock falls below thresholds and establish priority-based distribution center selection. But these rules only work if your inventory data is accurate and your 3PL can execute within the required timeframes. Depending on your retailer’s business rules, you may be able to partially ship an order when you have enough stock on hand to fulfill some items. You may need to split the items into separate packages, known as a split shipment, when preparing an order for shipment.

You must review your new orders and determine how you plan to ship the items before you can ship your orders or create packing slips.

Sellers configure fulfillment endpoints for internal warehouses, Amazon FBA/MCF, Walmart Fulfillment Services, third-party 3PLs, or dropship supplier networks. Rithum’s recent RithumIQ AI engine claims 96% accuracy in delivery promise forecasting and up to 10% shipping cost savings through machine learning-based routing, but these benefits require accurate underlying data from fulfillment partners. Rithum provides predictive delivery dates at checkout, achieving up to 96% accuracy.

Retailer SLAs demand near-perfect execution with significant financial penalties

Each major retailer connected through Rithum enforces distinct compliance requirements with meaningful consequences for violations. These requirements explain why 3PL selection matters so critically. Missing a single metric can trigger chargebacks, payment denials, or program suspension. Managing order quantities accurately is essential to meet retailer requirements and avoid backorders or inventory discrepancies.

Walmart’s Drop Ship Vendor program sets the most stringent bar: 99% on-time shipping, ≤0.1% backorder rate, and line-level order acknowledgment within four business hours. Orders received before the local warehouse cutoff (typically noon) must ship the same day. Chargebacks include $5 per purchase order for late shipments and $5 per unit for rejected or backordered items. Two or more ignored order alerts trigger a suspension warning, with minimum seven-day suspensions for non-response.

Nordstrom requires shipment within one business day of order receipt. Failure means Nordstrom cancels the order and you receive no payment. The advance shipment notice must transmit the same day as physical shipment. Nordstrom supplies shipping labels through their UPS account, and using the wrong carrier account means no payment. Monthly scorecards track performance across timeliness, compliance, and fulfillment accuracy, with $10 fees per non-compliant invoice.

Managing multiple retailer SLAs can be complex, but Rithum pulls orders from all sales channels into a single platform, providing a unified view of every order. Automation in Rithum helps to eliminate manual errors, achieving up to 40% reduction in errors.

Target Plus requires fulfillment within 24 business hours with a maximum five-business-day transit time. Sellers must use Target-branded packing slips, maintain $5 million commercial general liability insurance, and accommodate all carrier service levels. Amazon and Walmart fulfillment services are explicitly prohibited, requiring US-based fulfillment from your own operation or 3PL.

Best Buy’s Supplier Direct Fulfillment expects shipment within two business days with monthly SLA targets: 99% adjusted fill rate, 95% shipped-on-time rate, 99% timely ship notices, and 95% timely inventory advice. Performance reviews occur weekly at the warehouse level, and orders unfulfilled within 30 calendar days are automatically cancelled.

Macy’s Vendor Direct Fulfillment also requires shipment within two business days, but critically mandates that sellers cancel orders if product won’t ship within that window, regardless of reason. Out-of-stock items must be cancelled and communicated within one business day.

Why sellers struggle after Rithum implementation

Industry analysis reveals consistent patterns of post-implementation difficulty rooted in platform limitations, inventory synchronization failures, and the inherent complexity of multi-retailer dropship operations. According to a 2025 Threecolts analysis, brands commonly wait months before going live while being billed, with setup involving endless back-and-forth, rigid templates, and a one-size-fits-all workflow.

Inventory accuracy problems compound exponentially with scale. Unlike owned inventory with direct warehouse visibility, retail dropship requires suppliers to accurately report real-time availability across multiple locations. A Rithum and eTail industry report found 40% of companies cite inventory coordination across platforms as their top challenge, with 33% citing marketplace data integration as their second-biggest issue. When a store shows 100 units available but the supplier has zero, the seller faces refunds, angry customers, and potential account suspension. Errors add up to $8,000 to $15,000 in lost profit annually from preventable mistakes.

Multi-location fulfillment complexity creates routing failures where orders route to distant warehouses while closer facilities have stock, or split shipments divide orders across multiple locations unnecessarily. Without proper systems, gaining visibility across multiple warehouses requires calling or emailing each warehouse, waiting for responses, and manually aggregating information. By the time you have the answer, it’s already outdated. A nationwide network can resolve these challenges by increasing efficiency and visibility.

Platform rigidity forces businesses into workflows that don’t adapt to their needs. Custom rules for inventory allocation or specific sequences require additional payment and long waits, with results often partial fixes or compromises that never fully solve the underlying need. However, businesses can expand product assortments without carrying inventory through Rithum. Rithum also allows businesses to test new product categories through dropshipping or private marketplaces without the risk of owning inventory. Adding new channels becomes especially painful. Each marketplace has unique requirements, forcing teams to map attributes manually, reformat catalogs, and wait on slow updates. For successful integration, the needed steps include providing all required information, configuring system connections, and ensuring ongoing support to address marketplace-specific requirements.

Integration failures between Rithum and WMS/ERP systems create disconnects where orders don’t fulfill on time, inventory shows as available when it’s not, and tracking information doesn’t reach customers. Traditional integrations require 60 to 90 days of custom development, with each new client bringing unique tech stacks, data models, and business rules.

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What qualified 3PLs need to handle Rithum-connected orders

Selecting a 3PL for retail dropship through Rithum requires specific capabilities that many fulfillment providers lack. The core requirement is certified EDI compliance supporting essential transactions. The required EDI transactions can be listed as follows: EDI 850 (purchase orders), 855 (acknowledgments), 856 (advance ship notices), 810 (invoices), 940 (warehouse shipping orders), and 945 (warehouse shipping confirmations).

Multi-warehouse networks provide geographic coverage enabling one-to-two-day delivery to 96%+ of the US population, with automated order routing based on inventory availability, customer proximity, and SLA requirements. When items are unavailable at one location, orders automatically route to alternative facilities. This redundancy proves critical when individual warehouse disruptions would otherwise cause SLA violations.

Real-time inventory synchronization must flow bidirectionally from WMS to Rithum to prevent overselling, and from sales channels back through the system to maintain accurate availability and quantities across 420+ connected marketplaces. The National Retail Federation reports inventory distortion costs retailers billions annually, making immediate sync of every order, receipt, transfer, and adjustment essential to ensure correct quantities are reflected at all times.

Carrier diversification protects against single-carrier disruptions while enabling rate shopping for cost optimization. Required capabilities include integration with UPS, FedEx, USPS, DHL, and regional carriers, plus support for retailer-supplied shipping labels where programs like Nordstrom provide their own UPS account credentials.

Technical integration typically occurs through SFTP file automation (every Rithum account includes unique SFTP credentials), AS2 protocol for secure data exchange, or REST APIs with webhooks for real-time connectivity. File formats use specific extensions: .neworders for incoming orders, .confirm for acknowledgments, .inventory for stock updates, and .shipment for tracking confirmations.

ChannelAdvisor provides launch services to assist customers with setting up their ChannelAdvisor Fulfillment Services account. The ChannelAdvisor Launch Team is responsible for establishing the necessary calls with customers during the setup process, and customers will have access to the Launch Team via email for the duration of the services period. The number of calls with the ChannelAdvisor Launch Team will not exceed three per Fulfillment Endpoint.

Integration architecture connects WMS to retail channels

Rithum’s integration architecture supports multiple data exchange methods depending on retailer requirements and seller technical capabilities. API-based connections use REST architecture with JSON format, requiring Content-Type, API-Key, Timestamp, and Authorization headers with HMAC signature or access token authentication. Webhooks enable real-time event-driven data push for immediate updates.

EDI connections remain essential for major retailers who require specific document formats. The workflow proceeds from retailer purchase order (EDI 850) through supplier acknowledgment (EDI 855) to warehouse shipping instruction (EDI 940), warehouse confirmation (EDI 945), advance ship notice (EDI 856), and invoice (EDI 810). Each retailer may require different EDI formats, which Rithum translates through its Universal Connection Hub that normalizes supply chain communications across different file formats.

WMS integration connects through pre-built connectors from providers like Extensiv, Shipedge, Logiwa, and Deposco, or through integration platforms like Cleo, TrueCommerce, and SPS Commerce. Pre-built integrations can deploy in under one hour with documentation available on the integration documentation page. To learn more about setup options, click on the integration documentation page for detailed guidance.

SKU mapping across channels requires maintaining a master database with external identifier mappings. A single product may have different SKUs per channel or retailer, requiring one-to-many mapping relationships. Rithum’s Shadow SKU functionality enables channel-specific presentation while maintaining internal inventory consistency. Poor SKU mapping drives 10%+ error rates that cascade into fulfillment failures.

To learn more about Rithum’s integration architecture, visit the dedicated resource page for additional information.

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Selecting the right fulfillment partner determines retail dropship success

The fundamental truth of Rithum-connected retail dropship is that platform capabilities become irrelevant without execution excellence at the fulfillment level. Sellers choosing 3PLs should feel confident in their fulfillment partner’s ability to meet retailer requirements. Sellers should verify specific capabilities: certified Rithum or CommerceHub integration through EDI or API, multi-warehouse network with intelligent order routing, real-time inventory synchronization with sub-15-minute update frequency, and multi-carrier relationships enabling rate shopping across UPS, FedEx, USPS, and regional carriers.

