By Karla Urdaneta, Operations Manager at ShipHouse. Karla runs the processes every package goes through in our warehouse, from receiving to the carrier handoff.
A 3PL (third-party logistics provider) is a company that runs part of your supply chain for you, most often receiving your inventory, storing it, packing and shipping your orders, and processing returns, in its own warehouse with its own staff and systems. You keep ownership of the products and the customer relationship; the 3PL does the physical work and reports back.
That's the definition. The useful part is knowing where a 3PL's job starts and stops, what it actually costs, and when you're better off without one. That's what this guide covers, from the perspective of the people who run the warehouse floor.
What does a 3PL do?
Most ecommerce 3PLs provide five core services:
Service | What happens | What you provide |
|---|---|---|
Receiving | Inbound parcels, cartons, pallets, or containers are checked in against your advance notice, counted, and inspected. | An advance shipping notice (ASN) with SKUs and quantities |
Storage | Inventory is put away in bins, shelves, or pallet positions, each tracked by location. | Product dimensions and any handling rules |
Pick, pack & ship | Orders flow in from your store or marketplace; staff pick the items, pack them, buy the label, and hand them to the carrier. | Store/marketplace connection and packaging preferences |
Returns | Returned items are received, inspected, and restocked, set aside, or disposed of based on your rules. | A returns policy and disposition rules |
Reporting | Inventory levels, order status, and tracking are visible in a portal or synced back to your systems. | Access for your team |
AI-assisted image created from photos of the ShipHouse team.
On top of that, many 3PLs offer value-added services: kitting and bundling, Amazon FBA prep (FNSKU labeling, poly-bagging, carton and pallet prep), B2B and wholesale shipments that follow retailer routing guides, custom inserts, and one-off warehouse projects like relabeling or repacking.
How a 3PL works, step by step
Here is the path an order takes in a typical ecommerce 3PL, including the points where things most often go wrong:
- You send an inbound notice. Before anything ships to the warehouse, you tell the 3PL what's coming: SKUs, quantities, carton counts, and the expected arrival. Most receiving delays start with a missing or inaccurate notice.
- Receiving and put-away. The shipment is counted against the notice, discrepancies are flagged, and units are assigned to storage locations. Inventory becomes sellable only after this step.
- Order sync. Your Shopify, Amazon, Walmart, TikTok Shop, or other channel sends orders to the 3PL automatically.
- Pick and pack. Staff pull the items from their locations, pack them according to your rules, and print the shipping label.
- Carrier handoff. Packages are staged and handed to the carrier; tracking flows back to your store and your customer.
- Returns. Returned items come back to the warehouse and follow your disposition rules.
The point to take away: a 3PL is only as accurate as the data it receives. Clean SKUs, barcodes, and inbound notices matter more than any warehouse technology.
What a 3PL does not do
This is the section most guides skip, and it causes the most surprises, especially for brands shipping into the U.S. from abroad. A warehouse-focused 3PL generally does not:
- Act as your importer of record (IOR). Someone has to be legally responsible for importing your goods into the United States. That's you (or an entity you appoint), not the warehouse.
- Clear customs or pay duties for you. Customs brokerage, duties, tariffs, and government fees are handled by you and your customs broker or freight forwarder before goods reach the warehouse door.
- Make your products compliant. Labeling rules, FDA or CPSC requirements, permits, and product admissibility are your responsibility.
- Own marketplace rules. A 3PL can prep inventory to Amazon's or Walmart's requirements, but you're responsible for providing current instructions and for your seller account's standing.
- Take ownership of your inventory. You own it. Insurance coverage and the 3PL's liability limits for loss or damage should be written into your agreement; read that section before you sign.
At ShipHouse we draw this line explicitly before any inventory moves: imports, customs, and compliance sit with the customer and their import partners; receiving, prep, storage, fulfillment, and release sit with us. Agreeing on that boundary up front prevents most "who was supposed to handle that?" problems later. (More on this for international brands on our international 3PL page.)
3PL vs. 4PL, fulfillment center, prep center, warehouse, and FBA
These terms get used interchangeably, but they're not the same thing:
What it is | Best for | Who controls inventory and process | |
|---|---|---|---|
3PL | Outsourced logistics provider running receiving, storage, fulfillment, and returns in its own facilities | Brands that want one partner across channels (DTC, marketplaces, B2B) | You set the rules; the 3PL executes |
Fulfillment center | A facility built for picking and shipping orders; most ecommerce 3PLs operate fulfillment centers | High-volume parcel orders | Depends on the operator |
Prep center | A facility that prepares inventory to marketplace requirements (mostly Amazon FBA) and forwards it | Amazon sellers sending stock into FBA | You; the prep center doesn't usually fulfill customer orders |
Warehouse (storage only) | Space to hold goods, often by the pallet, with limited handling | Bulk storage, B2B replenishment | You; minimal services |
Amazon FBA | Amazon stores your inventory and fulfills Amazon orders (and, through Multi-Channel Fulfillment, some off-Amazon orders) | Amazon-first sellers | Amazon sets the rules, fees, and inbound requirements |
4PL | A provider that manages your whole logistics network, including other 3PLs and carriers, without necessarily running warehouses itself | Large brands with multiple warehouses and partners | The 4PL coordinates; others execute |
In practice, many brands combine these: FBA for Amazon orders, a 3PL for DTC, wholesale, and FBA replenishment, and a freight forwarder for imports. A good 3PL is often the hub that connects them.
