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What is a 3PL? Third-party logistics, explained

A plain-English guide to how 3PL fulfillment works, what it costs and when it makes sense for an ecommerce brand.

By the TradeHive3PL teamUpdated 7 min read

What does 3PL mean?

3PL stands for third-party logistics. A 3PL is a company that stores your products and ships your customers’ orders for you. Instead of packing boxes in your garage or renting your own warehouse, you send your inventory to the 3PL, connect your online store, and the 3PL handles every order from there.

For ecommerce brands, “3PL” and “fulfillment center” usually mean the same thing: a warehouse team that receives, stores, picks, packs and ships products, plus handles returns.

How 3PL fulfillment works, step by step

  1. Connect your store. Your Shopify, Amazon, Walmart, TikTok Shop, eBay, Etsy, Temu or WooCommerce store is connected to the 3PL’s warehouse management system (WMS), so orders flow in automatically.
  2. Send your inventory. Your supplier or factory ships stock to the warehouse. The 3PL counts and inspects it, and your products go live in the system.
  3. Storage. Products sit on shelves, in bins or on pallets, tracked by SKU and location.
  4. Pick and pack. When an order arrives, the team picks the right items, packs them in the right-sized box and adds any inserts.
  5. Shipping. The 3PL buys the label, often at discounted carrier rates, hands the parcel to the carrier and sends the tracking number back to your store.
  6. Returns. Returned items come back to the warehouse to be inspected, restocked or disposed of.

What services does a 3PL offer?

How much does a 3PL cost?

Most 3PLs charge for four things: receiving inventory, storage (per pallet, bin or cubic foot each month), pick and pack (per order, plus per extra item), and shipping labels. Some add packaging, account or setup fees.

As an example, TradeHive3PL’s published rates start at $2.50 per order for pick and pack, $0.50 per extra item, packaging from $0.35 and storage from $25 per pallet per month, with no setup fees. Read the full 3PL pricing guide or try the rate calculator.

When does a business need a 3PL?

3PL vs. doing it yourself

Self-fulfillment3PL
Your timeHours every dayClose to zero
Shipping ratesRetail or small-volume ratesDiscounted, rate-shopped labels
SpaceYour home or rented spaceProfessional warehouse
Scaling for peaksYou and whoever you can hireTrained warehouse team
Fixed costsRent, equipment, staffPay per order and per pallet

Why location matters

Carriers price by distance zones. A warehouse in the center of the US keeps most deliveries in shorter zones, which means lower label costs and fewer days in transit for customers on both coasts. That’s why TradeHive3PL operates from the central US.

Want exact numbers for your store?Get a free quote, or send last month’s invoice and we’ll price it line by line.
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Frequently asked questions

What is the difference between a 3PL and a fulfillment center?

For most ecommerce brands they mean the same thing. A fulfillment center is the warehouse, and the 3PL is the company that runs it and handles storage, packing, shipping and returns for you.

Is a 3PL worth it for a small business?

Often, yes. If packing orders takes hours each day or shipping costs are high, a 3PL with no minimums can save time and money. See our small business fulfillment page.

What is the difference between 3PL and 4PL?

A 3PL runs the warehouse and shipping. A 4PL manages your whole supply chain, often coordinating several 3PLs and freight providers on your behalf.

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