What is Third Party Logistics? A Clear Guide for Growth

What is third party logistics? A clear, simple guide from Shipping Bros

📖 Estimated reading: 9 mins

Key Takeaways

• Third-party logistics (3PL) involves outsourcing your supply chain tasks—like warehousing, fulfillment, and transport—to specialized providers.

• A 3PL handles both inbound logistics (receiving and storing goods) and outbound processes (picking, packing, shipping), enabling your business to focus on growth.

• Core 3PL services include warehousing, order fulfillment, transportation, returns management, and technology integration to streamline operations.

• Partnering with a 3PL can reduce costs, improve speed, and provide scalability to support channels like ecommerce, retail, wholesale, and international sales.

What's Inside

• What is third-party logistics (3PL)?

• Why 3PL matters for growing brands

• How third-party logistics works, step by step

• Core services a 3PL offers

• How a 3PL’s scope can change with your needs

• Real-life use cases at Shipping Bros

• Questions to ask when vetting a 3PL

• How to get started with a 3PL

• Common mistakes to avoid

• How 3PL supports growth across channels

• How technology makes 3PL work better

• How to measure if your 3PL is working

• When to move to a 3PL

• About Shipping Bros in Northwest Arkansas

• Recap: key facts about third-party logistics

What is third party logistics (3PL)?

Third-party logistics, or 3PL, is when a company hires an outside expert to manage parts of its logistics and supply chain. This can include inventory management, warehousing, order fulfillment, shipping, and transportation. The 3PL company does these jobs for the brand, allowing the business to focus on product development and growth.

Essentially, a 3PL provider is a partner that manages both inbound logistics—like receiving and storing goods—and outbound logistics—such as picking, packing, and shipping products to customers. This strategy enables businesses to achieve faster delivery, lower costs, and easy scalability. (Source: source)

Many 3PLs offer various services under one roof. Some focus on specific tasks such as transportation, while others manage an entire supply chain for a brand. This flexibility lets you start small and expand as your business grows. (Source: source)

Why 3PL matters for growing brands

For ecommerce, retail, and B2B companies, 3PLs are a game-changer because they:

• Save time: Eliminate the need to maintain a warehouse and hire a large operations team. You can focus on product innovation and customer service. (Source: source)

• Cut costs: Utilizing shared warehousing, labor, and carrier deals often results in lower expenses compared to managing all logistics internally. (Source: source)

• Improve speed: Efficient processes and advanced technology ensure orders are processed and shipped quickly and accurately. (Source: source)

• Scale easily: During peak seasons or when launching new channels, a flexible 3PL can adjust space and staffing on demand. (Source: source)

• Reduce risk: Complex shipping rules, freight options, and packaging choices are managed by experts, decreasing the chances of costly errors. (Source: source)

How third party logistics works, step by step

Here is a simplified view of how a 3PL integrates into your supply chain:

1) Inbound logistics

Your goods arrive at the 3PL’s warehouse from your factory, suppliers, or website. The 3PL receives deliveries, checks quantities and quality, and stores items in bins or racks. This process is part of inbound logistics. (Source: source)

2) Inventory management

The 3PL logs all items in its warehouse management system (WMS). This tracks each SKU, batch or lot codes, serial numbers if needed, and bin locations. You can view real-time stock levels either through a dashboard or integration with your store. (Source: source)

3) Orders in

Orders from your ecommerce platform, marketplace, or wholesale system are received by the 3PL’s system. The system confirms products are in stock before processing. (Source: source)

4) Pick, pack, ship

The 3PL team picks items from storage, packs them with suitable materials, and ships via chosen carriers and services based on your criteria. This outbound process ensures fast, accurate delivery. (Source: source)

5) Returns and reverse logistics

When customers return products, the 3PL inspects received items, restocks or disposes of them according to your policy. Proper returns handling enhances customer satisfaction and reduces waste. (Source: source)

6) Reporting and support

Regular reports on orders, inventory, and shipping performance are provided. Strategic planning sessions help forecast needs for promos, growth, and seasonality. (Source: source)

Core services a 3PL offers

Leading 3PL providers typically offer these key services, explained simply:

• Warehousing and inventory storage: Safe, clean spaces with racks, bins, and procedures for receiving and cycle counting to keep stock accurate and accessible. (Source: source)

• Order picking and fulfillment: Skilled staff select the correct products, pack them carefully, and sometimes include custom inserts or gift notes. Checks are run to reduce errors and packaging is optimized for waste and cost. (Source: source)

• Transportation and freight management: Planning inbound and outbound shipments, selecting shipping carriers, and optimizing routes to balance speed and expenses across parcel, LTL, or FTL options. (Source: source)

• Returns processing (reverse logistics): Handling customer returns with inspection, grading, restocking, or disposal, aligned with your policies to protect margins and customer experience. (Source: source)

• Customs clearance and global support: Assisting with cross-border shipping paperwork, duties, and compliance for international sales. Some 3PLs include this in their services, others partner with specialists. (Source: source)

• Technology integration and WMS: Connecting your store, marketplaces, and ERP systems for real-time stock and order tracking, reducing manual errors, and speeding up fulfillment. (Source: source)

How a 3PL’s scope can change with your needs

Every brand is different. A 3PL can tailor its services to match your growth stage:

• Single-service support: You might only need transportation or storage at first. A 3PL can focus on that alone. (Source: source)

• Full supply chain management: As you scale, a 3PL can take over warehousing, fulfillment, and freight for your entire operation. (Source: source)

If resources or space are limited, outsourcing to a 3PL often offers the fastest path to reliable logistics. (Source: source)