Critical performance metrics to require contractually include 99.5%+ order accuracy (with some 3PLs guaranteeing 99.9%), same-day fulfillment for orders received by cutoff, inventory accuracy matching physical counts to recorded inventory, and OTIF (on-time, in-full) rates meeting or exceeding retailer thresholds. Rithum computes SLA performance based on retailer-provided delivery dates and notifies suppliers of each order that misses requirements, but that notification arrives too late if your 3PL already failed.

Top 3PLs with demonstrated retail dropship expertise are providing comprehensive support for ecommerce businesses by managing the entire order fulfillment process. This includes providers like a2b Fulfillment (specializing in Amazon FBM/SFP and Walmart DSV), ShipBob (distributed inventory with 2-day express shipping), Red Stag Fulfillment (zero shrinkage guarantee with 99.9% accuracy), and DCL Logistics (40+ years of fulfillment SLA expertise). Integration platform partners like Extensiv 3PL Warehouse Manager, Pipe17, and ConnectPointz provide pre-built CommerceHub/Rithum connectors that accelerate deployment.

Frequently Asked Questions

Is Rithum a 3PL or fulfillment provider?

No. Rithum is order orchestration and retail connectivity software that routes orders between retailers and your fulfillment operation. It does not warehouse inventory, pick and pack orders, or ship products. All physical fulfillment happens through your chosen 3PL, in-house warehouse, or fulfillment service like Amazon MCF. Rithum handles order translation, inventory sync, and retailer integration, but execution responsibility sits entirely with your fulfillment partner.

How does Rithum connect to retailers like Target Plus and Nordstrom?

Rithum maintains pre-built integrations with 420+ retail channels through EDI connections, API partnerships, and SFTP file exchanges. When a customer purchases on Target.com or Nordstrom.com, the retailer sends a purchase order to Rithum in their required format (typically EDI 850). Rithum normalizes this data and routes it to your designated fulfillment endpoint based on business rules you configure. Your 3PL then fulfills the order and sends shipment confirmation back through Rithum to the retailer.

What happens if my 3PL misses a retailer SLA deadline?

Consequences vary by retailer but typically include financial penalties and potential program suspension. Walmart charges $5 per order for late shipments and $5 per unit for backorders. Nordstrom cancels orders and you receive no payment if shipment doesn’t occur within one business day. Best Buy tracks weekly performance at the warehouse level with monthly scorecards. Repeated violations can result in account suspension from retail programs, which often take months to rejoin.

Can I use Amazon FBA or Walmart fulfillment services for Rithum orders?

It depends on the retailer. Target Plus explicitly prohibits using Amazon or Walmart fulfillment services, requiring US-based fulfillment from your own operation or a third-party 3PL. Other retailers may allow it if the fulfillment partner can meet their specific SLA requirements and technical integration needs. Check individual retailer program terms before configuring fulfillment endpoints, as violations can result in immediate suspension.

Why do multi-warehouse 3PLs reduce order cancellation risk?

Multi-warehouse networks provide inventory redundancy and geographic distribution. When one location is out of stock or experiences disruptions, orders automatically route to alternative facilities that have inventory. This prevents the order cancellations that occur when single-warehouse operations run out of stock or face localized issues like weather delays, labor shortages, or carrier disruptions. Geographic distribution also enables faster delivery times, helping meet strict retailer transit requirements.

How long does it take to integrate a 3PL with Rithum?

Integration timelines vary by technical approach. Pre-built EDI or API connectors from certified 3PL partners can deploy in under one hour with proper documentation. Custom API integrations typically require two to six weeks for development, testing, and certification. Traditional EDI connections need careful setup and retailer-specific testing before production go-live, often requiring 60 to 90 days for full deployment across multiple retail channels. Choose 3PLs with existing Rithum or CommerceHub certifications to minimize implementation time.

Written By:

Indy Pereira

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

LTL vs FTL: Complete Guide to Choosing the Right Freight Shipping Method

In this article+

7 minutes

What Are LTL and FTL in Freight Shipping?
Key Differences Between LTL and FTL
When to Use LTL Shipping
When to Use FTL Shipping
Conclusion
Frequently Asked Questions

Choosing between LTL vs FTL shipping is a common dilemma in logistics. Selecting the right freight shipment method is crucial, as it impacts costs, delivery speed, and overall supply chain efficiency. Should you ship your goods as less than truckload (LTL) or spring for a full truckload (FTL)? The decision isn’t always straightforward, each freight shipping method has its own benefits and drawbacks. But making the right choice can lead to big cost savings, faster delivery times, and fewer headaches in your supply chain.

What Are LTL and FTL in Freight Shipping?

LTL (Less Than Truckload) shipping is for shipments that don’t fill a full truck. In LTL, your freight shares trailer space with other shippers’ freight, and you’re charged only for the portion of the truck you use. Shipments are considered LTL based on their volume or pallet count, and a shipment that does not fill a full truck is classified as an LTL shipment. LTL carriers combine multiple shippers’ freight, meaning multiple shippers share the same trailer for cost efficiency. LTL consolidates multiple smaller shipments and partial loads to optimize available space and reduce shipping costs. LTL carriers combine multiple shipments on one truck, which means your freight will likely make multiple stops or transfers through hub terminals on the way to its destination. This is ideal for a smaller shipment (a handful of pallets) where using a whole truck would be wasteful. LTL lets you pay for just what you need.

FTL (Full Truckload) shipping is when one shipper uses an entire truck for a single shipment. FTL provides dedicated space for a single shipper, utilizing all available space in the trailer exclusively for your freight. An FTL shipment is ideal for large, time-sensitive, or high-value freight. The trailer is fully dedicated to your freight and goes straight from pickup to final destination with no extra stops. FTL is usually chosen for large shipments (enough to fill most or all of a trailer) or for time-sensitive deliveries that need the quickest route. Because your freight isn’t handled or transferred along the way, there’s less risk of damage and generally faster transit times with FTL. Truckload freight refers to both FTL and LTL, and choosing between FTL and LTL depends on your shipment size and logistics needs.

LTL and FTL are the two main options for freight shipping, and selecting the right one depends on your specific requirements.

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Key Differences Between LTL and FTL

Both LTL and FTL will get your goods from point A to point B, but they do it in different ways. Here are the major differences to consider:

Cost: LTL shipping is usually the lower cost option for smaller loads because you pay only for the portion of trailer space you use. FTL costs more since you’re paying for the entire truck, but it becomes more cost-effective as your shipment size approaches a full truckload (the bigger your load, the better value FTL gets per unit of freight). Shipping rates for LTL are often more economical for smaller loads due to shared costs, while in FTL, the shipper pays for exclusive use of the truck, which provides direct service and faster delivery.
Transit Time: FTL shipments are generally faster. The truck goes directly from origin to destination with no extra stops. LTL shipments are slower because the truck makes multiple stops or transfers to accommodate other freight, which can add a few days to delivery time. FTL offers more predictable delivery dates and delivery timelines, making it ideal for time-sensitive shipments, while LTL delivery windows are more estimated and flexible.
Handling & Risk: LTL involves more handling; your goods might be loaded and unloaded multiple times at various terminals. More touches mean a higher chance of damage or loss, so packaging needs to be very secure. FTL, by contrast, involves less handling (once your freight is loaded, it stays on that same truck until delivery), so the risk of damage is lower.
Shipment Size: LTL handles shipments that only use part of a trailer, whereas FTL is meant for shipments large enough to fill most or all of a trailer. There are no hard and fast rules for when to choose LTL or FTL; sometimes consolidating your freight into one FTL shipment is more efficient, especially for large or time-sensitive loads.

These differences mean that neither option is “better” in an absolute sense, it depends on your specific shipping needs. Next, we’ll look at when it makes sense to choose LTL and when FTL might be the better fit.

When to Use LTL Shipping

LTL freight is best when your shipment is relatively small and time is not ultra-critical. LTL often involves multiple LTL deliveries, which can require careful coordination to manage several smaller shipments efficiently. If you’re shipping only a few pallets and can allow a longer transit time (LTL may take a bit longer due to stops), then LTL will provide significant cost savings over paying for a whole truck. To minimize damage during the LTL shipping process, it is important to ensure that your goods are properly packaged.

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When to Use FTL Shipping

FTL freight is best suited for transporting large quantities of goods, making it ideal for large shipments or situations requiring speed and special care. If you have enough freight to fill most of a trailer (for example, approaching 10 or more pallets), it’s usually more practical to book a full truckload. FTL freight shipping is preferred by businesses that need speed, efficiency, and direct delivery for bigger loads, as it allows the entire truck to be dedicated to a single shipment.

FTL is also the right choice when you need a faster, direct delivery or when shipping high-value or fragile goods that you prefer not to mix with other shipments. A dedicated FTL truck gives you that exclusive space, less handling, and more control over timing.

Conclusion

Deciding between LTL and FTL comes down to balancing cost, speed, and shipment size. If you have smaller shipments and want to save on shipping costs, LTL freight is a flexible solution, you’ll trade off a bit of transit time for cost efficiency. If you need faster delivery, have a large load, or want minimal handling, FTL is worth the higher price for the dedicated service.

