3PL

What is 3PL?

3PL stands for third-party logistics and refers to an external company that stores your inventory and handles picking, packing, shipping, and usually returns on your behalf. You send your goods to their warehouse, and they ship orders to your customers as the orders come in. A 3PL is a service provider — not to be confused with a WMS, which is the software that runs the warehouse itself.

Why does 3PL matter?

When order volume grows beyond what you can pack yourself, in-house fulfillment becomes a bottleneck that costs delivery time and creates errors. A 3PL gives you access to professional warehouse processes and often cheaper shipping rates, because the partner ships large volumes. With distributed warehouses you can also deliver faster to more markets without investing in square footage and staff yourself.

Common use cases

• You are scaling and can no longer keep up with packing orders in-house.
• You want faster delivery by holding stock closer to customers or in new markets.
• You want to free up time from the packing table for product development and marketing.
• You want to ship via parcel shop and multiple carriers without managing the contracts yourself.

Shopify perspective

In Shopify, a 3PL typically connects through a fulfillment app that registers as a fulfillment service and a location. Inventory counts then sync automatically, new orders are routed to the partner for picking and packing, and tracking plus order status update back in Shopify. Note that Shopify sold its own Shopify Fulfillment Network to Flexport in 2023, so the platform no longer operates its own 3PL — you choose a third-party provider. A 3PL usually bills for storage plus per-order pick, pack, and shipping fees.