What is 3PL Third-Party Logistics? Definition, Process, & Resources

When an online store grows, party logistics and shipping play an essential role so the business can run efficiently and flawlessly. Fulfilling shipping orders is essential to success at a higher level, and there also comes the point where in-house order fulfillment is no longer possible.

To satisfy customers on a bigger scale, third-party logistics (3PL) is the perfect solution for the task. If you work with dependable third-party logistics providers, their knowledge and expertise are applied to your eCommerce business.

Ultimately, you save money and time—you can now assign more to income-producing activities.

This guide will present you with what third-party logistics is all about and, hopefully, can help you optimize your entire supply chain operations.

Without further ado, let’s dive in!

What is 3PL?

What is 3PL

In case you didn’t know yet, third-party logistics (3PL) is an externalized eCommerce e-commerce logistics framework, shifting the supply chain process to a specialist third-party.

The services provided under a 3PL partnership often involve warehousing, pick and pack, order fulfillment, and inventory management.

Third-party logistics providers have improved their service offerings over the past years to support their growth with increased expertise, dependable infrastructure, and innovative reporting capabilities and tools. That will enable your eCommerce business to concentrate on the more crucial aspects of your business processes, as the lessened reliance on their capabilities related to order fulfillment frees up crucial resources.

What is 3PL Warehouse?

What is 3PL Warehouse?

The most appealing element of third-party logistics is third-party warehouse logistics warehouses. Warehousing in the 3PL sector is more about inventory management and the ability to scale the space when needed.

For retail stores, Black Friday or boxing day must be stored and move fast. That’s something third-party logistics warehouses must be able to provide effortlessly.

Fulfillment Process of the 3PL Order

Fulfillment Process of the 3PL Order

Are you starting to consider partnering with third-party logistics providers? Do you know the shipping process?

We know how easy it is to get overwhelmed with all the moving parts and unfamiliar terminologies. But it should not be a mystery so let us break things down.


The second step in the fulfillment process is receiving. It involves the reception of inventory that is followed by its storage.

A third-party logistics provider cannot fulfill orders without receiving the item timely and organized way.

Also, each 3PL has specialized capacity and processes for receiving and storing inventory.

3PL warehousing

Once the distributed inventory has been stored and organized, every product SKU enables staff to track a dedicated location on a pallet, bin, or shelf.

Seeking out a third-party logistics provider to handle your business growth is essential.

They must have more than warehouse space to safely and neatly store your growing inventory.


You’ve probably heard the phrase “pick, pack, ship.” The first of those steps in the 3PL order fulfillment process comes after the order is placed and funneled through an array of advanced eCommerce integrations.

Automatically receiving orders as they’re placed helps simplify the entire shipping process.

Once a warehouse picking team is allocated, the picker gets a packing list of items, the specific qualities, facility’s location and collects the items from their respective locations.


Great third-party logistics companies will pick the best packing materials for their customer orders, safeguarding your products and obtaining the lowest practical dimensional weight.

That method considers the package dimensions to identify shipping costs and transportation costs.


The final step is shipping. The third-party logistics company will buy and print a shipping label on your behalf.

No matter what shipping method you pick is automatically incorporated into the tracking information and confirmation email.

How Can a Company Benefit from Third-Party Logistics?

How Can a Company Benefit from Third-Party Logistics?

Here are some of the benefits of partnering with a third-party logistics company:

Reduce your overhead costs

Rather than spending money on keeping your own warehouse and distribution centers, you can remove such costs with logistics service providers.

Test and launch in new international and local markets with ease

Working with third-party logistics companies allows your eCommerce store access to new markets and enhances your customer service.

Third-party logistics providers are often accredited to provide services globally that can grow your store to greater heights.

Free up your capital that’s associated with warehouse spaces

While there are a few upfront costs to using a third-party logistics provider, not having to maintain your own warehouse will be a huge money-saver in the end.

Moreover, 3PL is a third-party logistics company that can accurately manage your inventory. That can save you money on inventory management costs.  

Protect your business against global supply chain disruptions

As your package is in transit, it’s exposed to many disruptions and risks. Working with 3PL providers helps you get around unforeseen scenarios, as they arrange alternate routes for your freight.

They also help you handle transportation services, logistics operations, insurance costs, and claims.

Disadvantages of Working with 3PL Providers

Disadvantages of Working with 3PL Providers

3PLs may have different hours or workflows

If there are problems or delays in shipping an order, your buyers will approach you for answers, even if you do not completely control what happens in your 3PL’s fulfillment center.

Your business may be working at a particular hour that your 3PL may not be available.

There is an upfront investment

3PL third-party logistics providers will indeed pay for themselves in the end. But suppose your business has insufficient orders to justify the upfront investment.

In that case, you might consider doing your fulfillment operations alone until you need the big logistical capacity these 3PL third-party logistics providers provide.

3PL Myths and Misconceptions

Myth #1: When you hand things over to a 3PL, you lose control

Hiring a 3PL service provider for your supply chain management offers you higher control over the core aspects of your business.

Many logistics providers are set to provide better visibility and control to the managers and owners.

The third-party logistics service maintains the international logistics planning, but the managers and owners are still in complete control of every process.

Myth #2: 3PLs have too many hidden fees

Working with a 3PL provider is an investment, but one that helps lessen overall shipping costs.

When you work with 3PL providers, you can save time, staffing, and resources that help with overall budget plans.

Myth #3: 3PLs are only for enterprise-sized businesses

Every business should prioritize order fulfillment and consistency within the customer experience.

