The global 3PL market is projected to reach $1.59 trillion by 2028, reflecting the increasing demand for outsourced logistics solutions.
For eCommerce brands, 3PLs serve as strategic partners, allowing businesses to focus on marketing, product development, and customer engagement while logistics experts handle fulfillment and shipping. Whether you’re outsourcing fulfillment for the first time or considering multiple 3PL providers to expand, this guide will help you understand everything you need to know about third-party logistics and selecting the right 3PL partner.
What is 3PL? Understanding the Basics
Definition of 3PL
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- Warehousing – Storing inventory in strategically located distribution centers.
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- Order Fulfillment – Picking, packing, and shipping orders to customers.
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- Inventory Management – Ensuring stock availability and preventing overstocking.
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- Reverse Logistics – Handling product returns and exchanges efficiently.
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- International Shipping – Managing customs, tariffs, and cross-border logistics.
Types of 3PL Providers
There are several types of 3PL providers, each offering specialized services:
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- Warehouse-Based 3PL – Focuses on storage, order fulfillment, and inventory control.
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- Transportation-Based 3PL – Manages freight services, shipping, and last-mile delivery.
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- Freight Forwarders – Specialize in cross-border shipping, customs clearance, and trade compliance.
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- Technology-Enabled 3PL – Uses AI, automation, and cloud-based platforms for real-time tracking and efficiency.
3PL vs. 4PL vs. Freight Forwarding
Understanding the differences between logistics providers helps businesses choose the right solution.
3PL Myths and Misconceptions
“When you hand things over to a 3PL, you lose control.”
Some businesses worry that outsourcing fulfillment means giving up control, but the reality is quite the opposite. A good 3PL provides real-time tracking, inventory visibility, and detailed analytics, giving you a clearer picture of your supply chain than ever before.
Rather than getting bogged down in shipping and logistics, you can focus on growing your business while staying fully informed. With expert handling, fewer errors, and streamlined operations, a 3PL actually helps you stay in control—without the daily logistics hassle.
“3PLs are only for enterprise-sized businesses.”
On the contrary! Whether you are a small business, or a growing brand, a 3PL can save you time, reduce costs, and scale fulfillment with your business needs. Many 3PLs offer flexible pricing models that make outsourced logistics affordable at any stage of business growth.
“3PLs have too many hidden fees.”
Yes, pricing can be complex, but a reputable 3PL is transparent about costs. There are fees for inbound shipping, storage, order fulfillment, outbound shipping, returns, and custom packaging, but these are not hidden. Before signing a contract, always ask for a full breakdown of costs and clarify service-level agreements (SLAs).
Why Do Companies Choose to Work with a 3PL Provider?
Businesses turn to third-party logistics providers when they become overwhelmed by order growth. 3PLs are not just for enterprise-level brands; they are designed to support businesses of all sizes that have plans to scale.
Consider this scenario:
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- You launch a flash sale or a product goes viral.
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- Your in-house fulfillment team struggles to handle the surge in orders.
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- Delays and mistakes occur, leading to frustrated customers.
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- In today’s competitive market, 62% of customers expect delivery within three days.
If you can’t meet these high expectations, your brand’s reputation could suffer. A 3PL ensures that fast, accurate, and scalable fulfillment is always in place—whether during peak seasons, viral product launches, or sustained business growth.
How do you know that you need a 3PL?
To know whether a third-party logistics partnership is the right decision for your brand, you need to review your current fulfillment strategy to understand whether outsourcing fulfillment will help you to achieve better cost savings and efficiency across your supply chain. This includes:
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- Your current fulfillment strategy (e.g. an in-house logistics process versus Amazon FBA).
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- Your current business growth and plans to scale operations.
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- Fulfillment services required e.g. kitting, custom packaging.
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- The type of products sold.
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- Your active SKU count.
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- Your inventory management strategy e.g. distributed inventory across multiple fulfillment centers vs. centralized storage space.
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- Your sales channels (e.g. Direct to consumer, retail/wholesale, Amazon).
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- Your order volume per sales channel.
