3PL Services: What They Are & How to Choose the Right Provider

Growing ecommerce brands eventually hit a wall with in-house fulfillment. You run out of space, lose time to packing boxes, or can't offer the fast shipping customers expect. That's when third-party logistics services become necessary.

This guide covers what 3PL services actually include, which ones matter for different business types, and how to evaluate providers so you choose a partner that helps you scale instead of holding you back.

What Are 3PL Services?

3PL services refer to the logistics operations that a third-party provider handles on your behalf. Instead of managing warehousing, order processing, and shipping yourself, you outsource these functions to a company that specializes in them.

The scope of services varies significantly by provider. Some 3PLs offer basic pick, pack, and ship operations. Others provide comprehensive solutions covering everything from inventory management to international shipping to customer support.

Understanding which services you actually need helps you avoid paying for capabilities you won't use while ensuring you get the functions that will help your business grow.

Core 3PL Services Explained

Here are the main services most established 3PLs offer.

Warehousing and Inventory Management

A 3PL stores your products in their warehouse facilities and tracks inventory levels in real time. You should be able to see exactly how much stock you have at any location, monitor inventory movement, and get alerts when products need reordering.

Good inventory management goes beyond just storing boxes. The right system syncs with your online store, updates stock counts automatically as orders ship, and provides data on metrics like inventory turnover and days on hand. This visibility helps you make smarter purchasing decisions and avoid both stockouts and overstock situations.

Order Fulfillment

Ecommerce fulfillment is the process of receiving, processing, picking, packing, and shipping customer orders. When someone places an order on your website, the 3PL receives that order through a direct integration, picks the items from warehouse shelves, packs them securely, and ships them to your customer.

The best 3PLs automate this entire workflow so orders flow from your store to the warehouse without manual intervention. You get tracking information pushed back to your store automatically when packages ship.

Returns Management

Reverse logistics handles the flow of products coming back from customers. A 3PL with returns management services receives returned items, inspects them for damage, determines if they're resellable, and either restocks them or processes them according to your policy.

Returns are part of ecommerce. The average return rate runs 20-30% for apparel and 5-15% for other categories. Having a 3PL handle returns keeps your inventory records accurate and gets products back into sellable stock faster than most businesses can manage internally.

Kitting and Assembly

Kitting services let you bundle multiple products together or add custom touches to orders. A 3PL can assemble gift sets, add promotional inserts, attach branded thank-you cards, or create subscription boxes with multiple items packed together.

Value added assembly goes further, handling light assembly work like attaching labels, shrink-wrapping products, or building custom product bundles based on your specifications. This service is particularly useful for brands that want to offer customized products without doing the assembly work themselves.

2-Day Shipping

Fast shipping has become table stakes for ecommerce. Customers expect orders to arrive within two days, and brands that can't deliver that speed lose sales to competitors who can.

3PLs make 2-day shipping affordable through two methods. First, they negotiate better carrier rates by shipping high volumes across many clients. Second, they operate multiple warehouse locations so you can store inventory closer to your customers. A package shipping ground from a warehouse 300 miles away arrives faster and costs less than one shipping from across the country.

Distributed Inventory

When a 3PL operates warehouses in multiple regions, you can split your inventory across locations. This puts products closer to customers, reducing both shipping time and cost.

Distributed inventory works by routing each order to the fulfillment center closest to the delivery address. Someone ordering from California gets their package from a West Coast warehouse, while an East Coast customer gets theirs from a facility in that region.

This strategy makes the most sense for businesses with geographically dispersed customers and enough order volume to justify inventory in multiple locations.

B2B and Omnichannel Fulfillment

Many brands sell through multiple channels beyond their own website. You might fulfill orders for Amazon, Walmart Marketplace, TikTok Shop, and wholesale accounts with retail stores.

B2B 3PL services handle bulk orders shipping to retail locations, including compliance with retailer requirements like advance shipping notices and pallet configurations. Retail dropshipping fulfills orders placed on big-box retailer websites and ships directly to end customers. Omnichannel fulfillment coordinates inventory and orders across all your sales channels from a single system.

Having one provider handle fulfillment across channels is significantly easier than coordinating multiple partners or mixing in-house and outsourced operations.

Technology and Integrations

Modern 3PLs provide software platforms that give you visibility into orders, inventory, and shipping performance. Your system should integrate directly with your ecommerce platform so orders flow automatically without manual uploads.