Real-life use cases at Shipping Bros

Here are practical examples based on our work with various brands:

• Fast-growing DTC brand: A skincare company launches new products after viral success. We handle their bulk storage, workflow integration, and same-day shipping, allowing the brand to focus on marketing and content. (Source: example)

• Maker with wholesale and DTC: A coffee roaster supplies retail stores and online customers. We provide separate pick flows and labels for wholesale cases and individual DTC orders from one shared inventory pool. (Source: example)

• Seasonal product line: A toy brand scales up operations during Q4 peak using our flexible storage and staffing. Once the season ends, capacity scales down without long-term commitments. (Source: example)

• Hardware with returns: A tools company manages returns with inspections and grading. B-grade items are discounted, reducing waste and protecting margins. (Source: example)

Questions to ask when vetting a 3PL

Good questions help ensure a strong fit. Consider these:

• Capabilities and fit: Can you support my current and peak order volumes? Do you handle my SKU types and special needs like temperature control or hazmat?

• Technology and data: What WMS do you use? Can I see real-time stock and order data? Do you integrate with my store and ERP?

• Speed and service: What is your same-day cutoff? What is your order accuracy percentage? How do you handle delays or exceptions?

• Cost and terms: How are storage and fulfillment priced? Are there minimums? What are cancellation or exit terms?

• Freight and international shipping: Which carriers do you use? Can you handle international customs and duties? Do you offer rate shopping?

How to get started with a 3PL

Steps to begin your partnership:

• Map your needs: List SKUs, packaging, sales channels, and goals. Define your packing and return policies.

• Select a partner: Shortlist providers, request references, visit warehouses if possible, review proposals.

• Integrate tech: Connect your systems, set up SKUs, and run tests for orders, returns, and edge cases.

• Plan inbound: Schedule receiving, send ASNs, and stagger inbound shipments to prevent congestion.

• Define SOPs: Establish clear procedures for fulfillment, custom kitting, backorders, and returns.

• Launch in phases: Start small to test processes, monitor metrics daily, and expand once stable.

Common mistakes to avoid

Key pitfalls include:

• Messy SKU data: Inaccurate or unclear product info slows picking and causes errors. Clean your data before loading stock.

• Vague packing rules: Lack of specific instructions leads to inconsistent packaging. Document exact steps for each product type.

• Late inbound planning: Last-minute shipments cause dock jams. Schedule receiving and send ASNs in advance.

• No clear return policy: Unplanned returns increase handling time and costs. Define grading, timelines, and policies early.

• Underestimating peak periods: Failing to alert your 3PL about upcoming promos or holidays hampers preparation. Plan early for capacity.

How 3PL supports growth across channels

As your brand expands, a 3PL helps unify operations:

• DTC fulfillment: Achieve fast delivery with strategic zone skipping and regional carriers to boost customer satisfaction.

• Marketplaces: Maintain high on-time ship rates and update tracking info seamlessly to protect seller scores.

• Wholesale/Retail: Handle pallet builds, compliance labels, and EDI for retail orders efficiently.

• International: Manage customs paperwork, duties, and cross-border logistics through your 3PL’s global support.

How technology makes 3PL work better

Key tech features include:

• Warehouse management systems (WMS): Tracks stock locations and order status in real time, minimizing errors. (Source: source)

• System integrations: Connecting your store, marketplaces, and ERP reduces manual input and delays. (Source: source)

• Scanning & barcodes: Use handheld devices and clear barcode systems to ensure picking accuracy at scale. (Source: source)

• Carrier rate shopping: Tools that evaluate available carriers for speed and cost to optimize delivery. (Source: source)

• Visibility dashboards and alerts: Monitor stock levels, delays, and order spikes to react promptly and maintain service quality. (Source: source)

How to measure if your 3PL is working

Use these KPIs to evaluate performance:

• On-time ship rate: Percentage of orders shipped by the promised date.

• Order accuracy: Correct items and quantities shipped per order.

• Dock-to-stock time: Hours from receipt to stock available for sale.

• Inventory accuracy: Matching system counts with physical stock.

• Customer return handling: Time taken from return receipt to resolution.

Tracking these metrics helps identify bottlenecks and improve overall efficiency. (Source: source)

When to move to a 3PL

Signs that it’s time to partner:

• Your team is overwhelmed with shipping tasks.

• Your current warehouse is overcrowded or disorganized.

• You miss fulfillment deadlines during busy seasons.

• You want to support more channels but lack the resources.

• Costs or delivery zones are limiting growth.

• You’re planning a big product launch or seasonal demand spike.

About Shipping Bros in Northwest Arkansas

We are a local, hands-on 3PL partner dedicated to supporting brands in Northwest Arkansas and beyond. Our focus is on simple, reliable workflows and clear communication. We connect seamlessly with your systems, ship fast, and care about your brand experience. Our transparent pricing and scalable services make us a trusted extension of your team. If you need a 3PL that picks up the phone, understands your SKUs, and solves problems efficiently—reach out today.

Recap: key facts about third-party logistics

Third-party logistics (3PL) involves outsourcing logistics tasks like warehousing, fulfillment, and transport to specialized providers. It handles inbound (receiving/storing) and outbound (picking/shipping) logistics, enabling businesses to focus on growth. Common 3PL services include warehousing, order fulfillment, freight management, and reverse logistics. They also support international shipping and system integration. Many brands, from startups to enterprises, leverage 3PLs to optimize costs, scale quickly, and improve customer satisfaction. If your team is stretched or your growth plans outpace your current logistics setup, partnering with a 3PL like Shipping Bros in Northwest Arkansas can be the next step.