How much does a 3PL cost?
3PL pricing is built from line items, not a single rate. The common ones:
- Receiving: per hour, per carton or pallet, or per container; sometimes free up to an allowance
- Storage: per bin, shelf, pallet, or cubic foot, per month
- Pick & pack: per order, plus a per-item fee for each additional unit
- Packaging materials: included or billed per box or mailer
- Shipping: postage based on weight, dimensions, service, and zone
- Account or minimum fees: a monthly minimum or account management fee, often waived above a volume threshold
- Special services: kitting, FBA prep, B2B compliance, returns processing, projects
A worked example
Here is a hypothetical month for a brand shipping 600 orders with an average of 1.5 items per order and 8 pallets of inventory, using the published ShipHouse starter rates:
Line item | Calculation | Monthly cost |
|---|---|---|
Pick & pack | 600 orders × $2.50 | $1,500 |
Additional items | 300 extra units × $0.50 | $150 |
Storage | 8 pallets × $40 | $320 |
Receiving | Within the included allowance | $0 |
Account management | Waived at 500+ orders | $0 |
Fulfillment subtotal | $1,970 (≈ $3.28 per order) | |
Shipping | From $4 per package, depending on weight and zone | Varies |
Two things this example shows. First, thresholds matter: below 500 orders, the same brand would also pay a $999 account management fee. Second, storage is a lever you control: slow-moving inventory is the line item that quietly grows. Published rates are non-binding estimates; final pricing depends on packaging, weight, picks per order, storage footprint, and receiving complexity.
Want to model your own numbers? Try the fulfillment cost calculator and compare a normal and a peak month.
When should you use a 3PL?
A 3PL usually starts to make sense when one or more of these is true:
- Fulfillment is taking time you should spend elsewhere. If founders or marketers are packing boxes, that's the most expensive labor in the business.
- You're running out of space, or renting space and paying for staff and equipment to run it.
- Delivery speed is costing you sales. Customers and marketplaces reward faster, cheaper shipping, and a 3PL closer to your customers shortens transit times.
- You sell on more than one channel. One shared inventory pool across your website, Amazon, Walmart, TikTok Shop, and wholesale accounts is hard to run from a garage.
- You're entering the U.S. from abroad and need a domestic operation to receive imports and ship to U.S. customers at domestic speed.
When a 3PL isn't the answer (yet)
- Very low or very unpredictable volume. If you ship a handful of orders a week, the minimum fees may outweigh the time you save.
- Products that need constant hands-on customization that you can't turn into written rules.
- You can't share accurate data yet. Without SKUs, barcodes, and inbound notices, a 3PL will struggle, and so will you. Fix that first.
How a 3PL fits each sales channel
A 3PL's value depends on where you sell. The same warehouse can serve every channel from one inventory pool, but each channel has its own requirements.
Shopify and your own website (DTC)
Your store sends orders to the 3PL automatically, and tracking flows back to your customer. The work that matters here is packaging and presentation: branded boxes, inserts, gift notes, and kitting for bundles or subscription boxes. Ask how the 3PL handles order cutoffs, address errors, and split shipments when an item is out of stock. See DTC fulfillment and ecommerce fulfillment.
Amazon (FBA and FBM)
Many Amazon sellers use a 3PL in two ways at once. First, as a prep and replenishment hub for FBA: inventory lands at the 3PL, gets FNSKU labels, poly bags, bundles, and carton or pallet prep, and is sent into Amazon in smaller, more frequent batches. That keeps Amazon storage fees and inventory limits under control. Second, for FBM or Multi-Channel Fulfillment backup, where the 3PL ships Amazon orders directly when FBA is out of stock or restricted. See FBA vs FBM, our FNSKU labeling guide, and FBA prep.
Walmart, TikTok Shop, eBay, and Etsy
Marketplaces increasingly reward fast, reliable shipping with better placement. TikTok Shop sets tight handling-time expectations, and its sales can spike overnight after a video takes off. Walmart Marketplace tracks on-time shipment and valid tracking rates. eBay and Etsy buyers expect domestic delivery times. A 3PL that connects to each marketplace and ships from one shared inventory pool lets you sell on all of them without separate stock for each.