Many businesses actually use a mix of both LTL and FTL, depending on the situation. For example, we at Cahoot often remind businesses to evaluate each shipment’s urgency, size, and value case by case. Sometimes it even makes sense to consolidate multiple LTL shipments into one FTL if that provides better efficiency. The goal is to get your freight to its destination on time at a reasonable cost, whether that means LTL, FTL, or a combination.

By understanding the differences and strategic trade-offs of LTL vs FTL, you can make smarter shipping decisions that improve your supply chain efficiency and keep costs under control. In other words, use whichever truckload shipping approach best meets your needs, so your freight arrives safely, on schedule, and at a cost that makes sense for your business.

Frequently Asked Questions

What’s the difference between LTL and FTL?

LTL shares truck space with other shipments; FTL dedicates the whole truck to one shipment.

How do I choose between LTL and FTL?

Pick LTL for smaller, less urgent shipments; choose FTL for large, time-sensitive, or fragile loads.

How many pallets count as LTL vs FTL?

Up to about 6 – 10 pallets is typically LTL; beyond that, FTL or partial truckload makes more sense.

Which is cheaper, LTL or FTL?

LTL is cheaper for small loads. Once your shipment nearly fills a truck, FTL is usually more cost-efficient.

Do I need to know the freight class?

Yes for LTL, since pricing depends on freight class. FTL doesn’t use it the same way.

Written By:

Jeremy Stewart

Jeremy Stewart leads customer success at Cahoot, helping merchants achieve high-performance logistics through smart technology and process optimization. With a background in both ecommerce operations and client services, Jeremy ensures that every merchant using Cahoot gets measurable results—whether they’re scaling from one warehouse to many or managing complex returns.

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How To Find A Freight Forwarder: Importing Into The U.S. 101

In this article+

8 minutes

Tip 1. Verify Licenses And Bonds Before You Compare Rates
Tip 2. Ask Who Files Your ISF 10+2 And When
Tip 3. Choose Incoterms That Match Your Risk Tolerance
Tip 4. Ask About CTPAT And Trusted Trader Programs
Tip 5. Demand Mode And Lane Options Up Front
Tip 6. Plan The Handoff To Your 3PL Before The Ship Sails
What A Great Forwarder Looks Like
Common Pitfalls That Kill Margin
The Cahoot Angle
Frequently Asked Questions

You can absolutely import inventory into the U.S. without losing sleep or margin. Freight forwarding companies play a key role in facilitating the import process for businesses of all sizes. The trick is picking a freight forwarder who treats compliance like oxygen and hands your cargo cleanly to your fulfillment partner. Here is the practical playbook I use with sellers who are new to international shipments.

Tip 1. Verify Licenses And Bonds Before You Compare Rates

Ocean forwarders and NVOCCs (Non-Vessel Operating Common Carrier) that move your containers must be properly licensed by the Federal Maritime Commission. You can verify an Ocean Transportation Intermediary’s license status in the FMC’s public database, and you can confirm their bond. When reviewing a forwarder, make sure to check all paperwork, including permits and insurance, to ensure full compliance. For example, a hazardous materials permit may be required if your cargo includes dangerous goods. If your forwarder cannot provide a license number, the necessary permits, or shows up as non-compliant, walk away.

Air forwarders should have an IATA number and TSA compliance as an indirect air carrier. Trade associations like NCBFAA (National Customs Brokers & Forwarders Association of America) outline the basics. Additionally, air forwarders should hold any required permits for handling specific cargo types, such as perishable or restricted items. The point is simple. Compliance first, quotes second.

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Tip 2. Ask Who Files Your ISF 10+2 And When

For ocean freight, U.S. Customs requires an Importer Security Filing 24 hours before the cargo is laden at the foreign port. The ISF filing process involves several steps, including gathering shipment details, submitting accurate information, and confirming receipt by Customs; following each step carefully is crucial to avoid penalties. Late or missing filings can trigger holds, inspections, and monetary penalties. Your forwarder or customs broker should own the data flow and the deadline, not your intern. Put it in writing. Clear communication between the importer and the forwarder is essential to ensure all deadlines are met and responsibilities are understood.

Tip 3. Choose Incoterms That Match Your Risk Tolerance

Incoterms define who pays for what and when risk transfers. If you pick DDP, the seller handles import clearance and duties. If you pick DAP, you, the buyer, handle import clearance. Pick wrong and you inherit surprise costs at the final destination. The ICC and reputable logistics providers publish clear differences between DDP and DAP. Read them, then decide.

Understanding how Incoterms affect the shipping process is crucial for importers, as these terms determine responsibilities and costs at each stage. A freight forwarder’s ability to advise on and manage various Incoterms can help importers avoid unexpected costs and ensure a smooth shipping process.

Tip 4. Ask About CTPAT And Trusted Trader Programs

CTPAT-validated partners (Customs-Trade Partnership Against Terrorism) can see reduced CBP (Customs and Border Protection) examinations and faster processing. Participation in CTPAT is a critical factor for importers in industries with high compliance requirements, as it can significantly impact shipping efficiency and reduce overall costs. Certain industry sectors, such as pharmaceuticals and electronics, benefit more from trusted trader programs due to the sensitive nature of their goods. The Trade Compliance program is voluntary, but for high-velocity importers, the benefits are real. If your forwarder participates or can align with your importer status, you can shave days of unpredictability off lead times.

Tip 5. Demand Mode And Lane Options Up Front

Do not let a forwarder sell you a single route. For many SKUs, the right forwarder offers a full range of logistics solutions, including ocean freight for base flow and air freight for exceptions, with clear guidance on when to switch. Access to trucks is essential for domestic transportation, ensuring goods move efficiently from warehouses to final destinations. A reliable forwarder will arrange all aspects of the shipment, including scheduling trucks and coordinating with carriers. You want at least two carriers per lane, transit time options, and visibility tools that show where the container is, not just when it left. Forwarders offering integrated logistics solutions can provide more flexibility and efficiency. Reputable guides from carriers and platforms explain how forwarders aggregate volumes to get better routes and rates.

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Tip 6. Plan The Handoff To Your 3PL Before The Ship Sails

Your forwarder is not your 3PL. Make sure the arrival notice, customs clearance status, and delivery orders are shared with your fulfillment partner early. That includes documentation, lading details, and any hazardous materials or perishable goods flags. Coordinate with your suppliers to ensure all necessary information and documentation are provided for a smooth handoff. Proper packaging is essential to ensure goods arrive safely and meet fulfillment requirements. If your fulfillment partner requires appointments at their distribution centers, your forwarder should book trucking in time to meet your launch date. Warehouses play a crucial role in ensuring efficient inventory management and smooth coordination between shipping parties. This is where Cahoot’s partner list helps. We match import lanes with the right last mile and warehousing so your inventory hits the shelf quickly.

What A Great Forwarder Looks Like

Licensed and insured with transparent bonds and a clean FMC entry.
Strong customs brokerage, either in-house or via a close partner.
Clear SOP for ISF and entry filing with named owners and backups.
Incoterms coaching before you sign the PO with your supplier.
Multiple modes and carrier options with time-definite transparency.
Comprehensive service and solutions, including excellent customer service, responsive communication, and value-added offerings to ensure smooth shipping operations.
Expertise in specific industries or routes, ensuring the forwarder understands your market, regulatory requirements, and can navigate local nuances effectively.
Proven handling capabilities for various types of cargo, including hazardous materials and perishable goods, to guarantee compliance and safety throughout the logistics process.
Ability to provide all the services required for your supply chain, such as multimodal transportation, warehousing, and integrated logistics solutions, so there are no gaps in coverage.
Selecting the right freight forwarder means choosing a partner who meets all these criteria and can fully support your shipping needs.

Common Pitfalls That Kill Margin

“DDP included” without a real broker. You pay twice when surprise duties appear on arrival.
Late ISF filings. Your cargo sits. You pay storage. Your launch slips. CBP is unsentimental about deadlines.
No appointment at the final destination. The forwarder blames the warehouse. Warehouse blames forwarder. Customers do not care.
Choosing based on price only. The cheapest quote often hides documentation, delivery, or demurrage risk you will learn about later. Trying to save money upfront can actually cost your business more in the long run if important factors like reliability, customer service, and specialty needs are ignored.

Selecting the right freight forwarder is an important factor for business success. A good forwarder can help streamline your shipping process, reduce risks, and ensure your money is managed properly, supporting your business growth and efficiency.

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The Cahoot Angle

Cahoot does not pretend to be your forwarder. We partner with licensed, audited forwarders and customs brokers, then make the U.S. handoff painless. Our fulfillment network receives, checks, and slots your goods into the right nodes so you can start selling faster. From the ocean vessel to the customer’s doorstep, the supply chain only works if every handoff is clean. Contact Cahoot to learn how you can save shipping time and money, even if you don’t require order fulfillment services.

Freight forwarding companies play a crucial role in the global market by helping businesses, exporters, and shippers manage complex international shipping logistics. In a country like China, which is the world’s largest exporter, the freight forwarding market is highly developed, and exporters rely on intermediaries to navigate regulations and ensure goods are delivered efficiently. Companies such as UPS and DHL operate ships and provide international shipping services, supporting the movement of goods across borders. Maintaining regular contact with your forwarder is essential to confirm shipments are delivered on time and users receive a positive experience. Businesses should search for a company with a proven track record in managing shipments and providing reliable delivery to stay competitive in the international shipping market.

