Third-party logistics
What is a 3PL (third-party logistics provider)?
A 3PL (third-party logistics provider) stores your inventory and picks, packs and ships your orders for a fee.
Getting 3PL right
Compare total cost per order
Receiving, storage, pick and pack, packaging and postage add up differently at each 3PL. Price a typical order at each.
Check the warehouse location
A warehouse near most of your customers cuts delivery times and postage.
Watch ship times weekly
Track days from order to shipment so problems surface before reviews do.
Ask Replo: "show average days from order to shipment by week".
3PL questions
- When should a store switch to a 3PL?
- When packing orders takes more time than growing the business, or when you run out of space. Many stores move around a few hundred orders a month, but the right point depends on your product and margins.
- How much does a 3PL cost?
- Pricing varies widely by provider and order profile. Expect fees for receiving stock, storage per pallet or bin, a pick and pack fee per order, packaging and postage. Ask each provider to quote your typical order.
- What's the difference between a 3PL and dropshipping?
- With a 3PL you own the inventory and pay them to store and ship it. With dropshipping you never own the stock; the supplier ships from its own inventory when you make a sale.
Related terms
Browse the glossarySKU
A SKU (stock keeping unit) is a unique code a store gives each product variant it sells, so it can track inventory and sales for that exact item.
Dropshipping
Dropshipping is a way to run a store without holding inventory: you sell the product, and a supplier ships it straight to the customer.
DTC
DTC (direct to consumer) is a brand selling straight to shoppers through its own site instead of through retailers or wholesalers.
Omnichannel
Omnichannel is selling across your own site, retail stores, marketplaces and social as one connected experience, with shared inventory and customer data.