3PL Fulfillment: How It Works & When to Outsource
As order volume rises and customer expectations tighten, running fulfillment in-house becomes harder to sustain. That's where third-party logistics comes in.
This guide breaks down exactly what 3PL fulfillment is, how the process works step by step, and when outsourcing becomes the smarter business move.
What Is 3PL Fulfillment?
3PL fulfillment means outsourcing your order processing, warehousing, packing, and shipping to a third-party logistics provider. Instead of managing these operations yourself, a 3PL handles them using their own facilities, staff, and technology.
Here's what a typical 3PL manages for you:
Receiving and storing your inventory
Picking and packing customer orders
Shipping via national and regional carriers
Processing returns and reverse logistics
Syncing orders from your ecommerce platform in real time
A 3PL becomes the operational backbone behind your online store, letting you focus on growth, marketing, and product development instead of daily logistics.
The 3PL Fulfillment Process
What goes on inside a fulfillment center between a customer placing an order and that package landing on their doorstep isn't complicated. Here's exactly how it works.
Receiving
Your 3PL can't ship orders without your inventory. Receiving is the first step, and everything else depends on getting it right.
When your products arrive at the fulfillment center, staff inspect incoming shipments, count units, and store everything in dedicated locations. Each SKU gets its own shelf, bin, or pallet location in the system. Most 3PLs ask you to submit a receiving notice in advance so they know exactly what's coming, which speeds up the process and gets your inventory ready to ship sooner.
Errors at this stage ripple through every order that follows, so a well-run receiving operation is worth paying attention to when you're evaluating providers.
Order Integration
Once your inventory is in the warehouse, your sales channels connect to the 3PL's system. When a customer places an order on your website or marketplace, that order flows automatically into the fulfillment platform without any manual uploads or intervention on your end.
Good 3PLs integrate directly with Shopify, Amazon, and leading ERPs so orders arrive in real time. You get full visibility into order status, inventory levels, and carrier performance through a single dashboard.
Picking
When an order comes in, a picker receives a list showing exactly which items to collect, their quantities, and where to find them in the warehouse. They pull each item from its designated location and scan everything to confirm accuracy before moving to packing.
Barcode scanning at this stage catches errors before they become customer complaints. A well-run pick operation is fast and accurate because the system does most of the thinking.
Packing
Once all items in an order are picked, they get packed for shipment. The 3PL chooses packaging based on the product's size, weight, and fragility to protect it in transit while keeping dimensional weight as low as possible. Lower dimensional weight means lower shipping costs for you.
Standard packing materials are typically included in your fulfillment fees. If your brand calls for something more specific, many 3PLs support custom branded packaging, kitting services, and value added assembly for more complex orders.
Shipping
After packing, the 3PL prints shipping labels and hands packages off to carriers. Most established 3PLs work with multiple carriers and compare rates across them for every shipment rather than defaulting to one carrier for everything.
Once a package ships, tracking information pushes back to your store automatically so customers stay informed without you doing anything.
Returns
Returns are part of ecommerce fulfillment. A good 3PL handles them without creating chaos in your inventory records.
When a return arrives, staff inspect the item, determine whether it's resellable, and either restock it or process it according to your return policy. Inventory levels update in real time so your available stock always reflects reality. Clean reverse logistics processes protect your inventory accuracy and keep customers taken care of.
When 3PL Fulfillment Makes Sense
Not every business needs a 3PL from day one. For early-stage brands shipping a small number of orders monthly, in-house fulfillment often works fine. But there are clear signals that outsourcing becomes the better move.
You're outgrowing your space. When inventory starts spilling into hallways or rented storage units, the cost of expanding your own operation often exceeds what a 3PL charges. Startups and fast-growing brands hit this wall earlier than expected.
Shipping times are slipping. If orders ship late because of staffing gaps or your single warehouse location puts you too far from customers, a 3PL with distributed warehouse locations closes that gap fast.
Seasonal spikes overwhelm your team. Peak periods can double or triple order volume overnight. 3PLs absorb those surges without requiring you to hire permanent staff you won't need three months later.
Fulfillment is pulling focus from growth. Packing boxes shouldn't compete with launching products or acquiring customers. Outsourced fulfillment returns your time to the work that actually grows the business.