Frequently Asked Questions

Do I Need A Freight Forwarder Or Just A Customs Broker?

Most importers use both. The forwarder manages transportation door to door and offers a range of services—such as warehousing, customs clearance, and logistics solutions to meet different shipping needs. The customs broker files entries with CBP and coordinates PGA requirements. Many firms provide both. Verify roles in your contract.

What Happens If My ISF Is Late?

CBP can assess penalties, increase inspections, or delay release. Your container may sit while fees accrue. Assign ISF responsibility to your forwarder or broker in writing and audit the workflow.

Should I Choose DDP Or DAP?

If you want control and transparency on duties and taxes, DAP is safer. If you want simplicity and are willing to pay a premium, DDP shifts import clearance to the seller. Align the choice with your compliance capability.

How Do I Check If A Forwarder Is Legitimate?

Use the Federal Maritime Commission’s OTI (Ocean Transportation Intermediaries) and NVOCC (Non-Vessel Operating Common Carrier) databases to confirm license and bond status. Ask for proof of insurance and recent reference letters.

Can A Forwarder Reduce My Lead Time?

Yes. CTPAT-aligned partners and multi-carrier routing often reduce holds and improve reliability. The right forwarder is a logistics provider that designs options, not a single price.

Written By:

Jeremy Stewart

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Best 3PL For Startups: Horror Stories From Small Brands And How To Avoid Them

In this article+

7 minutes

Why Startups Struggle With 3PLs
Real World “Horror Stories” You Can Learn From
The Startup 3PL Checklist I Use
The Cahoot Fit For Startups
Frequently Asked Questions

There is a special place in logistics hell reserved for start…rketplace” right after go-live. Let’s keep you out of there.

Why Startups Struggle With 3PLs

First, the market keeps shifting under your feet. Shopify exited its owned fulfillment bet and sold logis…which can trap small businesses in plans that no longer fit.

Second, carriers keep tinkering with fees. UPS, FedEx and USPS have confirmed 2025 holiday demand surcharges and USPS seasonal hikes. If your 3PL does not proactively mitigate these surcharges with smarter routing and regional carriers, your shipping costs will eat into customer satisfaction and margin. Outsourcing logistics to a 3PL can help startups reduce overhead costs and achieve operational efficiencies by leveraging third-party expertise and technology.

Third, small warehouses are scarce relative to giant buildings. Finding a six to twenty-thousand-square-foot site near your customers is harder than it looks, which is why multiple fulfillment centers inside a partner’s network matter for timely delivery at startup scale. Outsourcing logistics can also lead to significant labor savings by reducing the need for in-house staff to manage logistics needs, allowing startups to focus on growth.

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Real World “Horror Stories” You Can Learn From

A founder signs a slick proposal and discovers a monthly minimum that jumps two quarters later. We just watched a major provider announce a $5,000 monthly minimum starting in 2026. If you are a startup, that can be a deal breaker. Make minimums and their review dates explicit in the MSA (Master Services Agreement). Also, ensure the provider has a proven track record working with startups.
Another brand chooses a one-size-fits-all provider optimized for low SKU, high volume. Complexity spikes, errors soar, and support becomes a ticket loop. Even 3PL owners warn publicly that some large providers fit only specific profiles. Validate with reference calls from merchants like you. It’s crucial to select the right fulfillment service and a reliable fulfillment partner who can support your business as it grows.

The Startup 3PL Checklist I Use

1. Fit To Sales Channels And Customer Expectations

Does the provider natively support your sales channels today? Amazon, Walmart, TikTok Shop, Shopify, wholesale EDI. If they plan to “add it later,” assume you will be the beta tester. Fast and free is not enough. Consistency and reliable delivery matter more for improved customer satisfaction and repeat sales. The right 3PL can improve the overall customer experience by tailoring order fulfillment to customer preferences and enhancing customer satisfaction.

2. Transparent Pricing With Caps On Peak Fees

Ask for a single page that shows storage fees, pick and pack, packaging materials, account management fees, and any peak season surcharges passed through. Cross-check with public carrier announcements to see if the line items make sense. Avoid hidden fees by insisting on an all-in, effective rate card for your realistic order volume. Competitive pricing is also crucial for startups, as it ensures you receive cost-effective solutions that support your business growth and help establish long-term partnerships.

3. Multiple Fulfillment Centers And Real-Time Routing

Startups need timely delivery without air. A 3PL with multiple fulfillment centers and regional carriers can cut shipping costs and delivery times. Distribution centers and reliable shipping are essential for an efficient delivery process, ensuring that orders are fulfilled quickly and consistently to meet customer expectations. Distribution services and fulfillment centers play a crucial role in supporting startups’ logistics needs by managing inventory, coordinating shipments, and streamlining the overall delivery process. Ask for a shipping simulation across your last twelve months of orders. If they cannot run it, they are guessing.

4. Inventory Management System That You Actually See

You need real-time tracking, low stock alerts, and simple inventory management, not a black box. If the portal cannot show inventory accuracy by location and order processing exceptions in one dashboard, your day-to-day operations will slow down.

Efficient inventory storage and managing inventory are essential for startups to streamline fulfillment and reduce costs. Leveraging technology and robust warehousing and inventory management practices helps maintain optimal inventory levels, preventing excess stock and minimizing storage expenses. For example, the Cahoot Network enables inventory distribution across multiple warehouses, making it easier for ecommerce businesses to reach more customers and reduce shipping costs. By focusing on optimal inventory levels, you can ensure your inventory management system supports both cost efficiency and fast order fulfillment.

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5. Dedicated Customer Support With Escalation Paths

Startups underestimate the value of a named human who resolves issues. Excellent customer service, provided by key personnel with logistics expertise, is essential for startups to receive responsive support and effective problem-solving as they grow. Make the contract list the escalation chain and response SLAs. Ask for a sample “warehouse exception” report and how it is handled inside their logistics operations.

6. Returns, Kitting, And Value-Added Services

Your business growth can stall if your 3PL cannot handle light assembly, kitting, or returns at scale. Robust fulfillment operations and effective fulfillment strategies are essential for startups to remain competitive and meet customer expectations. Many ecommerce startups discover too late that their “best fulfillment service” will not relabel or bundle without lead time. Fulfillment services for startups can provide customized solutions to support business operations, ensuring flexibility and scalability as you grow. Confirm support for seasonality and value-added services in writing. Startup fulfillment and ecommerce fulfillment should be key considerations for growing brands seeking to optimize logistics and enhance customer satisfaction.

The Cahoot Fit For Startups

Cahoot was built for ecommerce startups that need cost savings without losing control. As a 3PL provider, Cahoot delivers comprehensive logistics services tailored for startups. As a fulfillment company, Cahoot supports business operations by streamlining order fulfillment, warehousing, and inventory management, resulting in significant labor savings and operational efficiencies.

Cahoot enables startups to expand into international markets by providing reliable international shipping solutions that simplify global logistics and ensure timely delivery. By offering expert supply chain management, Cahoot allows you to focus on your core business activities while improving supply chain efficiency and customer satisfaction.

Multi-node coverage for reliable delivery, clear pricing to avoid hidden fees, and a fulfillment process you can see. We are opinionated about inventory management and day one integrations, so you can scale operations across sales channels without a significant capital investment up front.

Frequently Asked Questions

What Is The Number One Mistake Startups Make With 3PLs?

Choosing based on price alone. Selecting the right fulfillment solution and fulfillment company is crucial to ensure your logistics needs are met as your business grows. The cheapest proposal usually hides storage costs, minimums, or limited carrier options that inflate your shipping costs later. Verify the total cost of ownership against your order volume, and consider cost-effective packaging strategies to further optimize your fulfillment process.

Do I Need Multiple Fulfillment Centers From Day One?

Not always. But you should pick a partner with the ability to add nodes as your ecommerce business grows. Having access to multiple distribution centers and fulfillment centers can improve inventory storage and scalability, allowing for more efficient order processing and faster shipping as your business expands. A two-node network often cuts zone-based costs dramatically compared with one node.

How Do Peak Season Surcharges Affect Startups?

Seasonal “demand” fees can swing your unit economics. Efficient order fulfillment and a streamlined delivery process are essential for reliable shipping during peak seasons, helping to manage surges in demand and maintain customer satisfaction. Confirm how your 3PL mitigates or passes through FedEx, UPS, and USPS surcharges and how that impacts timely delivery.

What Proof Should I Ask for From A 3PL Before Signing?

We recommend at least 2 customer references that match your SKU count and seasonality, a shipping simulation, and a demo of their inventory management system. If any are missing, wait. It’s also crucial to choose a provider with a proven track record in the industry to ensure reliability and expertise.

Written By:

Jeremy Stewart

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Convert returns into second-chance sales and new customers, right from your store.

Are You Overpaying for Fulfillment? 5 Hidden Fees to Watch

In this article+

7 minutes

Flat Rate Pricing: Is It the Solution to Hidden Fees?
How To Calculate Your Total Fulfillment Cost
Negotiation Scripts That Work
Where Cahoot Saves Money By Design
Frequently Asked Questions

If your 3PL pricing looks fine on the sales deck but ugly on the invoice, you are not alone. Fulfillment fees hide in packing tables, DIM math, “miscellaneous” surcharges, and account management fees that quietly grow. An additional fee for large items, custom packaging, or international shipping can also appear unexpectedly on invoices. Here’s a practical breakdown of the five most common hidden costs in ecommerce fulfillment in 2025, how to spot them, and how to negotiate them out.