Wholesale and retail (B2B)
Shipping to retailers and distributors is a different job from parcel fulfillment. Purchase orders arrive with routing guides, carton labeling rules, pallet specifications, and delivery appointments, and mistakes lead to chargebacks. If wholesale is part of your plan, choose a 3PL that handles B2B from the same inventory as your DTC orders. See B2B and wholesale fulfillment.
International brands selling into the U.S.
If you manufacture or sell from outside the U.S., a domestic 3PL lets you import in bulk once and then ship to American customers at domestic speed and cost, instead of sending every order across an ocean. The import itself (IOR, customs clearance, and duties) stays with you and your freight partners. The 3PL takes over once the goods are cleared and delivered to its dock. See U.S. 3PL for international businesses.
How to choose a 3PL
Ask these questions before you sign:
- Location: Where are the warehouses relative to your customers and your inbound freight? (ShipHouse operates in New Jersey and Delaware, close to the New York/New Jersey port and the Northeast population.)
- Channels and integrations: Does it connect to every channel you sell on today and plan to sell on next year?
- Services you'll need in 12 months: FBA prep, B2B and retail compliance, kitting, returns. Switching later is expensive.
- Pricing transparency: Can you see every line item, minimums, and what triggers extra charges?
- Receiving and accuracy commitments: How fast does inventory go live after arrival? How are discrepancies reported?
- Responsibility boundaries: Who handles customs, IOR, and compliance? What is the liability for loss or damage?
- Communication: Who is your day-to-day contact, and how fast do they answer?
- Contract terms: Term length, notice period, and how you get your inventory out if you leave.
Measure performance with a few KPIs
Once you're live, track the same handful of numbers every month: order accuracy, on-time shipping (orders out by the agreed cutoff), receiving time (dock to sellable), inventory accuracy from cycle counts, returns processing time, and cost per order.
What onboarding looks like
A typical onboarding runs two to four weeks:
- Week 1: Scope. Share your products, channels, order volume, inbound plan, and services. The 3PL confirms the operating scope and pricing.
- Week 2: Set up. Connect your store and marketplaces, load SKUs and barcodes, and agree on packaging and returns rules.
- Week 3: First inbound. Send a first shipment with an inbound notice; the 3PL receives it and reports any discrepancies.
- Week 4: Go live. Orders start flowing; review the first week's accuracy and timing together and adjust.
Frequently asked questions
What does 3PL stand for?
3PL stands for third-party logistics. "Third party" refers to an outside company that handles logistics between the seller (first party) and the customer (second party).
What is a 3PL warehouse?
A 3PL warehouse is a facility operated by a third-party logistics provider where client inventory is received, stored, and shipped. Unlike a storage-only warehouse, it's built around order fulfillment and value-added services.
Is a 3PL the same as a fulfillment center?
Not exactly. A fulfillment center is a type of facility; a 3PL is a company. Most ecommerce 3PLs run fulfillment centers, but they also handle receiving, returns, B2B shipments, and prep.
What's the difference between a 3PL and a 4PL?
A 3PL runs logistics operations such as warehousing and fulfillment. A 4PL manages your entire logistics network, often coordinating several 3PLs and carriers on your behalf.
Is Amazon FBA a 3PL?
FBA is Amazon's own fulfillment service for inventory sold on Amazon. It works like a 3PL for Amazon orders, but Amazon sets the rules, fees, and inbound requirements, and it isn't built for wholesale or other channels.
How much does a 3PL cost?
It depends on order volume, items per order, storage footprint, and services. As a reference, published starter rates at ShipHouse begin at $2.50 per order for pick and pack and $40 per pallet per month for storage, plus shipping. See the worked example above.
How many orders do I need before using a 3PL?
There's no fixed number. Many brands move once fulfillment takes meaningful staff time or space, often in the low hundreds of orders per month. Check minimum fees and volume thresholds first.
Do 3PLs work with small businesses?
Yes. Many 3PLs, including ShipHouse, work with growing brands. Look for clear minimums and pricing that scales with volume.
Can a 3PL handle returns?
Yes. Most 3PLs receive, inspect, and restock or set aside returns according to your rules. See returns management.
Does a 3PL handle customs and duties?
Usually not. Customs clearance, duties, and importer-of-record responsibilities sit with you and your customs broker or freight forwarder. The 3PL receives cleared goods.
How long does 3PL onboarding take?
Typically two to four weeks, depending on integrations, SKU count, and when your first inbound shipment arrives.
The bottom line
A 3PL turns fulfillment from a job you do into a process you manage. The brands that get the most out of one are clear about three things before inventory moves: what the 3PL is responsible for, what every line item costs, and what data the warehouse needs from them.
If you're evaluating a U.S. 3PL for DTC, marketplace, wholesale, or international inventory, tell us about your products and volume. We'll review the scope and show you exactly what the operation would look like.
