Operations
What Is a 3PL?
A 3PL, or third-party logistics provider, handles warehousing, picking, packing, and shipping for a brand, replacing the in-house warehouse most DTC brands cannot justify operationally. Typical DTC fulfillment runs $3 to $6 per order excluding shipping, or $5 to $12 with shipping included. Predictable subscription consumables sit at the low end while apparel, with size variation and returns, sits higher.
A 3PL (Third-Party Logistics) provider handles warehousing, picking, packing, and shipping for your brand — replacing the in-house warehouse most DTC brands can't justify operationally. The decision to use a 3PL vs go in-house is one of the bigger operational + capital decisions a brand makes.
Standard 3PL cost structure
- Receiving: $25–$75 per pallet (one-time at inbound)
- Storage: $10–$30 per pallet per month, or per cubic foot
- Pick fee: $1.00–$2.50 per item picked
- Pack fee: $0.50–$1.50 per order
- Ship cost: 3PL's carrier-negotiated rates, often better than what you'd get direct
- Account management: monthly minimum fee, sometimes percentage of revenue
Per-order cost
Typical DTC per-order cost (excluding shipping): $3-$6. With shipping: $5-$12 per order. Subscription consumables (predictable sizing) sit at the low end. Apparel (size variation + returns) sits higher.
When to use a 3PL vs in-house
- 3PL: under 50K orders/month, simple product (no special handling), variable volume, low capex appetite
- In-house: above 50K orders/month, unique product needs, want full control of customer experience, ready for $1-3M capex
- Hybrid: some DTC brands keep 3PL for DTC and bring wholesale in-house, or vice versa
The most common mistake
Switching 3PLs without modeling the migration cost. Inventory transfer, integration work, customer disruption, and operational learning curve can wipe out a year of cost savings from the new provider. Calculate total migration cost (typically $50-200K + 4-8 weeks of disruption) before chasing a lower per-order rate.
Frequently Asked Questions
What does a 3PL do?
Warehousing, picking, packing, shipping — replaces in-house warehouse.
When to go in-house?
Above 50K orders/month or unique handling needs.
What's a 4PL?
Fourth-Party Logistics — manages your logistics function including multiple 3PLs.
Related Terms
- What is fulfilment cost per order?
- What is last-mile delivery?
- What is reverse logistics?
- What is CM1?
Browse the full ecommerce finance glossary for every metric and money term a DTC operator needs.
Evaluating a 3PL switch? Talk to a CFO on the total economics first.