The short answer
A 3PL, short for third-party logistics provider, is a company that keeps your products in its warehouse and picks, packs and ships each order for you. Of the 20 3PLs we track, 2 publish a full rate card and 5 publish a pick and pack fee. The rest price by quote.
What a 3PL does
The Association for Supply Chain Management describes the usual setup in six steps (ASCM). In plain terms:
- Your products are made.
- You ship them to the 3PL’s warehouse.
- The 3PL counts them in and puts them on shelves.
- Your store sends each new order to the 3PL automatically.
- The 3PL picks the items and packs the box.
- A carrier delivers it to your customer.
Many also take in returns and assemble bundles or kits.
What a 3PL bills you for
A 3PL invoice is a stack of small fees. Here is each one, and how many 3PLs show what they charge for it:
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Pick and pack
A fee for each order: taking your items off the shelf, packing them and labeling the box.
5 of 20 3PLs we track publish an amount. See published rates
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Extra items
A smaller fee for each item after the first in the same order. Some 3PLs charge it on every item.
3 of 20 3PLs we track publish an amount. See published rates
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Storage
Monthly rent for the space your stock takes up, by bin, shelf, pallet or volume.
7 of 20 3PLs we track publish an amount. Price it
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Receiving
Unloading and counting each delivery of your stock, by the hour, carton, pallet or unit.
8 of 20 3PLs we track publish an amount. Price it
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Monthly minimum or account fee
A floor you pay even in a slow month: a minimum bill, an account fee or a tech fee.
8 of 20 3PLs we track publish an amount. Price it
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Setup or onboarding
A one-time fee to open the account and set up your products.
5 of 20 3PLs we track publish an amount. Price it
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Packaging
Boxes, mailers and fill. Often included in pick and pack, sometimes billed per box.
4 of 20 3PLs we track publish an amount. See published rates
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Returns
Opening, checking and restocking what customers send back.
4 of 20 3PLs we track publish an amount. Price it
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Software and store connection
Connecting your store to the 3PL's system. Several include it free.
6 of 20 3PLs we track publish an amount. Price it
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Kitting
Assembling bundles or gift sets before they ship.
2 of 20 3PLs we track publish an amount. Price it
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Long-term storage
A higher rate for stock that sits too long.
2 of 20 3PLs we track publish an amount. Price it
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Special projects
Hourly labor for one-off jobs, such as relabeling or moving your stock out.
5 of 20 3PLs we track publish an amount. Price it
Counts read from each 3PL's own pricing pages, the same data as our 3PL comparison. Amazon's and Walmart's own fulfillment services are left out: they bill per unit with delivery included. Sample quotes are not counted as a published rate.
Postage comes on top at most 3PLs: they buy the label at their carrier rates and pass the cost to you. 3 of the 20 include delivery in one price per order instead.
To see what these fees add up to at your volume, use the 3PL cost calculator.
3PL vs 4PL
A 3PL runs the warehouse work. A 4PL, a fourth-party logistics provider, manages the supply chain itself. Covenant Logistics, which sells logistics services, puts it this way: 4PLs “manage everything, from overseeing procurement procedures to coordinating with 3PLs” (Covenant Logistics).
So a 4PL often hires 3PLs on your behalf. If you sell online and need someone to store stock and ship orders, a 3PL is what you are shopping for.
3PL vs Amazon’s and Walmart’s fulfillment
Amazon and Walmart run their own fulfillment services. They work like a 3PL with one big difference: the price per unit includes delivery, so you don’t buy labels.
- Fulfillment by Amazon (FBA) and Walmart Fulfillment Services ship orders from their own marketplaces.
- Amazon Multi-Channel Fulfillment ships orders from your other channels, like your own store, out of the same Amazon stock. See Amazon MCF vs a 3PL for what that costs per order.
How to choose a 3PL
Start with three questions, in this order:
- Will it take your volume? Many 3PLs set a minimum order count or a monthly floor. See 3PLs that take small businesses.
- Is its warehouse near your customers? Closer stock means cheaper, faster labels.
- What will it cost at your volume? Compare every 3PL’s published fees and get quotes for the rest.
Common questions
What does 3PL stand for?
Third-party logistics: an outside company you hire to store your stock and ship your orders. The ASCM Supply Chain Dictionary defines it as a buyer and supplier team with a third party that provides product delivery services. The same letters name the company itself.
What is the difference between a 3PL and a 4PL?
A 3PL does the physical work: it stores, packs and ships. A 4PL manages your whole supply chain for you and coordinates the 3PLs, carriers and suppliers. Covenant Logistics describes 4PLs as managing everything from procurement to coordinating with 3PLs. Most online stores only need a 3PL.
How do 3PLs make money?
They bill for each job they do for you: a pick and pack fee per order, monthly storage, receiving when your stock arrives, and often a monthly minimum or account fee. Most 3PLs price these in a custom quote rather than on a public rate card.
Is Amazon a 3PL?
Amazon offers two services that do a 3PL's job. Fulfillment by Amazon (FBA) ships your Amazon orders. Amazon Multi-Channel Fulfillment ships orders from your other sales channels out of the same stock, with delivery included in a per-unit fee.
Is DHL a 3PL?
DHL runs one: its DHL Fulfillment Network, part of DHL Supply Chain, describes its services as third-party logistics on its own site. A carrier moves your packages; a 3PL also stores your stock and packs each order.