When brands evaluate 3PLs, they compare warehouse locations, pricing, and technology platforms. What most overlook is retail compliance infrastructure—the specific systems, configurations, and expertise that determine whether shipments arrive at retailer DCs cleanly or generate chargebacks. And that oversight is expensive. A 3PL that checks every box on warehouse capabilities but lacks retail compliance can quietly cost a brand 2% to 5% of gross retail revenue in avoidable penalties.
After two decades of onboarding brands—many of whom come to us after discovering their previous provider lacked compliance capability—we have identified the specific areas that separate a compliance-ready 3PL from one that will generate chargebacks. This checklist covers the questions you should ask, what good answers look like, and what the red flags are.
Category 1: EDI Infrastructure
EDI is the foundation of retail compliance. Without working EDI connections, a 3PL cannot transmit ASNs, receive purchase orders electronically, or generate the transaction sets retailers require. Here is what to ask.
Questions to Ask
- How many retailers do you have active EDI connections with? Look for 40+ active connections. More importantly, ask for the list and check it against your retail customers.
- Which EDI provider do you use? SPS Commerce is the most widely used for retail. Ask whether connections are pre-wired (ready to activate) or need to be built from scratch.
- Which transaction sets do you support? At minimum: 850 (PO), 855 (PO acknowledgment), 856 (ASN), 810 (invoice), 997 (functional acknowledgment).
- How long does it take to set up EDI for a new retailer? With pre-wired connections: 2 to 4 weeks. Building from scratch: 2 to 4 months. The answer reveals their infrastructure maturity.
Productiv said it would take 3 days and the customer was like 'wow, this usually takes us one to two months.'
What Good Looks Like
A compliance-ready 3PL names specific retailers, specific EDI transaction sets, and specific timelines. They can tell you which of your retailers they already connect to and which ones need setup. Integration speed is a direct indicator of infrastructure maturity—a provider that measures setup in days has fundamentally different infrastructure than one that measures in months.
Category 2: ASN Accuracy
ASN failures are the single most common source of retail chargebacks. The 3PL's ASN process determines whether your electronic notifications match your physical shipments.
Questions to Ask
- What is your ASN accuracy rate? Look for 99%+ accuracy. Ask how they measure it and over what time period.
- How are ASNs generated? The correct answer is from WMS shipment confirmation data (what was actually picked and packed), not from PO data (what was ordered).
- Do you have automated pre-transmission validation? A system that checks quantities, SSCC-18 correlation, PO references, and timing before the ASN is sent catches errors before they become chargebacks.
- How do you handle multiple PO formats from the same retailer? Some retailers issue replenishment, promotional, and seasonal POs in different formats. Each needs specific ASN configuration.
Red Flags
If the 3PL cannot tell you their ASN accuracy rate, they are not measuring it—which means they are not managing it. If they generate ASNs from PO quantities rather than actual shipment data, every partial shipment will generate an ASN mismatch. If they rely on manual review rather than automated validation, errors will scale with volume.
Evaluating 3PLs for retail compliance?
We can walk you through exactly how our compliance infrastructure works—EDI connections, ASN validation, label libraries, and OTIF management for 60+ retailers. Ask us the hard questions.
Talk to our teamCategory 3: Labeling Systems
Every major retailer has specific labeling requirements that go beyond the standard UCC-128 barcode. The 3PL's label infrastructure determines whether you pass compliance checks or generate labeling chargebacks.
Questions to Ask
- Do you have pre-built label templates for my retailers? A label library means templates are ready to use. Without one, labels need to be built from scratch—a process that involves trial-and-error against each retailer's specifications.
- How do you generate labels? Labels should be generated from WMS data during the pack process, ensuring SSCC-18 numbers match ASN data automatically.
- Can you handle specialty labeling requirements? Some retailers (like Dick's Sporting Goods) require thermal transfer printing rather than standard thermal labels. Ask whether they have the equipment for your retailers.
- How do you handle routing guide label updates? Retailers change labeling requirements. Ask how the 3PL monitors for changes and how quickly templates are updated.
Category 4: OTIF Management
OTIF compliance depends on carrier management, geographic positioning, and process discipline. Here is what to evaluate.
Questions to Ask
- What is your average OTIF rate across retail clients? Look for 97%+. Ask for the on-time and in-full components separately—they have different root causes and different fixes.
