If you sell physical products online, someone has to put them in boxes. At first that someone is you, at a kitchen table. Then it's a spare room, then a rented unit with a part-timer, and eventually a problem that competes with everything else you should be doing. A 3PL is the business you hand that problem to. Below is what that involves, in plain terms.
A 3PL (third-party logistics provider) is a company that stores your inventory and ships your orders for you. For an ecommerce brand, that means receiving your stock, putting it on shelves, picking and packing each order as it comes in from your store, handing it to a carrier, sending tracking back to your customer, and processing returns. You keep ownership of the inventory and the customer relationship. The 3PL runs the building, the people and the systems, and bills you per activity.
Follow One Order Through a 3PL
The easiest way to understand a 3PL is to follow a single order from the moment your supplier ships to the moment your customer opens the box.
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Your inventory arrives
Your manufacturer ships cartons or pallets to the 3PL. You (or they) send an advance shipping notice listing what's coming, so the warehouse knows what to expect. Staff count the delivery against that notice, flag any shortages or damage, and record the stock in the warehouse management system (WMS).
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It gets a home
Each SKU is assigned a location: a shelf bin for small, fast-moving items, a pallet position for bulk. Good 3PLs place your best sellers where pickers reach them fastest.
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A customer checks out
Your store (Shopify, Amazon, Walmart, wherever) passes the order to the 3PL's system through an integration. No emails, no spreadsheets. The order lands in a queue within minutes.
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Pick, pack, verify
A picker pulls the items, usually guided by a handheld scanner that confirms each barcode. A packer chooses the box, adds your inserts or branded packaging, and seals it. The better operations scan or weigh again at pack to catch mistakes before the box closes.
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Label and hand-off
Shipping software compares carrier rates for that package and prints a label. Carriers collect from the dock at set times each day. Orders that are packed before that pickup (the "cutoff") leave the same day.
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Tracking flows back
The tracking number is written back to your store automatically, which triggers your shipping-confirmation email. Your inventory count drops by what shipped.
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Returns come home
When a customer sends something back, it goes to the 3PL. Staff inspect it, restock it if it's sellable or set it aside if it isn't, and report back so you can issue the refund or exchange.
What Moves to the 3PL, and What Stays With You
A 3PL takes over the physical work. The commercial decisions stay with you. Be clear about where that line sits before you sign, because most friction between brands and their 3PLs starts with each side assuming the other owned a task.
The shared row is where relationships succeed or fail. A 3PL can't prepare for a launch it hears about the morning it goes live, and you can't hold a warehouse to an accuracy standard if the barcodes on your products don't match your listings.
3PL vs. FBA vs. Dropshipping vs. 4PL
These models get lumped together, but they answer different questions: who holds the inventory, who ships it, and which sales channels it can serve.
| Model | Who holds inventory | Channels served | Best fit |
|---|---|---|---|
| 3PL | A contracted warehouse, on your behalf | Any: your site, marketplaces, wholesale | Brands selling on more than one channel, or with custom packaging |
| Amazon FBA | Amazon's fulfillment centers | Amazon (other channels at extra cost, with Amazon branding) | Amazon-first sellers who want Prime eligibility |
| Dropshipping | Your supplier | Whatever the supplier supports | Testing products without buying stock; little control over packaging or speed |
| 4PL | Several 3PLs, coordinated by the 4PL | Any | Large brands needing one party to manage multiple warehouses and freight |
| In-house | You | Any | Low volume, or products that need specialist handling you do best |
Plenty of brands use more than one. A common setup is FBA for Amazon orders and a 3PL for everything else, with the 3PL also prepping and shipping replenishment into FBA. If you're weighing that split, our FBA vs 3PL decision guide walks through it.
Not All 3PLs Are Built for Ecommerce
"3PL" covers a wide range of businesses. Asking which kind you're talking to saves a lot of time.
Built around single orders going to individual customers. Shelving instead of only pallet racks, store integrations, daily parcel pickups. This is where DTC brands belong.
Moves full cases and pallets to stores and distributors. Strong on freight and retailer compliance, often slow and expensive at picking one unit at a time.
Temperature control, hazardous materials, oversized goods, high-value items. Worth the premium if your product needs it. Otherwise you're paying for capability you won't use.