A reputable 3PL provider can personalize their service to meet your business goals. Remember that no company is too small or big to benefit from third-party logistics providers.

When Should I Consider a 3PL?

When Should I Consider a 3PL?

3PL providers will benefit companies of all sizes, but specific factors that make their use benefit certain online companies above others.

Suppose your present order volume and sales forecasts have reached a quantity where you can no longer cope with the demand.

In that case, outsourcing order fulfillment may be advantageous to your business’s growth.

Also, as your company grows, it’s essential to stay aware of your order book’s growth before it reaches serious mass and once your inventory levels become too small. Liaising with a 3PL provider before that becomes the case is recommended.

3PL VS. Freight Forwarders: What is the Difference?

3PL VS. Freight Forwarders: What is the Difference?

The line between freight forwarding companies and 3PL providers can often become blurred, thanks to their identical roles.

Remember that freight forwarding companies provide a broker-type service, enabling businesses to get the best shipping rates, and a combination of carriers figured out on their behalf.

Also, they function as a middleman and coordinate almost everything in supply chain management.

Freight forwarders’ services end at arranging how your freight gets from one point to another. That indicates you must arrange warehouse storage, custom packaging, and other tasks.

Meanwhile, 3PL providers are different because they could be full-service. They’ll handle the whole supply chain management process, including warehouse storage, picking, packing, and even shipping.

3PL VS. 4PL: What is the Difference?

3PL VS. 4PL What is the Difference

The main difference between fourth-party logistics and 3PL providers is that the former encompasses the entirety of the journey, from customer to manufacturer to delivery from procurement.

Even though a fourth-party logistics company may not own its warehouse space or vehicles, its focus is on executing and optimizing your whole supply chain management, offering you a single point of contact and managing your order fulfillment.

3PL VS. Dropshipping: What is the Difference?

3PL VS. Dropshipping

In 3PL shipping logistics, the retailer purchases products in bulk and offers them to a third-party company.

If the retailer sells costly or highly customized products, they will go with 3PL to prevent keeping an in-house order fulfillment.

In dropshipping, the seller doesn’t need to own or manage inventory. Also, the manufacturers are in charge of shipping logistics and orders to customers.

In 3PL, the 3rd party logistics provider does all the logistics operations in-house, from warehouse operations to packaging and shipping.

Top 10 3PL Providers to Choose From

Several 3PL companies stand out in the eCommerce space and are worthy of consideration for all your supply chain requirements.

1.      Yue Shing Logistic Company


3.      CTSI Logistics

4.      ESA Logistics

5.      China2West

6.      Fulfyld

7.      DSV Panalpina

8.      Red Stag Fulfillment

9.      UPS Supply Chain Solutions

10.   Kerry Logistics

More Tips To Help You Find the Perfect 3PL Services Provider for Your Business

There are numerous third-party logistics firms out there. How do you guarantee you find the one that’s the perfect fit for your business?

Here are some tips you must consider:

1.      Ensure you pick a 3PL provider with dependable capacity for your business’s volume. If you plan on scaling up, you like a company that could keep up with your growth instead of losing time seeking a new one at a serious time in your business.

2.      Ask if a 3PL provider’s technologies are compatible with your business. It must be familiar with how your platforms engage and predict any concerns. That’s critical for managing inventory and customer satisfaction and experience.

3.      Transparency is essential in supply chain management. A 3PL provider should offer quotes readily. Ask how you can track the shipment for supply chain visibility.

4.      Ask your potential 3PL provider how it sets up contact points to support your business efficiently.

Online platforms are significant, but it’s crucial to understand that there are supply chain management professionals who manage your supply chain. A company can offer references from previous customers who can speak to its recent performance.

8 Most Valuable 3PL Services to Look For

Here are the most important 3PL services you need to watch out for when considering hiring a 3PL service provider:

1.      Warehousing

3PL businesses offer storage space where you can securely and safely store the elements of your inventory list.

2.      Receiving orders

When a 3PL company receives a new order, they have enough resources who are proficient at picking orders from the warehouse.

3.      Packing of orders

3PL providers manage the packaging of goods, which are scheduled to be dispatched and sent to their destinations.

4.      Shipping the goods

3PL providers manage delivery from the company’s warehousing facility to your customer’s door. Helping with deliveries and pickups to and from the courier hub is all provided in this service.

5.      Tracking

You’ll get receiver proper and detailed tracking for all your orders. That will be forwarded to your consumers for their use to track and complete information. The shipping company offers details that customers can utilize to track their orders.

6.      Return orders

Most 3PL providers handle your returns. Remember that returned goods are always filled at the original warehouse, following your policies in such cases.

7.      Inventory management

Managing an ever-increasing inventory flow from your sales requires syncing the physical inventory with your eCommerce store.

Real-time inventory counts and tracking throughout customer warehouse management software enables 3PLs to have a pulse on accessible quantities and units sold every day for each product.

8.      Distributed inventory and discounted shipping

Most customers expect reasonable and fast shipping. A 3PL partnership guarantees your products and stored and shipped from convenient shipping zones at more discounted shipping costs.

Final Thoughts

Overall, there’s no doubt that a 3PL provider can help you improve your business’s growth while offering you the time-distance to focus on other elements of your company.

Try to partner with a 3PL provider that is resourceful and skilled to offer your consumers same-day shipping delivery, reliable transportation procedures, low labor costs, and a remarkable delivery experience that is necessary these days.



DFH Global Logistics - China

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