Look for integrations with Shopify, WooCommerce, Amazon, and other major platforms. The 3PL's dashboard should show real-time inventory levels, order status, shipping costs, and performance metrics so you always know what's happening with your fulfillment operations.

International Fulfillment

If you sell to customers outside your home country, international 3PL services handle cross-border shipping complexities including customs documentation, duties, and taxes. Some 3PLs operate fulfillment centers in multiple countries, letting you store inventory locally in markets you serve frequently.

Having warehouses in the US, Canada, Europe, or Australia means you ship domestically even when serving international customers. This reduces shipping costs, shortens delivery times, and simplifies customs processing through DDP services.

Value-Added Services

Beyond core fulfillment, many 3PLs offer additional services that enhance the customer experience or extend your operational capabilities.

Custom packaging lets you use branded boxes, mailers, and inserts instead of plain shipping materials. Subscription box fulfillment handles recurring shipments with precise timing and item variation. Merch fulfillment manages promotional items and branded merchandise. Some 3PLs even offer outsourced customer service to handle order inquiries and support tickets on your behalf.

The specific services available vary widely by provider, so identify what matters for your brand before evaluating options.

When Should You Outsource to a 3PL?

Not every business needs to outsource fulfillment immediately. Here's when 3PL services become the right move.

You're running out of space. Inventory filling your garage, spare bedroom, or rented storage unit signals you've outgrown in-house fulfillment. The cost of expanding your own space often exceeds 3PL fees.

Fulfillment consumes too much time. If you or your staff spend hours daily packing boxes instead of growing the business, that's time better spent elsewhere. Outsourced fulfillment returns your focus to product development, marketing, and customer acquisition.

You can't offer fast shipping. Customers expect 2-day delivery. A single warehouse location far from many customers makes fast shipping prohibitively expensive. 3PLs with distributed networks solve this problem.

Seasonal peaks overwhelm operations. Peak seasons can triple order volume overnight. 3PLs scale up labor and capacity to handle surges without requiring you to hire permanent staff you won't need off-season.

You're expanding into new channels. Selling on Amazon, into retail stores, or through social commerce platforms creates fulfillment complexity that 3PLs are built to handle. TikTok fulfillment and YouTube fulfillment are becoming increasingly common as creators monetize their audiences.

You need specialized services. If customers want gift sets, subscription boxes, or customized kitting, a 3PL with these capabilities delivers better results than trying to build them yourself.

Benefits of Using 3PL Services

Outsourcing to a 3PL delivers several measurable advantages.

Lower costs than in-house fulfillment. Building your own fulfillment operation requires warehouse space, equipment, staff, insurance, and technology. These fixed costs add up fast. 3PLs operate on variable cost models where you pay only for the space and labor you actually use. Most businesses save 15-30% on fulfillment costs by outsourcing.

Better shipping rates. 3PLs negotiate carrier rates based on the combined volume of all their clients. You get access to enterprise-level pricing that would be impossible to achieve on your own, typically 20-40% below standard retail shipping rates.

Time back for strategic work. Fulfillment operations are time-intensive. Outsourcing returns hours to your day that you can spend on activities that actually grow revenue like product development, marketing campaigns, and customer acquisition.

Faster delivery to customers. Multiple warehouse locations put inventory closer to customers. Ground shipping reaches most of the country in 2-3 days from strategically placed facilities. Faster delivery improves customer satisfaction and reduces cart abandonment.

Access to expertise. Logistics professionals stay current on carrier changes, shipping regulations, and best practices. You benefit from their knowledge without needing to become a shipping expert yourself.

Scalability without capital investment. Growing order volume doesn't require buying more warehouse space or hiring more staff. Your 3PL scales capacity up or down based on your actual needs month to month.

Better inventory accuracy. Professional warehouse operations with barcode scanning and systematic processes maintain 99%+ inventory accuracy. Most businesses running their own fulfillment struggle to exceed 95% accuracy, which creates costly errors.

How to Choose the Right 3PL Provider

Choosing a 3PL partner is a significant decision. The wrong provider creates more problems than they solve. Here's what to evaluate.

Can They Scale With Your Business?

Switching 3PLs is expensive and disruptive. Find a provider with the capabilities you'll need as you grow, not just what you need today.

Look for providers that handle multiple fulfillment models if you plan to expand beyond your current sales channels. Verify they can manage different business types, from direct-to-consumer through D2C fulfillment to handling wholesale accounts. Ask about their capacity to process surge volumes during peak seasons.