1) DIM weight and oversize surprises

Carriers increasingly bill by dimensional weight. UPS lists a divisor of 139 for Daily Rates, and FedEx uses similar guidance; whichever is greater, DIM or actual weight, wins. If your 3PL’s cartonization drifts, you pay more shipping fees than planned. Review carton libraries and require periodic cube audits.

2) Peak and demand surcharges you didn’t model

Expect time-limited holiday price changes and peak surcharges across USPS, UPS, and FedEx this Q4. USPS has already posted its 2025 holiday adjustments, with specific per-package increases by service and zone. FedEx continues to adjust surcharges and recently increased late payment fees to 9.9% of overdue balances. Your 3PL should forecast these into your fulfillment cost model and update your pricing models ahead of peak season.

3) Inbound receiving and special projects that balloon

“Standard receiving” might sound simple, but many third-party logistics providers bill by the hour for complex inbounds, relabeling, or inventory inspection. Setup fees may also apply during the onboarding process, covering initial integration and service setup, and these one-time charges can vary depending on the complexity of your requirements. Typical ranges vary widely, and container handling can also add fees. Insist on service level agreements that define when hourly rates kick in and cap spend per container or inbound receipt.

4) Account management and “program” fees

Some fulfillment providers add a monthly account management line or a “program fee” that doesn’t correlate to measurable value, no SLA, no deliverables. If the fee funds actual logistics operations (dedicated analyst, weekly optimization, custom reporting, support, technology upgrades), great. If not, move to custom pricing where the monthly cost ties to volume or outcomes.

5) Packaging and special handling multipliers

Pick and pack is only part of the story. The packing process, including kitting and assembly, can involve additional steps to meet specific client requirements and may impact overall costs. Boxes, mailers, poly, dunnage, and inserts can add real dollars per order. Ask for pack fees by material type, whether you can bring your own custom-branded packaging, and how “oversize handling” triggers. Publish a packaging bill of materials in your RFP so quotes are comparable. Reference tables from reputable 3PL pricing explainers to benchmark.

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Flat Rate Pricing: Is It the Solution to Hidden Fees?

Flat rate pricing has become an attractive option for many ecommerce businesses aiming to simplify their fulfillment costs and avoid the headache of hidden fees. With this pricing model, your fulfillment provider charges a single, fixed shipping cost per order, regardless of the package’s actual weight, dimensions, or destination. For online stores juggling multiple SKUs and fluctuating order volumes, this can make budgeting and cost analysis much more straightforward.

The biggest advantage of flat rate pricing is predictability. Instead of worrying about surprise surcharges, fluctuating shipping rates, or unexpected account management fees, you know exactly what your shipping cost will be for each order. This transparency helps ecommerce businesses avoid hidden costs that often sneak into invoices, like fuel surcharges, residential delivery fees, or delivery area surcharges. By rolling these into a single flat rate, fulfillment providers make it easier to calculate your total fulfillment cost and plan your logistics operations with confidence.

Flat rate pricing can also drive cost savings by streamlining your fulfillment process. With fewer variables to track, your team spends less time calculating shipping costs and more time focusing on inventory management, optimizing storage space, and improving customer experience. Many fulfillment services that offer flat rate pricing also bundle in warehousing fees, packaging materials, and even custom packaging options, further reducing the risk of additional fees cropping up later.

However, flat rate pricing isn’t a one-size-fits-all solution. If your ecommerce business regularly ships large, heavy, or unusually shaped items, a flat rate may not reflect your actual shipping cost, and you could end up paying more than you would with a customized pricing model. Flat rate pricing also tends to be less flexible than tiered or weight-based pricing models, which can be adjusted as your order volume or shipping needs change. For some businesses, especially those with highly variable shipments, a more tailored fulfillment strategy may deliver better cost savings.

When evaluating flat rate pricing, consider how it impacts your warehousing costs and inventory management. Some fulfillment providers include storage fees in their flat rate, while others charge separately based on the amount of storage space your inventory occupies. Make sure you understand exactly what’s included in the flat rate and how it aligns with your business operations.

How To Calculate Your Total Fulfillment Cost

Order fulfillment: The order fulfillment process includes receiving inventory, storage, picking, packing, and shipping, with each stage contributing to the overall cost.
All-in per order: pick fee + additional picks + packaging + shipping label + surcharges + storage amortized + returns share + account management fees + pick and pack fee + labor costs.
Storage: rate per storage space unit (bin, shelf, pallet, cubic foot) plus any long-term or specialized storage lines; model seasonal inventory peaks. Storage costs can be calculated as a fixed fee or flat rate, and storage fees may vary depending on space utilization and duration.
Inbound: receiving method (per pallet, per carton, hourly), labeling, and non-compliance penalties. Inbound shipping is also a cost factor when sending inventory to fulfillment centers.
Reverse logistics: expected return rate and per-unit processing cost.
Shipping rates: lane-level quotes for your top SKUs and destinations; ensure major carriers and regionals are included with negotiated shipping rates. Shipping carriers and pick and pack fees can vary depending on the provider and order volume.

Cost structures for fulfillment companies and fulfillment partners can vary depending on the provider, and many fulfillment providers offer customized solutions for online stores to achieve lower costs and total cost transparency.

Fulfillment centers and fulfillment companies may use standard packing materials, but higher costs can result from special handling or hazardous materials.

Outsourcing logistics to a third-party logistics (3PL) provider can help achieve cost savings and optimize the supply chain.

It is important to compare total costs, including all fulfillment costs across providers, and all fees, to avoid surprises.

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Negotiation Scripts That Work

“Cap my hourly.” If hourly receiving is unavoidable, cap hours per inbound and include auto-approval thresholds.
“Publish the pack BOM.” Fix the unit price of each packaging material item for 6 – 12 months.
“Show me DIM control.” Quarterly cartonization audit with sample orders and photos, or fee credits.
“Outcome-based account management.” Tie the monthly fee to specific deliverables and SLA improvements, not a vague “program.”

Where Cahoot Saves Money By Design

Bulk purchasing power on materials across our network reduces pack fees.
Cartonization and rate-shop automation curb DIM surprises.
Multi-node placement reduces zones, so you pay ground, not air.
Transparent invoices with line-item detail keep you in control.

Frequently Asked Questions

What is the right DIM divisor to use in 2025?

UPS lists 139 for Daily Rates, and FedEx applies dimensional weight rules with similar divisors. Always check current carrier guides; your divisor may vary by service.

Will there be 2025 holiday surcharges?

Yes. USPS has posted time-limited holiday increases for October 2025 – January 2026, and FedEx/UPS maintains demand surcharge frameworks. Model these in your fulfillment pricing now.

Are account management fees normal?

They exist, but should buy value, analytics, continuous improvement, and SLA oversight. If you cannot tie the line to outcomes, negotiate it out, or convert to custom pricing.

How do I compare 3PL quotes apples to apples?

Normalize to an all-in fulfillment cost per top SKU and destination: storage, picks, pack materials, label, surcharges, and returns. Use an identical packaging bill of materials for all bidders.

How does Cahoot help me avoid hidden costs?

We quote transparently, automate rate-shopping and cartonization, and place inventory near demand to lower logistics costs while meeting customer expectations on shipping speed.

Written By:

Jeremy Stewart

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

How to Choose a 3PL for Pet Products: Temperature, Turnaround, and Trust

In this article+

9 minutes

Why Pet Is Different
The Three T’s: Temperature, Turnaround, Trust
Sustainability and Environmental Responsibility
Technology And Innovation In Pet Product Fulfillment
Risk Management And Mitigation
The Pet 3PL Checklist (Copy/Paste To Your RFP)
Inventory Management Strategy For Pet Brands
How Cahoot Helps Pet Brands Win
Frequently Asked Questions

Pet customers are loyal, vocal, and absolutely unforgiving when order fulfillment goes sideways. If the food arrives warm, the treats crumble, or the litter leaks, they do not reorder. That is why choosing a 3PL for pet products is less about cheap storage and more about temperature control, effective inventory management, and spotless compliance. The pet industry sets unique standards for logistics, requiring specialized solutions to meet regulatory requirements and the growing demands of pet owners. A pet products business must also ensure that high-quality products reach customers, maintaining quality assurance and safety throughout the supply chain. You also need to make sure your 3PL can meet the demanding performance metrics for your channels, such as Chewy Marketplace, for example.

Why Pet Is Different

Pet isn’t “just another CPG.” Dry pet food needs cool, dry storage, typically under 80°F; moisture swings and heat degrade nutrients and oil stability. Wet food and fresh formulas add temperature-controlled storage and stricter handling. These aren’t nice-to-haves; they’re FDA-anchored realities under the Food Safety Modernization Act’s (FSMA) Preventive Controls for Animal Food and related guidance.

Beyond the FDA, labels and handling instructions often follow the Association of American Feed Control Officials (AAFCO) model guidance, storage directions, ingredient statements, and clarity on life-stage. Your 3PL must respect those labels and keep documentation on hand for audits. To ensure compliance with all relevant regulations, it is essential to follow proper procedures throughout the supply chain. Careful handling and precise handling of pet products are critical to maintain product quality and safety during storage, packing, and transportation.