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- Shipping logistics e.g. service levels, shipping costs, and delivery timeframes.
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- Commitment to making a move and continuous improvements.
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- What 3PL would be the best fit (local 3PL or national third-party logistics. provider with multiple distribution centers).
Not all of these factors will apply to every business, but it’s important to review them carefully to understand your needs and conduct your 3PL search accordingly.
How 3PLs Work: A Step-by-Step Process
Most 3PLs follow a similar fulfillment process: inventory arrives at a warehouse, where it’s sorted, verified, and trackedusing a Warehouse Management System (WMS). When an order is placed, it’s picked, packed, and shipped using a Transportation Management System (TMS) to find the most cost-effective shipping method. Returns are inspected, restocked when possible, and processed efficiently to keep operations running smoothly.
The real difference comes down to precision, efficiency, and thoughtful handling—that InterFulfillment exemplifies. Every item is carefully received and verified to ensure inventory accuracy from the start. Orders are fulfilled with 100% accuracy, thanks to an intelligent picking system and SmartPack technology that can gurantee 100% accuracy. Returns are handled seamlessly and efficiently, ensuring a smooth experience for both businesses and customers. To keep shipping costs low without compromising speed, automated rate shopping selects the best available option for every order. By combining technology, expertise, and attention to detail, InterFulfillment delivers a fulfillment process that is both reliable and cost-effective, helping businesses scale with confidence.
Advantages and Considerations of Using a 3PL
Key Benefits of Partnering with a 3PL
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Effortless Expansion into New Markets:
- Enter international markets without the need for local warehouses or distribution centers.
- Leverage a 3PL’s established infrastructure to minimize risk and streamline global fulfillment.
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Optimize Cash Flow by Reducing Warehouse Costs:
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Avoid large capital investments in warehouse leases and storage facilities.
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Free up financial resources to invest in marketing, product development, and business growth.
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Lower Operational Expenses:
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Benefit from bulk shipping discounts that 3PLs negotiate with carriers.
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Eliminate the need to hire, train, and manage in-house warehouse teams.
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Leverage automated fulfillment solutions to improve efficiency and reduce errors.
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Increased Resilience Against Supply Chain Disruptions:
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Utilize multiple fulfillment centers to prevent shipping delays caused by regional disruptions.
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Gain access to a diverse carrier network, ensuring more flexibility and reliability in shipping.
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Considerations When Working with a 3PL
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Initial Setup and Integration:
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Onboarding requires planning, including system integration, SKU setup, and warehouse coordination.
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Some providers may have minimum volume requirements, making it essential to align with a 3PL that fits your growth stage.
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Operational Adaptability:
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3PLs operate on set schedules, which may differ from in-house fulfillment workflows.
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Businesses may need to adjust order cutoff times or packaging preferences to align with 3PL processes.
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While a 3PL can significantly enhance efficiency and scalability, selecting the right provider ensures a seamless fit with your business needs and goals.
How to Choose the Right 3PL Partner
Selecting the right third-party logistics (3PL) provider is a crucial decision that can significantly impact business growth, operational efficiency, and customer satisfaction. With so many options available, it’s essential to carefully evaluate your potential 3PL partner to ensure they align with your business goals.
Here’s what to consider when selecting the best 3PL provider for your company.
- Industry Experience & Reputation: A 3PL with experience in your industry will understand the specific challenges, compliance requirements, and fulfillment needs of your business.
- Technology & Integration Capabilities: Technology is at the heart of efficient logistics operations. A tech-driven 3PL ensures smooth order processing, accurate inventory management, and real-time tracking for you and your customers.
- Warehouse Locations & Geographic Reach: A 3PL with strategic warehouse locations helps reduce shipping costs, transit times, and customs complexities.
- Transparent Pricing & Flexible Contracts: Before signing any agreement, ensure clarity on pricing and contract terms. Look for:
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Transparent breakdown of costs (storage fees, pick-and-pack charges, shipping rates, returns handling, etc.)
