The Best Third-Party Logistics Providers (3PL) of 2023
Every business owner that sells physical products will tell you that one of the biggest challenges is inventory management and shipping. The time it takes to pick, pack, and ship products to customers is sizable, especially with extensive inventories or high order volumes. We’re looking at what we think are the best third-party logistics providers for e-commerce businesses and businesses that sell physical goods online to decide which is the best for your business and how you can benefit from them.
What is a Third-Party Logistics Provider?
A Third-Party Logistics provider (often shortened to 3PL) is a company that provides outsourced or external logistics services for businesses. These services may include inventory management, warehousing, transportation, and other logistics-related activities. 3PL providers help businesses manage the “last mile” of their supply chain by providing an end-to-end service from when goods are received until they are delivered to their final customers. The services offered by 3PL companies help businesses save time and money as they don’t have to manage every element of their supply processes.
Using a 3PL also means businesses can access more expertise and resources than they would have if they manage their logistics operations in-house. They can use a wider network of warehouses, suppliers, and transportation options, higher levels of customer service, and better consumer experience when using a third-party provider. For example, 3PLs often use advanced technologies such as artificial intelligence and analytics to provide more efficient services to their clients.
Why Should I Use a Third-Party Logistics Provider?
There are several reasons to offload logistics and fulfilling orders to a third-party logistics provider.
Reduced Costs. A 3PL is more cost-effective, as they are better equipped to find competitive shipping rates and provide discounts on bulk orders. They also manage large warehouses and often thousands of other clients, meaning your fractional cost of warehousing is minimal and often so low it’s not worth breaking out on an invoice.
3PLs Can Handle It All. Third-party logistics providers offer scalability, allowing businesses to easily adjust their shipping needs as the number of orders grows. A 3PL’s staff is often equipped to handle a dozen or a thousand daily orders.
Offloading Risk. Outsourcing to a third-party logistics provider reduces the risks of handling shipping and logistics in-house, such as missed delivery deadlines or damaged goods due to improper packaging.
What to look for in a Third-Party Logistics Provider?
Customer Service. First and foremost, a small business should look for a 3PL that offers reliable customer service and can quickly answer any questions. The last thing you need is to have an issue with orders and be unable to reach someone.
Tailored to your needs. A 3PL that can provide flexible solutions tailored to their specific needs and scalability to meet the small business’ growing requirements over time. Look for a provider to support you in your early days and after your business has grown.
Guarantees and SLAs. An experienced 3PL with a proven track record of success will reflect their performance in their SLAs. It’s then in their best interest to ensure every order goes out correctly and on time.
Flexible storage options. Some third-party logistics providers charge for floor space only when you use it, and often break down that space into smaller chunks, so you’re not paying for an entire pallet’s worth of room when a bin will do.
Useful locations. A 3PL’s footprint isn’t always indicative of its performance, but if you find most of your customers are in one specific region, partnering with a 3PL that has a warehouse in that area can save you on shipping costs and result in orders arriving at a customer’s home or business much sooner.
Largest Fulfillment Network: ShipBob
ShipBob’s pricing transparency and lack of minimum monthly spending requirements make it a great solution for new businesses. While some 3PL services charge upwards of $500 per month, ShipBob’s $0 minimum spend gives small businesses access to high-quality logistics solutions and fulfillment nationwide.
Inventory will always be close to your customers, with nearly two dozen warehouse locations across the continental United States and Canada, as well as a location in Australia and a handful of locations in Europe.
Pros
Cons
Fulfillment Costs
- Receiving: $25/hour for the first two hours; $40/person/hour thereafter
- Storage: $40/pallet/month; $10/shelf/month; $5/bin/month
- Pick and Pack: FREE for the first 4 picks; +$0.20 each thereafter
- Materials: FREE
- Shipping: Varies based on several factors (carrier, destination, weight, size, and more).
- Returns: $3 per order
- Special Projects: $45/person/hour
ShipBob
Seller Journal Rating 4.5Subscription Boxes: ShipMonk
Copious amounts of warehouse space turns ShipMonk into a great solution for businesses selling various products. ShipMonk also offers dedicated workflows and handling for subscription box services, making them a unique choice on this list for those who sell monthly collections of curated goods.
With their optional MonkProtect service, your business can offer insurance for orders automatically at checkout–potentially increasing revenue and trust in the company–and guaranteeing each customer is satisfied, even if their order arrives damaged.
