3PL (Third-Party Logistics)
An outside company that handles warehousing, picking, packing and shipping on a seller's behalf. Using a 3PL trades some control and per-unit margin for not having to lease warehouse space, hire warehouse staff, or manage carrier relationships directly - a common middle step between fulfilling orders out of a garage and building an in-house fulfillment operation.
In practice
Using a 3PL trades some control and per-unit margin for not having to lease warehouse space, hire warehouse staff, or manage carrier relationships directly - a common middle step between fulfilling orders out of a garage and building an in-house fulfillment operation.
A growing DTC brand outgrows fulfilling orders from its founder's apartment and signs with a 3PL that handles storage and shipping from three regional warehouses instead.
Why it matters
Choosing the wrong 3PL - one without warehouses near a business's customer base - can actually make shipping slower and more expensive than doing it in-house.
Worth knowing
- Pricing usually combines storage fees, per-order pick-and-pack fees, and passed-through shipping cost.
- Some 3PLs specialize by product type (apparel, fragile goods, oversized items) - fit matters more than price alone.
- Multi-warehouse 3PLs can split inventory across regions to cut average shipping distance and cost.
Related terms
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