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Flexible, scalable pricing models (pay only for the services you need)
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Month-to-month agreements instead of long-term locked-in contracts
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🚩 Red Flags to Watch Out For:
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Lack of pricing transparency or hidden fees.
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Rigid long-term contracts with high termination penalties.
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Slow fulfillment speeds or frequent shipping delays.
Evaluating a 3PL for Your Business Needs
When considering a third-party logistics provider, here are some essential questions to ask to ensure they are the right fit for your business:
1. Are You Equipped to Handle the Needs of My Industry?
Each industry has unique logistics requirements. A 3PL specializing in your industry will have experience handling similar products, compliance regulations, and inventory needs.
2. Do You Specialize in the Products I Sell?
Not all 3PLs are equipped to store and ship every type of product. Consider:
- SKU count – Do they have experience handling products with high SKU variability?
- Product dimensions – Can they efficiently store bulky, fragile, or perishable goods?
- Regulatory compliance – Are they familiar with the specific legal requirements for your industry (e.g., cosmetics, electronics, or supplements)?
3. Do You Work with the Shipping Carriers I Use?
A 3PL should have carrier flexibility to ensure the best shipping rates and service levels. If they only work with a limited number of carriers, you may lose cost savings opportunities or flexibility in shipping options.
4. Are You Able to Handle My Company’s Growth?
Scalability is crucial for long-term success. Ask:
- Can they handle seasonal fluctuations and spikes in demand?
- Do they have sufficient warehouse space and labor capacity?
- Are they investing in automation and technology to support long-term growth?
5. Where Are Your Warehouses Located?
The closer the fulfillment center is to your customers, the faster and cheaper shipping will be. A strategic warehouse network can significantly reduce delivery times and costs.
6. Do You Provide Kitting and Value-Added Services?
If your business requires custom packaging, bundling, or promotional inserts, ensure the 3PL offers value-added services tailored to your needs.
7. What Is Your Pricing Model?
Pricing structures vary by provider. Look for:
- Transparent pricing (no hidden fees).
- Scalable pricing options (pay only for what you use).
- Bundled services vs. à la carte options.
8. What Kind of Contract Will I Need to Sign?
Some 3PLs require long-term contracts, while others offer month-to-month agreements. Ensure flexibility in case your business needs change.
9. What Is Your Shrinkage Allowance?
Every warehouse has a shrinkage policy that covers lost or damaged goods. Clarify who is responsible for missing inventory and the reimbursement policy.
10. Do You Have a Minimum Monthly Order Volume?
Some 3PLs have order minimums, which may not suit small businesses or startups.
11. Is Your System Flexible Enough to Handle Seasonal Spikes?
Ensure the 3PL can scale fulfillment operations during peak shopping periods, such as Black Friday, holiday seasons, or product launches.
12. Are You Able to Process Same-Day Shipping Orders?
If your business offers same-day shipping, ensure the 3PL has cutoff times that align with your needs.
13. How Are Returns Processed?
A smooth reverse logistics process is key to customer satisfaction. Ensure the 3PL has automated return processing and quality control checks.
14. How Do You Maintain Accuracy?
Order accuracy impacts brand reputation. Look for:
- Barcode scanning and accurate picking systems.
- Quality control procedures.
- Order accuracy SLAs.
15. How Are Errors Corrected?
Mistakes happen. A reliable 3PL should have a clear resolution process for incorrect orders, lost shipments, or damaged items.
16. What Is the Security of Your Warehouses and Data?
A secure warehouse protects inventory from theft or damage. Ask about:
- Surveillance systems.
- Access controls.
- Cybersecurity measures for customer data.
17. Which Software and Marketplace Integrations Do You Work With?
A seamless integration between your 3PL and Shopify, Amazon, WooCommerce, or ERP systems ensures efficient order processing and inventory updates.
18. How Do You Track Your Inventory? Do You Provide Real-Time Inventory Data?
Real-time tracking prevents stockouts and overstocking. A good 3PL provides:
- Automated inventory updates.
- Real-time dashboards.
FAQs: Common 3PL Questions Answered
What is a 3PL, and how does it work?
