A 3PL, or third-party logistics provider, is a company that stores your inventory and fulfils your orders on your behalf. You stop picking and packing and start managing a relationship with an organisation doing work you cannot watch. The responsibility for the customer's experience does not transfer with the operation.
In more detail
The pitch is that fulfilment stops being your problem. What actually changes is the shape of the problem. In-house fulfilment fails as a capacity problem, visibly, and fixing it means somebody working late. A 3PL fails as a visibility problem, invisibly, and fixing it means an email and a wait.
Neither is worse in the abstract. Knowing which one you can tolerate predicts satisfaction better than the per-order cost does, which is why the spreadsheet comparison so often produces a decision people regret.
The pricing is not one number. Receiving, storage, pick and pack, shipping, special handling, returns processing and monthly minimums all appear, and the surprises are usually in storage on slow-moving stock and in returns.
What you are actually charged for
| Cost line | Charged by | Commonly underestimated |
|---|---|---|
| Receiving | Pallet, carton or unit | Yes |
| Storage | Bin or pallet per month | Yes, badly, on slow lines |
| Pick and pack | Order plus extra items | No |
| Shipping | Their negotiated rates | No |
| Returns processing | Per return | Yes |
| Monthly minimum | Flat | Yes, in quiet months |
Where people get it wrong
- Comparing on pick-and-pack fee alone. Storage and returns processing are where quotes diverge from reality.
- Getting quoted on an average month. Ask for a quote modelled on your real last three months, because you pay for the shape rather than the mean.
- Not deciding who watches. Fulfilment stops being something people see and becomes something people read about. If nobody is given that job, problems surface only when a customer reports them.
- Underestimating the return journey. Bringing fulfilment back in-house is harder than sending it out, because you are rebuilding space, equipment, shipping rates and people who know your products.
Common questions
What does a 3PL actually cost?
Typically receiving per carton or pallet, storage per bin or pallet per month, pick and pack per order plus per extra item, shipping at their rates, special handling, returns processing, and often a monthly minimum.
When should a store move to a 3PL?
Less about order volume than about whether fulfilment has become the constraint on growth, whether your volume is highly seasonal, and whether the people packing should be doing something else.
What changes for the team?
The work shifts from doing fulfilment to monitoring it, which is a genuinely different skill. Someone has to be given the job of watching, explicitly.
Can I use a 3PL for only part of my catalogue?
Yes, and many stores do: bulk lines outsourced with fragile or personalised items kept in-house. It costs more per order and buys a fallback, but the rule for which orders go where has to be unambiguous.