3PL stands for third-party logistics. A 3PL is a company that stores your stock in its warehouse, then picks, packs and ships your orders for you, and often handles returns too. You keep running the store, the products and the marketing while they handle the physical side of getting orders to customers.
Definition first, since that's what you came for. 3PL means you hand the physical side of your ecommerce business to a specialist company. Your products sit on their shelves, your orders flow to them automatically and their team packs and ships each one, often in your own branded packaging.
The 'third party' bit is the key. The first party is you, the seller. The second party is your customer. The third party is the logistics company in the middle. You'll sometimes see the term used loosely for any courier or freight company, but in ecommerce it usually means an outsourced fulfilment warehouse.
How a 3PL works, step by step
- You send stock. You book an inbound delivery with the 3PL and ship your products to their warehouse, usually with a packing list so they know what's arriving.
- They receive and store it. Their team checks the delivery against your list, logs each product in their system and puts it on shelves or racking. Your stock levels update in their dashboard.
- Orders flow from your store. Your Shopify, WooCommerce, Amazon or other sales channel connects to the 3PL's software, so every new order drops straight into their queue without you lifting a finger.
- They pick, pack and ship. Staff pick the items, pack them in the agreed packaging and hand them to a courier. Tracking details go back to your store, so your customer gets updates.
- Returns come back to them. Returned items go to the warehouse, get checked and are either restocked or set aside, depending on the rules you've agreed.
Your job shifts from packing boxes to keeping stock topped up, watching the dashboard and dealing with the odd exception. For most owners, that's the whole point: hours back every week to spend on selling.
3PL vs in-house vs dropshipping
A 3PL is one of three common ways to get orders to customers. Here's how they compare in plain terms:
| 3PL | In-house | Dropshipping | |
|---|---|---|---|
| Who holds the stock | The 3PL's warehouse | You, at home or in a unit | Your supplier |
| Who packs orders | The 3PL's staff | You or your team | Your supplier |
| Control over packaging | Good, often with custom packaging | Full control | Limited |
| Do you buy stock upfront? | Yes | Yes | No |
| Best for | Growing brands with steady order volume | Early stage stores, low volume or products that need special care | Testing products without holding stock |
| Main downside | Less hands-on control, plus contracts and minimums | Your time and your space | Slower delivery and less control over quality |
Plenty of stores mix these. You might pack your bestsellers in-house while a supplier dropships the rest, or use a 3PL for your main range and keep fragile items at home. If you're still at the idea stage, my list of drop shipping small business ideas is a lower-risk place to start.
Signs you're ready for a 3PL
- Packing orders takes more of your week than growing the business.
- You've run out of space at home or in your unit.
- Shipping mistakes or late dispatches are turning into complaints and bad reviews.
- You want faster delivery, or to store stock closer to customers in another country.
- Seasonal spikes are more than you and your team can handle.
- You sell on several channels and your stock counts keep drifting apart.
If only one of these applies, you may be fine for now. If three or four do, it's time to get quotes. A 3PL can also help on shipping, because it negotiates courier rates across lots of sellers. I've written more about how 3PL logistics reduces shipping costs.
A few well-known 3PLs
There are hundreds of fulfilment companies, from local warehouses to global networks. These names come up often with small and growing online sellers, so they're a sensible place to start comparing:
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- ShipBob runs fulfilment centres in several countries, including the US and UK, and connects to the main ecommerce platforms.
- Amazon Multi-Channel Fulfillment uses Amazon's network to ship orders from your other channels, such as your own website. It's worth a look if you already store stock with Amazon.
- Huboo is a UK-based fulfilment company aimed at small and growing sellers.
- Zendbox is another UK-based option for ecommerce brands that want a fulfilment partner close to UK customers.
- ShipMonk is a US-based 3PL that works with ecommerce stores and subscription box businesses.
Questions to ask a 3PL before you sign
- Do you have minimums? Many 3PLs set a minimum number of orders or a minimum monthly bill. Make sure you clear it comfortably, not just in your best month.
- Which platforms do you integrate with? Check they connect directly to your store, whether that's Shopify, WooCommerce or another sales channel, and ask what happens if the connection drops.
- How are your storage and pick fees structured? Some charge by pallet, shelf or bin, others by item, plus receiving and packaging. Ask for a written breakdown and run it against a real month of your orders.
- How do returns work? Who checks the item, how fast is it restocked, and what's charged for it?
- What's your peak season capacity? Ask about cut-off times and how they handled last year's busiest weeks.
- What happens if stock is damaged or lost? Get their liability terms in writing, and check what your own insurance covers.
- Can you ship internationally? Ask about customs paperwork, duties and whether they have warehouses in other countries.
- How long is the contract? Check the notice period, and ask how you'd move your stock out if it doesn't work. A good 3PL won't mind the question.
Talk to two or three 3PLs, give them the same order data and compare like for like. The cheapest-looking quote isn't always the cheapest once you add up every line.
Before you switch, plan the move. Agree a date, send a small test shipment first, place a few test orders yourself and check what arrives. Keep some stock back for a week or two in case anything goes wrong while the integration settles in.
Frequently asked questions
What does 3PL stand for?
3PL stands for third-party logistics. It's a company that stores, packs and ships orders on behalf of another business.
What's the difference between a 3PL and a warehouse?
A plain warehouse stores goods. A 3PL stores them and also picks, packs, ships and often handles returns, connected to your online store.
Is a 3PL worth it for a small business?
It can be once packing orders takes up too much of your time or space. Get quotes based on your real order volume and compare them with what fulfilment costs you in-house, including your own time.
Can a 3PL work with Shopify?
Yes. Most ecommerce 3PLs connect to Shopify, and many also connect to WooCommerce, Amazon and other channels. Check the exact integration before you sign.