- What OTIF target do you commit to in your SLA? A provider confident in their capability will set a specific target. Vague language like “we strive for high compliance” is a red flag.
- Where are your facilities located relative to my retailer DCs? Transit time determines on-time risk. Shorter transit = more buffer for disruptions.
- How do you maintain OTIF during seasonal peaks? Volume spikes test compliance infrastructure. Ask about surge capacity, carrier relationships, and whether compliance processes are automated or manual.
They're flexible, they move quick, and they are located in great geographies.
Category 5: Routing Guide Compliance
Routing guides cover everything from carton dimensions to carrier selection to delivery scheduling. Violations trigger chargebacks regardless of whether the product itself was correct.
Questions to Ask
- How do you track routing guide updates? Retailers update routing guides frequently. A 3PL needs a process for monitoring changes and updating configurations proactively.
- Do you have routing guide specifications on file for my retailers? Existing specs mean the 3PL has shipped to that retailer before and has working configurations.
- How do you handle carrier routing requirements? Some retailers specify which carriers can be used, how appointments must be scheduled, and what documentation must accompany shipments.
- Can you manage retailer-specific packaging compliance like Walmart's ISTA transit testing or automation-eligible case requirements? Walmart requires all items to pass ISTA testing at a certified lab before the first shipment, and defines precise dimension windows for cases that flow through automated DCs. Target requires a label approval process before your first shipment and has specific carton sealing rules (tape or glue only—no bands or staples). A 3PL that already knows these requirements will not learn them on your account.
Category 6: Technology and Visibility
Compliance is data-driven. Without real-time visibility into compliance metrics, problems are invisible until chargebacks arrive.
Questions to Ask
- What WMS do you use, and does it integrate with my ERP? Ask about integration timeline and whether they have existing connectors for your system (NetSuite, SAP, Shopify, etc.).
- Do you provide real-time compliance dashboards? SLA dashboards that show OTIF rates, ASN accuracy, chargeback trends, and order status give you visibility before problems become penalties.
- How quickly does your IT team complete new client integrations? Integration speed predicts how long you will be exposed to manual processes and compliance risk.
We chose Productiv because of the convenience of being flexible. Most kitting partners are not as flexible as Productiv.
Category 7: Track Record and References
Past performance is the strongest predictor of future compliance. Verify claims with evidence.
Questions to Ask
- Can you share your chargeback rate for existing retail clients? A provider that tracks and shares this metric is confident in their performance. One that deflects or says they don't track it is not.
- Can I speak with a current client who ships to the same retailers I do? A reference call with a client in a similar situation reveals operational reality that no sales presentation can convey.
- What happens when a compliance failure occurs? Ask about root cause analysis, corrective action timelines, and whether they have a formal continuous improvement process.
We are hitting all the SLAs over and over again. Productiv has led the charge and brought so many improvements to the table over the last two years.
The One Question That Tells You Everything
If you only have time for one question, ask this: What is your average chargeback rate, by category, for clients shipping to the same retailers I ship to?
A 3PL with genuine retail compliance expertise will answer with specific numbers, specific categories, and specific retailers. They will know their OTIF rate, their ASN accuracy rate, and which chargeback categories they have driven to near-zero. They will explain how they achieved those numbers and what their continuous improvement process looks like.
A provider that cannot answer this question with specifics does not have the infrastructure, the measurement systems, or the experience to protect your brand from compliance penalties. The chargebacks will come, and by the time you notice the pattern, you will have lost months of revenue to avoidable deductions.
If you are evaluating 3PLs and want to compare compliance capabilities, start a conversation with us. We are happy to answer every question on this checklist with the specific data behind our compliance infrastructure.
Paul Baker
CFO, Productiv
Paul co-leads Productiv alongside Doug Legan, bringing two decades of hands-on experience in 3PL operations, kitting, fulfillment, and embedded manufacturing.
Frequently Asked Questions About 3PL Compliance Evaluation
Why does retail compliance matter when choosing a 3PL?
Retail compliance determines whether your shipments to major retailers generate chargebacks or arrive cleanly. The 3PL controls the operations — ASN transmission, labeling, packing, carrier selection, delivery timing — but the brand absorbs the financial penalties when compliance fails. A 3PL without retail compliance expertise can cost a brand 2% to 5% of gross retail revenue in avoidable chargebacks. The difference between a compliance-capable 3PL and one that lacks that infrastructure often exceeds the entire cost difference between providers.