If you're currently small but have aggressive growth plans, make sure the 3PL has experience supporting businesses at various stages. You don't want to outgrow your provider in 18 months.

How Does Their Technology Work?

Technology makes or breaks the 3PL experience. The right platform should be intuitive, cloud-based, and integrate directly with your ecommerce platform without custom development work.

Verify they have native integrations with Shopify, WooCommerce, Amazon, or whatever platforms you use. Orders should flow automatically into the fulfillment system when customers check out. Inventory updates should push back to your store in real time so product availability stays accurate.

The dashboard should provide visibility into inventory levels by location, order status, shipping performance, and costs. You need this data to make informed decisions about purchasing, marketing, and operations.

Is Their Service Reliable?

Ask for their service level agreements covering receiving time, order accuracy, and shipping speed. Industry-leading 3PLs maintain 99.5%+ order accuracy and ship 99%+ of orders within their promised timeframe.

Request references from current clients in similar industries or business stages. Ask those references about communication, problem resolution, and whether the 3PL proactively identifies issues before they become problems.

Customer support matters. You should have a dedicated contact who knows your account rather than calling a general support line where you explain your situation from scratch every time.

What Data and Reporting Do They Provide?

You can't manage what you don't measure. Your 3PL should provide clear reporting on inventory levels, fulfillment costs, shipping performance, and operational metrics.

Specifically, verify you'll have access to inventory holding costs, inventory turnover rates, average fulfillment cost per order, average shipping cost and time by destination, and on-time delivery performance.

This data helps you make better decisions about purchasing inventory, allocating stock across warehouses, and identifying opportunities to reduce costs.

Where Are Their Fulfillment Centers Located?

Location determines shipping speed and cost. A 3PL with warehouses only on the West Coast won't serve East Coast customers as efficiently as one with locations in multiple regions.

Ask where their facilities are located and how they decide which warehouse to ship each order from. The best providers use algorithms that consider customer location, inventory availability, and shipping costs to route orders optimally.

If you serve international customers, verify whether they have facilities in those countries or offer services that handle cross-border shipping complexities.

What Do Their Services Actually Include?

Not all 3PLs offer the same services. Verify they provide what you need before signing a contract.

Ask about the specific services that matter for your business model. Confirm whether these services are included in base pricing or cost extra. Some 3PLs charge separately for packing materials, while others include standard packaging in their fulfillment fees.

If you sell on Amazon, ask about FBA prep services, Amazon SFP 3PL fulfillment, or general Amazon fulfillment services to understand how they handle marketplace orders.

Understanding the full cost structure before committing prevents surprises down the road.

FAQs

What services do 3PLs typically offer?

Most 3PLs provide warehousing, inventory management, order fulfillment, and shipping. Many also offer returns management, kitting, custom packaging, and multichannel fulfillment. The specific services available vary by provider.

How much do 3PL services cost?

Costs depend on services used, order volume, and product characteristics. Typical pricing includes receiving fees, monthly storage costs, pick and pack fees per order, and shipping costs. Most businesses pay $5-$12 per order for pick, pack, and standard packing materials.

When should I start using 3PL services?

Consider a 3PL when you ship 200+ orders monthly, run out of storage space, spend too much time on fulfillment, or need to offer faster shipping than your single warehouse location allows.

What's the difference between 3PL services and fulfillment services?

The terms are often used interchangeably. Fulfillment specifically refers to order processing, while 3PL services encompass a broader range including warehousing, transportation, and logistics management.

Do I need a 3PL if I only sell on Amazon?

Not necessarily. Amazon FBA handles fulfillment for Amazon orders. You'd need a 3PL if you also sell through your own website, other marketplaces, or retail channels. Some brands use 3PL services as alternatives to FBA.

Can a 3PL handle fulfillment for multiple sales channels?

Yes. Providers with omnichannel capabilities can fulfill orders from your website, Amazon, Walmart, retail stores, and social commerce platforms through a single system that coordinates inventory and orders across all channels.

Rush Order has provided 3PL services for over 30 years to brands across industries. Our order accuracy rate is 99.99% and our on-time fulfillment rate is 99.9%. We offer comprehensive services including warehousing, fulfillment, kitting, reverse logistics, and support across all major sales channels.

If you're ready to outsource fulfillment and get back to building your business, talk to our team about what working with Rush Order looks like.