Meanwhile, demand is resilient. U.S. pet spending reached about $152 billion in 2024 and is projected to hit roughly $157 billion in 2025. That means opportunity for brands that safeguard product safety and customer loyalty with reliable shipping and delivery speed.

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The Three T’s: Temperature, Turnaround, Trust

Temperature. Your 3PL should provide documented temperature and humidity controls for dry, canned, and fresh categories, with sensor logs you can audit. For fresh and refrigerated diets, verify the cold chain plan, from dock to reliable carriers to the final destination.

Turnaround. Pet shoppers reorder frequently, often on a weekly cadence. That means consistent same-day pick, accurate inventory management strategies, and backup labels when carriers miss pickups. Efficient order processing and expertise in fulfilling orders are essential to achieve accurate delivery and meet customer expectations. The metric that matters is SLA adherence across seasonal demand, not the one perfect day.

Trust. Trust equals compliance plus transparency. You need FSMA Part 507 awareness (sanitation, pest control, recall readiness) and clean warehouse management system records. Ask for mock recall drill results and how quickly they can isolate lots by stock levels and real-time inventory tracking. Real-time visibility in pet care fulfillment ensures customers can track their orders and builds trust in your brand.

Sustainability and Environmental Responsibility

Sustainability is no longer optional in the pet products industry; it’s a core expectation from both pet owners and retail partners. The environmental impact of pet supplies fulfillment, from packaging waste to carbon emissions, is under increasing scrutiny. Leading 3PLs are stepping up by offering eco-friendly packaging options, such as biodegradable bags and recyclable materials, that help reduce landfill waste without compromising product safety. Optimizing shipping routes and consolidating orders can further cut down on carbon emissions, making the entire supply chain more efficient and environmentally responsible.

Energy-efficient warehouse operations, like LED lighting and smart climate controls, not only lower the carbon footprint but also contribute to cost savings for pet products businesses. Waste reduction programs, including recycling initiatives and responsible disposal of damaged goods, help ensure that every step of the fulfillment process aligns with sustainability goals. By choosing a 3PL that prioritizes environmental responsibility, pet products businesses can strengthen their brand reputation, meet evolving market demands, and deliver the level of customer satisfaction today’s eco-conscious consumers expect.

Technology And Innovation In Pet Product Fulfillment

Technology is transforming the way pet products businesses manage inventory, fulfill orders, and meet customer expectations. A modern warehouse management system (WMS) is the backbone of efficient pet products fulfillment, providing real-time tracking of inventory, optimizing stock levels, and ensuring accurate order fulfillment. Automated packaging and labeling systems streamline the fulfillment process, reducing errors and speeding up operations, key to meeting the fast turnaround times pet owners demand.

Advanced solutions like AI-powered inventory forecasting and predictive analytics allow pet products businesses to anticipate seasonal demands and unexpected market changes, minimizing missed sales opportunities and excess stock. These tailored solutions not only improve inventory accuracy but also drive cost savings and timely delivery across every sales channel. By leveraging the latest technology, 3PL providers can offer scalable, efficient operations that keep pet products businesses ahead of the curve and ensure a positive customer experience from click to doorstep.

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Risk Management And Mitigation

Risk is a constant in the pet products industry, whether it’s a product recall, supply chain disruption, or regulatory change. Effective risk management is essential for protecting your brand and maintaining customer loyalty. A 3PL with deep experience in the pet products industry will proactively identify potential risks, from inventory shortages to compliance gaps, and develop contingency plans to keep your supply chain resilient.

This means implementing strict quality control measures, maintaining transparent pricing, and ensuring regulatory compliance at every stage of the fulfillment process. Real-time inventory tracking and regular audits help prevent missed sales opportunities and reduce unnecessary labor or capital expenditures. Ongoing training and inspections ensure that every team member is prepared to handle unexpected challenges, safeguarding both product integrity and customer experience. By partnering with a 3PL that prioritizes risk management, pet products businesses can confidently scale operations, protect their reputation, and deliver the reliable service that keeps pet owners coming back.

The Pet 3PL Checklist (Copy/Paste To Your RFP)

Storage specs per SKU: dry kibble below 80°F, moisture control, separation from cleaners and chemicals.
Lot and expiration control with FEFO (First Expired, First Out), plus expired inventory quarantine procedures.
Pest management plan aligned to Part 507 GMPs, with logs.
Dock-to-door cold chain validation for refrigerated or frozen lines.
Carrier matrix that matches the weight and cube of bulk pet food and grooming supplies; not every lane is UPS Ground.
Packaging SOPs: protective packaging for cans and glass, poly-in-box for oils, liners for dusty litter SKUs.
Returns triage: when to destroy vs restock to protect pet health.
Transparent pricing: no mystery “food handling” fee; itemized fulfillment services, hidden fees called out.
Recall readiness: mock recall completed in the last 12 months; time to isolate all affected lots.
Data access: real-time inventory, aging, and real-time tracking through your OMS.
Customized solutions: ensure the 3PL can provide customized solutions for different pet products, including specialized warehousing and packaging as needed.
Pet products fulfillment strategy: confirm there is a robust pet products fulfillment strategy in place to address product handling, inventory accuracy, and timely delivery.
Managing inventory: prioritize effective systems for managing inventory, including forecasting and coordination to avoid stockouts or overstock.
Outsourced pet products fulfillment: consider the benefits of outsourced pet products fulfillment for efficiency, scalability, and proper handling of industry-specific requirements.

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Inventory Management Strategy For Pet Brands

Pet brands often experience seasonal demands, requiring them to adapt their inventory strategies to handle fluctuations in order volume and product mix.
Segment storage by risk and velocity. Keep fast movers close to carriers, slow movers deeper in the building to save warehouse space.
Efficient management of pet supply, including pet food, treats, and health items, is crucial, especially when segmenting inventory to ensure timely fulfillment and compliance.
Forecast by reorder cadence. Autoship means steady rhythm with occasional spikes; tune labor and slots accordingly.
Leveraging outsourced pet products services can help brands handle inventory fluctuations and scale operations up or down as needed.
Smaller shipments to test new flavors or bag sizes, then ramp. This reduces missed sales opportunities and obsolescence.
Dual-node setup for national coverage, so your customers expect 1 – 2 day delivery without air. That is pure cost savings.
Risk management: diversify suppliers, pre-approve alternates, and lock in packaging conversions well before unexpected market changes.

How Cahoot Helps Pet Brands Win

We run pet-friendly SOPs: temp monitoring for dry zones, FEFO allocations, protective pack recipes for cans and fragile jars, and scalable solutions across our network of distribution centers. We provide personalized service and tailored fulfillment solutions for pet brands, ensuring expert handling of diverse products like pet beds and other pet essentials. Add multi-node routing to keep timely delivery and on-time delivery consistent without paying for air. And because we operate as a transparent fulfillment partner, our transparent pricing lets you see the true landed cost per order.

Frequently Asked Questions

What regulations apply to pet food storage in 3PLs?

FSMA’s Preventive Controls for Animal Food and 21 CFR Part 507 require GMPs, sanitation, pest control, and records for facilities that manufacture, process, pack, or hold animal food. Your 3PL must comply.

Do dry kibble products really need temperature control?

Yes. FDA and AAFCO guidance recommend keeping dry food under about 80°F, away from moisture and heat, to maintain nutrient integrity and shelf life.

How fast should a pet 3PL ship?

Same-day fulfillment for orders before cutoff and predictable 1–3 day ground delivery for most ZIPs. Reliability matters more than a single headline speed.

How do pet products 3PLs handle recalls and lot tracking?

Insist on lot-level granularity, FEFO, and a proven mock recall. The 3PL should be able to locate, quarantine, and report affected inventory within hours.

How does Cahoot reduce pet fulfillment costs?

By placing inventory near demand, optimizing cartons, and using regional carriers for heavy items, we cut shipping costs while maintaining customer satisfaction and brand loyalty.

Written By:

Indy Pereira

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

Amazon SFP: Profit Math, Pitfalls, and the Smarter Alternative

In this article+

7 minutes

What SFP Actually Demands For The Prime Badge In 2025
The Hidden SFP Shipping Costs Stack
SFP vs FBM vs Cahoot: The Margin View
A Simple Seller Fulfilled Prime Program Decision Tree
Three Operational Truths Nobody Tells You
How To Win With Prime Customers, Whether You Choose SFP Or Not
Frequently Asked Questions

Short answer, yes, Seller Fulfilled Prime can work in 2025. As part of the broader Amazon Prime program, Seller Fulfilled Prime (SFP) is a fulfillment option that allows third-party sellers to fulfill Prime orders directly from their own warehouses. Here’s how Seller Fulfilled Prime works: sellers manage their own inventory and shipping, but still offer customers the Prime badge, fast free delivery, and a premium experience, without using Amazon’s FBA warehouses. This approach can help sellers reach Prime customers, control storage costs, and enhance brand recognition.

Longer answer, it depends on whether you can hit strict speed, coverage, and quality metrics while keeping shipping costs from eating your margin. The 2025 refresh tightened rules again, added weekend coverage checks, and introduced volume floors. Ultimately, the decision to use SFP should be based on your business model and your ability to meet the program’s requirements.