You're expanding into new channels or regions. Selling through omnichannel fulfillment, into retail via retail dropshipping, or going direct to consumer through D2C fulfillment demands logistics coverage that most internal teams can't build quickly or cheaply.
What Types of Businesses Use 3PL Fulfillment?
3PL fulfillment works across a wide range of business models and product categories. B2B 3PL operations handle bulk wholesale orders with pallet-level shipping and retailer compliance requirements. D2C fulfillment focuses on individual consumer orders with faster turnaround and branded packaging. Subscription box fulfillment requires precise kitting on a recurring schedule. Amazon fulfillment demands strict compliance with marketplace requirements.
On the product side, 3PLs handle everything from apparel and footwear to electronics, supplements, food and beverage, skincare products, pet supplies, sporting goods, furniture, and medical devices. The fulfillment process is largely the same across categories, but the specific handling requirements, packaging needs, and return rates vary significantly by product type.
If your business sells through Amazon specifically, FBA prep services and Amazon SFP 3PL fulfillment are worth looking into as part of your broader fulfillment strategy.
The Trade-Offs Worth Knowing
Outsourcing fulfillment brings real advantages, but the partnership only works if you go in with clear expectations.
Control vs. convenience. You give up some direct oversight of daily operations. The right 3PL replaces that oversight with detailed reporting, real-time dashboards, and proactive communication so you always know what's happening with your inventory and orders.
Integration time. Getting your systems connected to a 3PL's platform takes time upfront. Plan for an onboarding period before you're fully live, and make sure your ecommerce platform and the 3PL's system are compatible before signing anything.
Brand experience. Your customers experience your brand through every package they receive. Make sure your 3PL supports whatever level of packaging customization your brand requires, whether that's plain brown boxes or fully custom branded unboxing experiences.
Service consistency. Ask any 3PL you're evaluating for their order accuracy rates, on-time shipping rates, and how they handle errors when they occur. A 3PL that owns mistakes and fixes them fast is worth more than one with a perfect pitch but no accountability.
For large enterprise operations, these considerations are even more pronounced since the volume of orders means small error rates create big problems at scale. Crowdfunding campaigns have different needs again, since fulfillment often needs to ramp up quickly for a one-time large shipment before settling into normal operations.
Frequently Asked Questions About 3PL Fulfillment
What is 3PL fulfillment?
3PL fulfillment refers to outsourcing your order processing, warehousing, packing, and shipping to a third-party logistics provider. The 3PL manages your inventory and ships directly to customers on your behalf.
What does a 3PL do?
A 3PL handles the physical operations of getting orders to customers. This includes receiving and storing inventory, picking and packing orders, selecting carriers, printing labels, shipping packages, and processing returns. Many 3PLs also offer kitting services, value added assembly, customer onboarding support, and outsourced customer service.
When should I switch from in-house fulfillment to a 3PL?
The right time differs for every business, but common triggers include outgrowing your warehouse space, consistently missing ship times, losing too much time to fulfillment operations, or needing to reach customers faster across different regions.
What is the difference between a 3PL and a 4PL?
A 3PL handles your logistics operations directly using their own facilities and staff. A 4PL manages other 3PLs on your behalf, coordinating across multiple providers as part of a broader supply chain management strategy. Most growing ecommerce brands start with a 3PL.
How does a 3PL connect to my online store?
Most established 3PLs offer direct integrations with major ecommerce platforms like Shopify, WooCommerce, and Amazon. Orders flow into the fulfillment system automatically when a customer checks out, and tracking information flows back to your store when the order ships.
Do 3PLs handle specialty fulfillment needs?
Yes. Depending on the provider, you can find support for subscription box fulfillment, merch fulfillment, TikTok fulfillment, YouTube fulfillment, DDP services, B2B 3PL, and more. The range of 3PL services available has expanded significantly, so it's worth asking any provider exactly what they cover before committing.
Rush Order has spent over 30 years handling fulfillment for high-growth brands across industries. Our order accuracy rate is 99.99% and our on-time fulfillment rate is 99.9%. If you're ready to hand off fulfillment and get back to building your business, talk to our team about what working with Rush Order looks like.