ShipMonk Pros
ShipMonk Cons
ShipMonk Costs
Above all else, ShipMonk has a minimum $250/month fee. The difference is charged if storage and order costs do not exceed the $250/month minimum. Prices are based on up to 500 monthly orders and up to 500 monthly subscription boxes. Prices are lower for higher volumes.
- Storage (calculated daily)
- Small Bin: $1/month
- Medium Bin: $2/month
- Large Bin: $3/month
- X-Large Bin: $4/month
- Pallet: $25/month
- Pick and Pack
- Single Order
- First: $3.00/order, Additional: $0.75/each/order
- Subscription Box
- Box assembly + kitting (5 items): $2.50/order, Additional: $0.20/each/order
- $15 batch processing fee if less than 50 identical subscription boxes are assembled at once
- Single Order
- Returns
- Base (1 item): $2.00
- Each Additional item: $0.50/each
- Materials
- Packaging materials: $0.15-$2.00/order
- Promotional inserts: $0.20
- Bubble pouches: $0.50/item
- Shipping: discounted carrier rates
- Other
- Separate charge(s) for custom packaging
- Gift messaging
- Blank 4×6″ card: $1.00
- Custom 4×6″ card: $0.80 + insert cost
- Fragile items and items over 5 pounds may incur additional charges.
ShipMonk
Seller Journal Rating 4.0Custom SMB Solutions: The Fulfillment Lab
The Fulfillment Lab is built for small, medium, and large businesses that operate complex e-commerce and supply chains. Integrates with every key e-commerce platform (and many lesser-known ones). With a robust SLA and substantial international presence, established businesses looking for a more tailored, custom 3PL solution will likely find it with The Fulfillment Lab.
The Fulfillment Lab Pros
The Fulfillment Lab Cons
The Fulfillment Lab Costs
Pricing is dependent on several factors. For orders in the $80-$160 range, the average total fulfillment cost is about $8 per shipment, given 10-20 orders daily. An example item TFL provided would be a candle (shipped about 6 inches cubed).
Inventory that hasn’t moved in 90 days results in a charge passed on how much space those items occupy in the warehouse.
The Fulfillment Lab
Seller Journal Rating 4.0Flat-rate Pricing: ShipHero
Bucking the traditional pricing structure of most 3PL companies, ShipHero offers a flat rate for each shipment. Paying the same price for each shipment can mean big potential savings, though depending on the variance in each order’s cost and retail value, lower-priced, lower-margin items may suffer at the hands of inadvertent loss-leader status, even if that’s not your intention.
The Fulfillment Lab Pros
The Fulfillment Lab Cons
ShipHero Costs
- Onboarding: FREE
- Receiving: FREE
- Storage: $0.65/square foot
- Fulfillment: Flat rate based on shipping weight, dimensions, and service level (Standard vs. Overnight, for example).
ShipHero
Seller Journal Rating 3.5Niche & High-Value Inventory: Red Stag Fulfillment
With the most generous guarantees in the industry, Red Stag Fulfillment stands by its SLAs. It is an excellent option for established businesses looking to move to a provider offering a more tailored, custom solution. Red Stag Fulfillment isn’t a service provider for everyone; however, with a higher minimum than most, limited warehouse locations, and higher-than-average costs for smaller items. They excel for businesses that sell high-end, valuable, or hazardous products with their bespoke access controls and chain of custody processes in each of their warehouses.
Red Stag Fulfillment Pros
Red Stag Fulfillment Cons
Red Stag Fulfillment Costs
- Receiving: $14.25 per pallet
- Storage: $0.75 per cubic foot
- Pick and Pack:
- First item: $1.80 to $2.25
- Additional item: $0.32
- Materials: $0.80
- Shipping: discounted carrier rates
- Returns: $6 per order plus return shipping cost
- Other:
- Special Projects: $40/hour/person
- Small package fee ($1) for shipments less than 1 LB.
Red Stag Fulfillment
Seller Journal Rating 4.0Wrap Up
Third-party logistics providers can play an important role in businesses looking to outsource shipping and supply chain needs. It is important to choose a provider that best fits one’s specific needs, and it is essential to consider factors such as price, location, technology offerings, and scalability. No provider is a one-size-fits-all solution, so it is wise to research the best fit for your business before engaging a third-party logistics provider.
The Seller Journal may receive a commission from purchases made through links in this post. Click here to learn more about how we treat affiliate links and content that contains them. As an Amazon Associate, The Seller Journal earns from qualifying purchases.