A third-party logistics (3PL) provider manages warehousing, fulfillment, inventory management, and shipping on behalf of businesses. They receive inventory, store it, process orders, pack and ship products, and handle returns, streamlining the entire supply chain process.
How much does a 3PL cost?
Costs vary based on storage, order volume, shipping requirements, and additional services like custom packaging. Typical costs include:
- Storage fees (per pallet, bin, or square footage).
- Pick-and-pack fees (per order or item).
- Shipping costs (negotiated carrier rates).
- Inbound receiving fees.
- Returns processing fees.
Most businesses spend 10-20% of their order value on logistics, but this can vary depending on order volume and complexity.
When should I switch to a 3PL?
- You’re fulfilling more than 10-20 orders per day.
- Warehousing and fulfillment are taking too much time away from core business activities.
- You want to offer faster shipping but don’t have the infrastructure.
- Shipping costs are cutting into profit margins.
- You plan to expand into new markets or international territories.
Should I use multiple 3PLs?
Ideally, working with one reliable 3PL that has the capacity and flexibility to grow with your business is the best approach. A well-optimized 3PL can streamline operations, reduce complexities, and offer scalable solutions without the need for multiple providers. While some businesses expand to multiple 3PLs for regional fulfillment, this adds logistical challenges in inventory coordination and integration. Before considering multiple partners, it’s essential to choose a 3PL that can adapt and scale with your needs. For more insights, explore InterFulfillment’s blog on building a long-term fulfillment strategy.
Should I choose an asset-based or non-asset-based 3PL?
- Asset-based 3PLs own their warehouses, trucks, and logistics infrastructure, offering greater control and reliability.
- Non-asset-based 3PLs partner with multiple logistics providers, offering more flexibility and scalability.
The best choice depends on your needs—asset-based 3PLs are ideal for consistent volume, while non-asset-based 3PLs work well for businesses that need flexibility in fulfillment locations and carrier options.
What happens if there are errors in fulfillment?
Mistakes happen, but a reliable 3PL has strict quality control to minimize them. When errors occur, most 3PLs:
- Investigate the issue and provide corrective action.
- Offer refunds or credits for mistakes.
- Have quality assurance processes to reduce future errors.
How do I choose the right 3PL?
Look for a 3PL that aligns with your business goals, considering factors like:
- Industry expertise (do they handle similar products?).
- Warehouse locations (are they near your customers?).
- Technology integrations (do they work with your eCommerce platform?).
- Shipping speed & carrier partnerships.
- Pricing transparency.
What are the benefits of using a 3PL?
- Lower costs (reduced warehousing, labor, and shipping expenses).
- Scalability (adjust capacity based on demand).
- Faster shipping (leveraging multiple fulfillment centers).
- Better customer experience (more accurate and timely order fulfillment).
- Less operational complexity (free up time to focus on business growth).
What are the downsides of using a 3PL?
- Upfront setup costs (integrating your business with a 3PL system).
- Less direct control (you’re trusting another company with your logistics).
- Potential minimum order volume requirements.
- Dependence on the 3PL’s operational efficiency.
Do I need a long-term contract with a 3PL?
Not necessarily. Always clarify the terms before signing a contract.
How do 3PLs handle returns?
A 3PL’s reverse logistics process includes:
- Receiving returned items from customers.
- Inspecting products for damage or resale eligibility.
- Restocking or disposing of items based on return policies.
How do 3PLs track inventory?
Most 3PLs use a Warehouse Management System (WMS) that offers:
- Real-time inventory tracking (reducing stockouts and overstocking).
- Restocking alerts.
- Multi-location inventory visibility.
Do 3PLs integrate with eCommerce platforms?
Yes! The best 3PLs integrate seamlessly with:
- Shopify, WooCommerce, Amazon, eBay, Magento, and other marketplaces.
- ERP and order management systems.
- Carrier APIs for automated shipping label generation.
How secure are 3PL warehouses?
A good 3PL invests in security measures like:
- 24/7 surveillance cameras.