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What SFP Actually Demands For The Prime Badge In 2025

To join SFP, sellers must have a professional selling account to enroll in Seller Fulfilled Prime. Sellers must pre-qualify, then pass a 30-day seller fulfilled prime trial, also referred to as the prime trial, trial period, or prime trial period. During this phase, sellers must fulfill a certain number of prime trial orders and meet strict performance metrics: at least 93.5% on-time delivery, 99% valid tracking, ≤0.5% seller-initiated cancellations, and a steady baseline of 100 Prime packages per month after enrollment. Sellers must also have a default shipping address in the US to enroll in seller fulfilled prime. Weekend operations are monitored, and Prime offers must cover the contiguous U.S. with competitive two-day delivery speeds where feasible.

Sellers must meet all seller fulfilled prime requirements and prime requirements to maintain eligibility in the program. As part of the enrollment and management process, sellers configure shipping settings in Seller Central to ensure compliance with Prime standards. Successful completion of the trial allows sellers to gain access to Prime customers and the Prime badge, increasing product visibility and sales potential.

Amazon has also announced 2025 program updates (effective late June) impacting SFP and Premium Shipping, including policy clarifications and protections when Amazon sets promises and you ship on time using eligible labels. Great when it applies, but you still own the ops.

The Hidden SFP Shipping Costs Stack

SFP’s trap is simple. You keep inventory in your own warehouse or with a third-party logistics provider, you display the Prime badge, and you own the fulfillment process. Having sufficient fulfillment capacity is crucial for meeting the strict requirements of the Seller Fulfilled Prime program. Amazon sellers and third-party sellers can fulfill orders themselves or partner with third-party logistics providers to handle shipping and storage. Miss a weekend pickup, mis-estimate a lane, or under-optimize cartons, and your Prime orders get expensive fast. Fulfilling orders efficiently is critical for maintaining Prime status and being a successful Prime seller. Enrolled in Seller Fulfilled Prime, sellers can make Seller Fulfilled Prime offers and must ensure they are offering free shipping, which is a key benefit for customers and a requirement for SFP. Maintaining Prime status requires ongoing compliance with program standards.

Weekend staffing: You must operate at least one weekend day and use shipping services with weekend pickup/delivery coverage.
Nationwide promise pressure: Standard nationwide shipping for all Prime offers, plus competitive 1–2 day promise exposure in many ZIPs.
Order-limit throttling: If you don’t maintain volume and speed, Amazon can clamp your daily Prime order limit until you recover. (Commonly cited by program trackers.)

In other words, SFP is feasible when you have multi-node coverage, tight inventory management, and smart routing. Both third-party Amazon sellers and Amazon sellers can choose between FBA, FBM, and the Seller Fulfilled Prime program depending on their business needs. If not, Fulfillment by Amazon (FBA) or FBM + Cahoot may deliver better customer satisfaction and profit.

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SFP vs FBM vs Cahoot: The Margin View

FBM vs FBA gives you control and lower platform fees, but you lose the Prime badge and must maintain reliable delivery standards for your sales channels. FBM operates through the merchant fulfilled network, where sellers handle storage, packing, and shipping themselves, taking on full responsibility for logistics and customer service. FBA buys you Prime eligibility and leverages Amazon’s fulfillment centers, large warehouses where Amazon stores your inventory, manages packing, shipping, and customer service, streamlining the process and boosting sales potential, though storage and handling fees can be painful for slow-moving or oversized SKUs. SFP sits in the middle, delivering the Prime badge with your own ops, but only if you can truly run a Prime-class network. Market watchers note that overall Amazon competition has eased from 2021 highs, which helps conversion if you can deliver fast and free shipping reliably.

Where Cahoot fits: we turn FBM into something closer to SFP economics by routing to the best node and carrier for each order, including weekends, so your on-time delivery and valid tracking rate can match SFP expectations without carrying SFP’s strict nationwide promise liability yourself.

A Simple Seller Fulfilled Prime Program Decision Tree

Under 2 lb, high-velocity, small parcel, steady volume ≥100 Prime orders/month? Consider SFP, but only with multi-node and weekend ops.
Oversize, seasonal, or irregular demand? FBA or FBM + Cahoot.
Multi-channel beyond Amazon (Walmart, Shopify, eBay)? SFP adds complexity with thin payoff; FBM + Cahoot preserves control.

Three Operational Truths Nobody Tells You

1. Weekend promise math is unforgiving. Your shipping template, carrier weekend capabilities, and pickup windows must align. If the template shows Saturday pickup, non-Prime orders in that template often inherit weekend obligations too, and some orders may require same-day shipping to meet Prime and SFP requirements. Plan staffing and cutoffs accordingly.

2. Prime shipping templates are critical for SFP. Setting up a Prime shipping template in Seller Central is essential to qualify for Prime orders and optimize costs. Configuring shipping templates properly enables Prime shipping and ensures you meet required shipping speed and delivery speed metrics for Seller Fulfilled Prime. When fulfilling orders, use shipping labels purchased through Amazon Buy Shipping Services to streamline order fulfillment, shipment tracking, and reliable delivery through Amazon’s trusted network.

3. Nationwide coverage isn’t optional. Even for standard shipping, SFP requires contiguous U.S. coverage. If your single node sits on the coast, your cost to keep 1 and 2-day exposure jumps.

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How To Win With Prime Customers, Whether You Choose SFP Or Not

Build weekend operating muscle with clear cutoffs and carrier mix.
Add nodes or enable peer-to-peer fulfillment to collapse zones.
Automate cartonization and rate-shop every label.
Set conservative daily caps so you don’t over-promise on major sales events.
Optimize your Prime listings to increase visibility, display the Prime badge, and boost conversions.
Align your operations to reflect Prime customers expectations, ensuring your service levels and delivery quality meet what Prime customers anticipate.
Leverage SFP to deliver directly to domestic Prime customers from your own warehouse, enhancing brand recognition and customer satisfaction.
Use Cahoot to meet Prime customers’ expectations without locking into SFP for every SKU.

Frequently Asked Questions

What are the 2025 SFP performance requirements?

Expect 93.5% on-time delivery, 99% valid tracking, ≤0.5 percent seller-initiated cancellations, weekend operations, and steady volume of at least 100 Prime packages per month post-enrollment.

Do I have to ship on weekends for SFP?

Yes. SFP policies require weekend operations, plus carriers that support weekend pickup and delivery. Templates and coverage must match your actual capability.

Is SFP cheaper than FBA?

Depends on your cube, weight, and geography. SFP can be cheaper for compact, fast-moving SKUs when you run multi-node fulfillment. For bulky or slow movers, FBM + Cahoot or selective FBA often wins.

What’s new in the 2025 SFP rules?

Amazon issued program updates and clarified protections when promises are Amazon-set and you ship on time with eligible labels. There are also policy refreshes effective June 29, 2025.

How does Cahoot help with SFP, FBM, and FBA?

We route every order to the fastest, cheapest compliant path, maintain weekend coverage with regional carriers, and provide the inventory management and fulfillment partner capabilities you need to protect metrics and margin.

Written By:

Jeremy Stewart

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

Walmart 3PL Success: Why Most 3PLs Don’t Support Walmart Properly (And How to Vet Them)

In this article+

7 minutes

Walmart Marketplace Is A Different Animal
Why Most 3PLs Miss The Mark On Walmart
The 12-Point Walmart 3pl Vetting Checklist
When To Mix WFS And A 3PL
Practical Takeaways
Frequently Asked Questions

If you sell on Walmart Marketplace, your 3PL can make or break your growth. Selling on Walmart Marketplace gives you the opportunity to reach millions of customers, expanding your potential audience significantly. The platform is surging, the buyers are trained on fast delivery, and Walmart’s physical stores quietly turbocharge the last mile. Most third-party logistics providers still operate with an “Amazon-only” mindset. That’s why so many Walmart orders get stuck, misrated, or delayed.

Here’s the playbook I use to evaluate a Walmart 3PL, so you get the upside of Walmart Fulfillment Services, cost savings on shipping, and a better customer experience without surprise hidden fees.

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Walmart Marketplace Is A Different Animal

Walmart’s Marketplace isn’t a niche anymore. Seller count and volume have accelerated through 2025, with Marketplace Pulse tracking a 30 percent increase in sellers in the first five months alone and a rapid influx of international sellers. Translation, more competition, and a higher bar for fast delivery and customer expectations.

And Walmart keeps leaning into its superpower, stores. The company extended delivery coverage to 12 million more households in 2025 using geospatial routing, letting multiple Walmart stores fulfill a single order. That store network, rebranded as Accelerated Pickup and Delivery (APD), turns physical stores into fulfillment centers for real-time speed. Walmart fulfillment centers and warehouses are strategically located to enable fast delivery and efficient inventory management. These Walmart fulfillment centers and warehouses play a key role in storing products and supporting the fulfillment center network. Effective warehousing and storing inventory are essential for meeting Walmart’s delivery expectations and ensuring accurate, timely order fulfillment.

If your 3PL can’t plug into that ecosystem, or at least align to its service levels, your Walmart orders will lag.