What is EDI readiness, and why does it matter?
EDI (Electronic Data Interchange) readiness means the 3PL has working connections to your retailers' EDI systems and can send and receive the required transaction sets — 850 (purchase orders), 855 (acknowledgments), 856 (ASNs), 810 (invoices), and 997 (functional acknowledgments). A 3PL with pre-established EDI connections can activate compliance for a new retailer in 2 to 4 weeks. A provider building from scratch typically needs 2 to 4 months per retailer. During that setup period, every shipment is exposed to ASN errors and compliance failures.
How many retailers should a 3PL have active EDI connections with?
There is no universal threshold, but the number and relevance of connections matters. A 3PL with active EDI connections to 40+ major retailers likely has the infrastructure, experience, and established relationships that translate into fewer setup issues. More important than the total count is whether they have active connections to your specific retailers. Ask for the list and compare it against your retail customers.
What should I ask about a 3PL's ASN accuracy?
Ask for their ASN accuracy rate across retail clients — specifically, the percentage of ASNs transmitted without errors. A rate above 99% indicates mature ASN processes. Then ask how they achieve that rate: Do they generate ASNs from actual shipment data or PO data? Is there automated pre-transmission validation? How do they handle SSCC-18 correlation between labels and ASN data? Do they test ASN configuration for every PO type a retailer issues? The specificity of their answers reveals whether they have genuine expertise or are relying on manual processes.
What questions should I ask about labeling?
Ask whether they maintain pre-built UCC-128 label templates for your specific retailers. Ask about their label generation process — is it integrated with WMS picking so that labels are generated from actual shipment data? Ask whether they have experience with specialty labeling requirements like Dick's Sporting Goods' thermal transfer labels. Ask how they handle label updates when a retailer changes specifications. A 3PL with a mature label library will answer with specific details about templates, printer types, and update processes.
How do I evaluate a 3PL's OTIF track record?
Ask for their average OTIF rate across retail clients, broken down by on-time and in-full components. Then ask what OTIF rate they commit to in their SLA. A provider confident in their compliance capability will offer an SLA with specific targets — typically 97% or above. Also ask how they manage OTIF when volume spikes seasonally — do they have the capacity and carrier relationships to maintain compliance during peak periods? Geographic proximity to retailer DCs is another factor: transit time directly affects on-time performance.
What should I look for in WMS and technology capabilities?
The WMS (Warehouse Management System) is the operational backbone. Ask which WMS they use, whether it integrates with your ERP, and how data flows between systems. Specifically ask how the WMS connects to their EDI system for ASN generation — the tighter the integration, the fewer data gaps that cause compliance errors. Ask about real-time inventory visibility, SLA dashboards, and whether you will have access to compliance metrics. Integration speed matters too: ask how long their IT setup typically takes for a new client.
How important are geographic locations for compliance?
Very important. Geographic positioning directly affects transit time to retailer DCs, which determines OTIF risk. A 3PL with facilities in strategic locations — near major retail DC clusters — provides shorter transit times, lower shipping costs, and more buffer for the unexpected. Multiple facilities also provide redundancy: if one location has capacity constraints or disruptions, shipments can route through another. Ask about their facility locations and how they map to your retailer DC destinations.
What contract terms should I watch for?
Watch for long minimum commitments that lock you in before you can evaluate compliance performance. Ask about exit terms and transition support. Look at how the pricing model aligns incentives — fixed unit cost pricing means the 3PL earns more by working more efficiently, which aligns their incentive with your cost reduction goals. Ask whether compliance monitoring and reporting are included in the base service or charged as add-ons. And critically, ask who is financially responsible for chargebacks caused by 3PL operational failures.
What is the biggest red flag when evaluating a 3PL for retail compliance?
The biggest red flag is vague answers. A 3PL with genuine retail compliance experience will answer with specific retailers, specific rates, specific timelines, and specific processes. A provider that answers with generalities — 'We have strong compliance capabilities' or 'We work with many retailers' — is likely learning on your account. Ask for the names of retailers they currently ship to, their actual OTIF rate, their ASN accuracy rate, and their average onboarding timeline. If they cannot provide specifics, that tells you everything.
Ready to Compare? We'll Answer Every Question on This List.
We maintain EDI connections, label libraries, and ASN configurations for 60+ retailers. Ask us about our chargeback rates, OTIF performance, and integration timelines—we have the data.
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