- Secure access control (limiting warehouse access to authorized personnel).
- Inventory audits and tracking systems.
How does a 3PL affect customer satisfaction?
Faster fulfillment = happier customers. With a 3PL, businesses can:
- Offer two-day or next-day shipping.
- Ensure accurate and timely order fulfillment.
- Improve the returns and exchange process.
- Reduce delivery issues through real-time tracking and proactive customer support.
How do I transition from in-house fulfillment to a 3PL?
- Evaluate your needs – Determine order volume, storage space, and service requirements.
- Select a 3PL – Choose one that aligns with your growth goals and integrates with your platforms.
- Plan inventory transfer – Ship products to the 3PL’s fulfillment center.
- Integrate technology – Connect your eCommerce store, marketplaces, and order management system.
- Run test orders – Ensure everything flows smoothly before fully transitioning.
The Value of an Industry-Specific Fulfillment Partner
Not all products are stored, packed, and shipped the same way. A fulfillment provider with expertise in your industry ensures that every order is processed with efficiency, accuracy, and compliance—whether it’s cosmetic products that require temperature-controlled storage, fragile electronics that need secure packaging, or pet supplies with varying expiration dates.
Businesses that align with a specialized 3PL provider gain access to:
- Optimized storage conditions for different product categories.
- Reduced shipping times by using a network of fulfillment centers close to customers.
- Scalability to handle seasonal demand, flash sales, and high-growth product launches.
- Customized solutions for businesses that require subscription box fulfillment, custom branding, or specialized handling.
At InterFulfillment, we specialize in tailored fulfillment solutions designed to meet the specific needs of diverse industries. Whether you’re shipping electronics, pet supplies, cosmetics, or Kickstarter projects, our experience, advanced logistics technology, and scalable fulfillment network help businesses optimize their operations and focus on growth.
Industries We Specialize In:
Baby Items & Parenting Essentials
- Safe handling and secure packaging for delicate products such as diapers, bottles, and pacifiers.
- Storage solutions for organic and eco-friendly baby products requiring special handling.
- Efficient fulfillment for large, bulky items like strollers, carriers, and safety seats.
Pet Supplies & Accessories
- Temperature-controlled storage for pet food, treats, and supplements.
- Custom packaging and subscription box fulfillment for pet owners.
- Reliable shipping for pet toys, leashes, grooming supplies, and bedding.
Electronics & Gaming Accessories
- Anti-static storage and careful handling for fragile tech items like game controllers, headsets, and VR accessories.
- Optimized fulfillment for fast-moving consumer tech, including wireless headphones, smart gadgets, and home automation devices.
- Specialized packaging solutions to prevent damage during transit.
Skin Care & Cosmetics
- Temperature-controlled fulfillment for organic skincare, serums, and beauty products.
- Custom kitting and branding options for makeup, wellness items, and personal care products.
- Strict compliance with beauty and cosmetic storage regulations to ensure product integrity.
Sports & Fitness Products
- Scalable fulfillment for gym equipment, resistance bands, and fitness accessories.
- Shipping solutions for heavy or oversized items like weights and home workout gear.
- Storage and fulfillment for supplements and nutrition products with proper handling protocols.
Home & Lifestyle Products
- Safe and secure fulfillment for kitchenware, home décor, and smart home gadgets.
- Sustainable packaging and storage solutions for eco-friendly home products.
- Customized shipping strategies for furniture, bedding, and household essentials.
Crowdfunding Projects (Kickstarter, Indiegogo, and more)
- Scalable logistics for new product launches and startups managing large pre-orders.
- Support for high-volume, limited-edition releases with flexible storage and fulfillment options.
- Worldwide shipping solutions to ensure backers receive their products on time.
Key Takeaways
- 3PLs help businesses save costs, scale efficiently, and focus on growth.
- Prioritize providers with proven tech, transparency, and industry fit.
- Treat your 3PL as a strategic partner, not just a vendor.
Looking for a fulfillment partner that understands your industry? Contact InterFulfillment today to optimize your logistics strategy!