Split your inventory across several warehouses to shorten delivery times. Useful at high volume; at lower volume, splitting stock often causes more stockouts than it saves in postage.
How a 3PL Charges You
Almost every 3PL bills on the same building blocks, even if the names and bundling differ. You pay when inventory arrives, while it sits, when it ships, and when it comes back.
- Receiving: per pallet, per carton, per unit or per hour of labor.
- Storage: per pallet, bin, shelf or cubic foot, usually monthly.
- Pick and pack: a fee per order, often with a smaller fee for each additional item.
- Packaging: boxes, mailers and fill, either included or itemized.
- Shipping: the carrier's charge, passed through at cost or with a markup.
- Returns: per return processed.
- Account fees: monthly minimums, software fees, or onboarding charges.
When you compare providers, look past the individual rates to the total bill divided by orders shipped. We break down each line and what's typical at different volumes in How Much Does a 3PL Cost?, and you can run your own numbers in the 3PL cost calculator.
How to Tell If You're Ready
Order volume is the most common yardstick, but it's a weak one on its own. A brand shipping 200 heavy, fragile orders a month may need help sooner than one shipping 600 lip balms. These signals matter more:
- You're spending hours a day packing instead of selling, sourcing or hiring.
- You're out of room, and the next step is a lease you'd be signing for years.
- Mistakes are creeping up: wrong items, missed orders, oversells because counts don't match the shelf.
- You're adding a channel, like Amazon or wholesale, and managing stock for both is getting messy.
- A spike is coming (a launch, a creator partnership, Q4) that you can't staff for.
And the signs you're not ready: your products change every week, you're still testing whether anyone wants them, or you ship so few orders that a 3PL's monthly minimum would cost more than your time is worth. Our list of signs you've outgrown in-house fulfillment goes deeper on each.
What the First Month Looks Like
Moving to a 3PL takes a few weeks of setup. A typical onboarding goes roughly like this:
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Connect your store
The 3PL links to your storefront and marketplaces so orders flow in and tracking flows back. Test it with a handful of real orders before any volume depends on it.
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Load your product data
Every SKU needs a barcode, dimensions and weight. Bad data here causes most early problems: wrong box sizes, wrong postage, items that can't be scanned.
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Send your first inbound
Label cartons clearly, send a shipping notice, and expect the first receipt to take longer than later ones while locations are set up.
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Overlap, then cut over
Keep some stock where it was for a week or two so you can fulfill if something goes wrong. Once the 3PL's counts match and orders are shipping cleanly, route everything to them.
Before any of that, you'll need to pick the right partner. Our 3PL vetting guide covers the questions to ask and how to compare quotes.
Frequently Asked Questions
3PL stands for third-party logistics. A 3PL is an outside company that handles warehousing and shipping for another business. In ecommerce, that means storing a brand's inventory and picking, packing and shipping its customer orders.
A 3PL is the company; a fulfillment center is one of the buildings it runs, where orders are picked, packed and shipped. In everyday ecommerce conversation people use the two terms almost interchangeably.
Yes. The 3PL stores your inventory on your behalf, but you keep ownership. Your contract should state that clearly, along with how the 3PL is liable if stock is lost or damaged while in its care.
FBA is Amazon's own fulfillment service, designed mainly for Amazon orders. A 3PL is independent and can fulfill orders from any channel, including your own website, several marketplaces and wholesale, while using your packaging. Many brands use both.
There is no fixed number. Many brands start looking in the low hundreds of orders per month, but time spent packing, space, error rates, product size and upcoming spikes are better signals than volume alone. If a 3PL's monthly minimum would exceed what fulfillment costs you today, it's probably too early.
Some do, but most ecommerce 3PLs handle the physical side only: shipping, returns and inventory. You typically keep customer conversations, while the 3PL gives you tracking, order status and return information to answer them quickly.
For a straightforward catalog, a few weeks from signing to shipping is common. The main variables are how quickly your store integration is tested, how clean your product data is, and when your first inbound shipment arrives.
Many can. A 3PL that offers FBA prep can label, bag and box your inventory to Amazon's requirements and ship replenishment into Amazon's fulfillment centers, while fulfilling your other channels from the same stock.
Wondering whether a 3PL makes sense yet?
Tell us your monthly orders, SKU count and where you sell. We'll give you a straight answer on whether outsourcing fulfillment makes sense now, later, or not at all.