What is a 3PL, and when should you use one?

A 3PL stores your product, picks and packs each order, and ships it. You keep the customer.

3PL stands for third-party logistics. You send your inventory to their warehouse. Your store sends them each order, usually through an integration. They pick the items, pack them, ship them, and send the tracking back to your store. Most also handle returns.

You still own the product, the customer, the brand and the store. What you hand off is the warehouse, the packing table and the shipping labels, and the people and space it takes to run them.

When fulfillment is costing you more than it would cost to hand it off: in time, space, errors or growth.

• You’re packing orders yourself.

  And it’s taking time away from selling and running the business.

• You’re running out of space.

  And the next step is a bigger lease or a second building.

• Shipping errors are costing you customers.

  Wrong items, damaged boxes, late orders.

• You want to sell in more places.

  And you can’t ship fast enough from one location.

• Doing it yourself costs more.

  Once you add up staff, space, materials and mistakes.

In-house keeps control. A 3PL can keep overhead lower. Both are good answers for the right business.

• You control

  Keep it in-houseEvery detail: packaging, inserts, timing, quality checks.

  Use a 3PLThe standard you set and the 3PL you choose.

• You pay for

  Keep it in-houseSpace, staff, equipment and materials, whether orders are up or down.

  Use a 3PLFees per order and per unit stored, which move with volume.

• Works best when

  Keep it in-housePackaging is part of the brand, orders need special handling, or you have the space.

  Use a 3PLSpace is short, a lease is limiting, or volume swings.

• Watch out for

  Keep it in-houseFulfillment pulling the owner and team away from growth.

  Use a 3PLLosing sight of quality and timing once orders leave your building.

To weigh it properly, put both options into a 13-week cash flow forecast. A building is a fixed cost every month. 3PL fees rise and fall with orders. Which one your cash can carry is often the deciding factor.

Most charge for several things. Ask for every fee type before you compare.

• Receiving

  What it coversUnloading and checking in your inventory.

  What to askIs it per pallet, per carton or per hour? What if the shipment arrives wrong?

• Storage

  What it coversSpace your product takes up in the warehouse.

  What to askPer pallet, bin or cubic foot, and is it charged monthly or more often?

• Pick and pack

  What it coversPicking each order and packing it.

  What to askPer order, per item, or both? What does custom packaging add?

• Shipping

  What it coversThe postage or carrier charge.

  What to askDo you pass through their rates, or a marked-up rate?

• Minimums and extras

  What it coversMonthly minimums, setup, returns, special projects.

  What to askWhat’s the monthly minimum, and what costs extra?

The cheapest rate is not always the lowest total cost. Run your last three months of orders through each 3PL’s fees and compare the totals.

Volume, integration, receiving, errors, and who you call when it breaks.

1. 01

   Can they handle your volume?

   Today, at your busiest week, and where you expect to be in a year.

2. 02

   Do they integrate with your store or system?

   Orders, inventory counts and tracking should flow without anyone retyping them.

3. 03

   What is the receiving process?

   How fast new stock is available to sell, and what happens when a shipment is short or damaged.

4. 04

   What happens when something is wrong?

   Wrong item, damaged order, lost package: who pays, and how fast it’s fixed.

5. 05

   Who do you call when it breaks?

   A named person, not a ticket queue, and how fast they answer.

Ask for references from a business your size, and ask them the last question first.

Write the standard down, move in stages, and test before customers feel it.

1. 01

   Write down your packing standard.

   How each order is packed, what goes in the box, and how fast it ships, on a one-page SOP. The 3PL can only match a standard they can read.

2. 02

   Count your inventory.

   Know exactly what you’re sending, so you can check what they receive.

3. 03

   Connect and test.

   Run test orders through the integration before real orders flow.

4. 04

   Move in stages.

   Start with one product line or one channel, and keep shipping the rest yourself until it holds.

5. 05

   Check the first weeks closely.

   Order accuracy, shipping time and customer complaints, every week, until the numbers settle.

It’s a handoff like any other: write it down, name the owner, check it, then step out. Our guide on how to delegate covers the steps. the free SOP template gives you the one-page format, and it works just as well if you keep fulfillment in-house.

Add up what fulfillment costs you now: time, space, materials and errors. Then ask two 3PLs for every fee type, and compare the total, not the rate.

If you want help setting it up, or setting up the store back end it connects to, that’s our Shopify & 3PL operations work: fulfillment and inventory that hold up when volume rises.

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