3PL.
aka third-party logistics, fulfilment provider, outsourced fulfilment
Someone else's warehouse, staff and couriers, shipping your orders.
What it actually means
A 3PL, third-party logistics provider, is a company that stores a seller's inventory and picks, packs and ships orders on the seller's behalf. The seller sends stock in bulk to the 3PL's warehouse; orders flow in from the store automatically; the 3PL sends them out and usually handles returns too.
Sellers pay for receiving, storage (by pallet, shelf or cubic metre), a pick-and-pack fee per order, packaging and postage. The 3PL's bargaining power with carriers often makes postage cheaper than a small seller could get alone.
The marketplace versions, where the platform itself is the warehouse, work the same way with one addition: using them tends to improve a listing's delivery promise and visibility on that marketplace. The trade is control. Your stock sits in someone else's building under someone else's rules.
Where you'll hear it
We were spending four hours a day packing. We moved to a 3PL and it costs 2.80 an order plus storage.
Translation: we bought our time back. Whether it was worth it depends on what we do with the four hours.
Also in logistics quotes, in marketplace fulfilment programmes, in any expansion plan that involves holding stock in another country, and in the phrase “1PL, 2PL, 3PL, 4PL”, which mostly exists to confuse people.
The pop-culture version
A band starting out carries its own amps, drives its own van and sells its own T-shirts. It works for small rooms and it leaves nobody with energy to play well.
At some point they hire a crew. The crew owns the trucks, knows the venues, sets up and packs down. The band turns up and plays. It costs money every night, and the band can now do thirty cities instead of six.
A 3PL is the tour crew. You stop being a warehouse that happens to have a brand and go back to being a brand.
Outsource fulfilment when packing is taking time away from selling, and not before you understand what a correctly packed order looks like.
Say it like you mean it
“All-in fulfilment through the 3PL is 4.10 an order against 3.60 in-house, and it frees two people for sales.”
Compares full cost and names what the switch buys.“A 3PL will fix our delivery problems.”
It will ship what is in stock. Late supplier deliveries and bad forecasts move into the 3PL's warehouse with you.Ask any 3PL for a quote on your actual order profile: units per order, parcel size, returns rate. Rate cards mean little until they meet your numbers.
Shipping, fulfilment and the rest of the tools a store needs, in setup order.
Decoded next
Decoded by the Kurums editorial team. Kurums Decoded translates the language of business for people who are new to it. Definitions are kept short on purpose; the serious version above goes deep. Nothing here is financial, legal or career advice.
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