Why Most 3PLs Miss The Mark On Walmart

1. They copy-paste Amazon SOPs. Routing rules, order management systems, and fulfillment process logic often assume Amazon’s cutoffs and zones. Walmart’s promise logic is different, and Walmart fulfillment windows require different carriers, shipping costs math, and cubic foot handling. If your 3PL doesn’t tune templates for Walmart, you eat hidden costs and miss same-day shipping promises. Understanding Walmart’s requirements is essential for 3PL success, as optimizing your supply chain and ensuring compliance are key to smooth operations. When evaluating a third-party logistics (3PL) provider, consider key factors like lead times, return processes, and pricing to ensure efficient order management and customer satisfaction. Choosing the right fulfillment partner can be a game-changer for Walmart sellers, enabling you to deliver products reliably and on time, and taking advantage of advanced 3PL services and technology can further optimize your operations.

2. They don’t model store-adjacent speed. Walmart’s network reduces zones for last-mile lanes. Your 3PL should steer Walmart Marketplace sellers toward regional carriers or local injection that mirrors APD pace, not default to national major carriers every time. Recent data shows Walmart customers leaned heavily into same-day during summer deal weeks, because stores are everywhere. When it comes to delivering orders quickly, fulfillment speed is critical; your 3PL must be capable of delivering orders quickly to meet customer expectations and ensure they are delivered accurately.

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3. They skip WFS knowledge. Even if you don’t use Walmart Fulfillment Services (WFS), your 3PL should know the program’s fulfillment fees, storage rules, hazmat items policies, and routing guide, because those benchmarks anchor buyer expectations, and they’re often cheaper than you think. As of April–July 2025, Walmart publicized that WFS averages about 15 percent less than “the competition” with clear storage/optional fee tables and peak windows. Testing shipments with your 3PL before full rollout is important for quality and compliance, and helps ensure smooth scaling of your operations.

4. They don’t support Walmart-specific data flows. You need real-time tracking in Seller Center, clean inbound receiving for fulfillment centers, and order processing events that match Walmart’s performance scorecards. A 3PL that can’t expose these events reliably will ding your customer satisfaction and rank. It is also important to promptly mark orders as shipped once they are dispatched, maintaining transparency and trust with your customers.

5. They hide fees. Watch for “Walmart handling” surcharges, unexpected packaging materials fees, and shipping weight upcharges for large cube items. If you can’t audit fulfillment fees per order, you can’t scale. For large or bulk items, having freight options is essential to ensure efficient and cost-effective shipping.

The 12-Point Walmart 3pl Vetting Checklist

1. Native Walmart integration, not a connector-of-a-connector. Test order create, cancel, ship confirm, returns, and real-time tracking.

2. Walmart promises parity. Can they meet WFS-like SLAs on 1 – 2 days to core zip clusters, and do they simulate Walmart’s promise windows before you publish offers?

3. Regional carrier bench. Ask for their on-time performance across Zones 5 – 8 for your top five lanes. If they only quote national carriers, expect higher shipping costs.

4. Store-adjacent injection. Do they support scheduled late pickups or local injection to mirror APD speed near key Walmart stores?

5. Dim and cube handling. Walmart’s heavy and oversize rules differ; ensure cartonization and cubic foot billing are transparent.

6. Peak season plan. Can they surge headcount and dock space for peak season without “capacity caps”? Get last Q4’s throughput.

7. Hazmat and temperature control. If you sell aerosols or meltables, confirm temperature control zones and hazmat credentialing.

8. Returns and reverse logistics. How fast can they receive, grade, and restock?

9. Value-added services. Kitting, relabels, packaging materials swaps, and order management exceptions.

10. Inventory management maturity. Cycle counting, shrink reporting, and slotting tuned for your top SKUs.

11. Transparent pricing. Line-item fulfillment services by pick, pack, dunnage, storage; no “Walmart” surcharge.

12. Case studies on Walmart. Ask for references from marketplace sellers with your weight and cube profile.

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When To Mix WFS And A 3PL

WFS is compelling, especially for fast movers that fit the fee table. You still need a third-party logistics partner for multichannel work, oversized items, or SKUs that perform better outside WFS. WFS publishes current pricing, optional services, and routing guides. Use those to set target service levels for your 3PL.

A hybrid model works: let WFS carry your highest-velocity Walmart SKUs, and use a vetted Walmart 3PL for the long tail and multi-channel orders (Shopify, DTC, marketplaces). Walmart has also been investing in seller services and embedded finance to speed payouts, another reason volume is migrating. Your 3PL should be ready to ride that wave, not fight it.

Practical Takeaways

Treat Walmart like Walmart, not Amazon. Different promise logic, different network, different fulfillment solutions.
Build a carrier mix that prefers short zones and regional speed.
Benchmark against WFS fees and SLAs, even if you don’t use them.
Demand transparency on hidden costs and fulfillment operations.
Use Walmart’s store network to your advantage; shorter delivery equals happier customers, higher sales, better rank.

Cahoot supports Walmart out of the box: multi-node routing, regional carriers, WFS-aware promise modeling, and transparent order fulfillment costs you can audit down to the SKU.

Frequently Asked Questions

What makes a Walmart 3PL different from an Amazon-only 3PL?

Walmart’s promise logic, store-adjacent fulfillment, and WFS benchmarks require different routing, carrier selection, and service windows. A Walmart-ready 3PL maps to APD coverage and WFS-like SLAs rather than cloning Amazon rules.

Should I use Walmart Fulfillment Services or a 3PL?

Use WFS for fast movers that fit the fee table. Pair a 3PL for oversized items, bundles, and multi-channel work. Many brands run both to balance cost savings, fast delivery, and control.

How fast is Walmart really growing in 2025?

Marketplace seller growth has accelerated through 2025, and Walmart reported strong ecommerce momentum into FY25. That means more competition and higher expectations on speed and price.

What hidden fees should I watch for in Walmart fulfillment?

Look for cartonization upcharges, “Walmart handling” adders, hazmat surcharges, peak storage, and mis-billed shipping weight on large cube items. Compare against WFS’s public rate card to catch anomalies.

How does Cahoot help Walmart Marketplace sellers?

We tune routing to Walmart’s speed map, leverage regional carriers to shorten zones, expose granular cost lines, and support hybrid WFS + 3PL strategies so you can fulfill orders faster, at lower total cost.

Written By:

Jeremy Stewart

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

In this article+

Introduction to Ecommerce Returns

What 3PL returns means operationally

Make Returns Profitable, Yes!

The journey of a returned package through a 3PL facility

Common reverse logistics disposition paths and their economic implications

SLAs and where they break down

Convert Returns Into New Sales and Profits

Hidden costs in 3PL returns operations

Benefits of Outsourcing Returns

What brands should control versus what to outsource in returns management

Common failure modes impacting customer satisfaction and how to prevent them

Best Practices for 3PL Returns

No More Return Waste

Technology and integration requirements

When to keep returns in-house versus outsource

Future of 3PL Returns

Frequently Asked Questions

What does 3PL returns actually mean and what do they handle?

What happens when a returned item arrives at a 3PL warehouse?

What are common return disposition paths and how much value do they recover?

What are typical 3PL returns SLAs and where do they break down?

What hidden costs appear in 3PL returns that don’t show on invoices?

What should brands control versus outsource in returns management?

Turn Returns Into New Revenue

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What DSCO actually does vs what it does not do

Slash Your Fulfillment Costs by Up to 30%

Why sellers confuse EDI compliance with fulfillment readiness

Order Fulfillment Strategies

Retailers that rely heavily on DSCO

Looking for a New 3PL? Start with this Free RFP Template

Cancellation and late-shipment penalties tied to DSCO metrics

Real operational examples sellers underestimate

Late ship caused by warehouse reality, not system timing

Inventory mismatch that turns into cancellations

Carrier scans that do not happen when you think they do

Wrong service level or routing details that create downstream cost

The role of 3PLs in DSCO success

Scale Faster with the World’s First Peer-to-Peer Fulfillment Network

What “DSCO readiness” actually looks like in practice

Strategic takeaway for operations leaders

Frequently Asked Questions

What is DSCO fulfillment?

What does DSCO do in drop shipping?

What does DSCO not do for sellers?

Why do sellers fail DSCO programs even when EDI is working?

What DSCO metrics typically trigger penalties?

How do carrier scans impact DSCO performance?

How can a 3PL help with DSCO success?

What operational changes matter most for DSCO readiness?

Turn Returns Into New Revenue

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How Rithum evolved from two competing platforms into commerce middleware

Slash Your Fulfillment Costs by Up to 30%

The order lifecycle from retailer purchase to customer delivery

Retailer SLAs demand near-perfect execution with significant financial penalties

Why sellers struggle after Rithum implementation

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What qualified 3PLs need to handle Rithum-connected orders

Integration architecture connects WMS to retail channels

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Selecting the right fulfillment partner determines retail dropship success

Frequently Asked Questions

Is Rithum a 3PL or fulfillment provider?

How does Rithum connect to retailers like Target Plus and Nordstrom?

What happens if my 3PL misses a retailer SLA deadline?

Can I use Amazon FBA or Walmart fulfillment services for Rithum orders?

Why do multi-warehouse 3PLs reduce order cancellation risk?

How long does it take to integrate a 3PL with Rithum?

Turn Returns Into New Revenue

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What Are LTL and FTL in Freight Shipping?

Slash Your Fulfillment Costs by Up to 30%

Key Differences Between LTL and FTL

When to Use LTL Shipping

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