What is a 3PL? A plain-English guide for online sellers

A 3PL (third-party logistics provider) is a company that stores your inventory, packs your customers' orders and ships them for you. You sell the products. The 3PL runs the warehouse, so you do not need your own space, staff or shipping setup.

The term covers a wide range of businesses, from large national networks to small local warehouses. What they have in common is the job: receive your stock, hold it, and send it out when an order comes in.

What does a 3PL actually do?

• Receiving. Your inventory arrives, is counted and checked, and is put away.
• Storage. Products are kept on pallets, shelves or in bins until they sell.
• Pick and pack. When an order arrives from your store, someone finds the items, packs them and labels the box.
• Shipping. The package goes out with a carrier. Many 3PLs compare carriers and rates for each order.
• Returns. Returned items are received, inspected and put back in stock or set aside.
• Inventory visibility. You can see what is on hand, what is on its way and what has shipped, usually in an online portal.

Some 3PLs also do prep for Amazon FBA and Walmart WFS, kitting and assembly, and shipping across the border.

3PL, fulfillment center, prep center: what is the difference?

The names overlap. In practice:

• 3PL is the broad term for an outsourced logistics provider.
• Fulfillment center usually means the warehouse side: storing stock and shipping orders to your customers.
• Prep center usually means a warehouse that prepares inventory to marketplace rules (labels, bagging, boxes) and sends it to Amazon or Walmart.

Many companies, including us, do both. Ask what a provider actually handles, not what it calls itself.

Who uses a 3PL?

Online brands that sell through their own store (often called DTC, direct to consumer), through marketplaces, or to other businesses (B2B). Typical starting points are a garage or home office that has filled up with boxes, orders that take hours to pack each day, or a wish to sell into another country without opening a warehouse there.

Signs it may be time to use one

• You or your staff spend a large part of the week packing and taking boxes to the carrier.
• Stock is taking over your home, garage or office.
• Orders are growing, or spikes (holidays, a sale) are hard to handle.
• You want to ship to customers in another province or in the US, and your current shipping options are slow or costly.
• Mistakes are happening: wrong items, missed orders, late shipments.

When a 3PL may not be the right fit yet

If you ship a handful of orders a week and enjoy packing them, doing it yourself is usually cheaper. A 3PL also needs somewhere to send the stock first, so you must be ready to ship your inventory to their warehouse. Run the numbers for a typical month before you decide.

How do 3PLs charge?

Typically for receiving, storage, pick and pack, shipping and returns, each with its own unit, such as per pallet, per item or per order. Two quotes can look the same and cost very differently, so compare them by the total for a typical month. We cover this line by line in how to read a 3PL quote, and we publish our own prices on the pricing page.

How to start with a 3PL

1. Write down your monthly orders, items per order and the number of pallets or boxes you hold.
2. List the channels you sell on (your store, Amazon, Walmart, wholesale).
3. Ask two or three providers for a quote with the unit next to every price, and ask what is not included.
4. Start with one product line or one shipment so you can see how it works before you move everything.

Our how it works page shows what that looks like with us, and our fulfillment page covers pick, pack and ship for DTC and B2B orders from our warehouse in Milton, in the Toronto area.