Third-party logistics (3PL) is on the rise. The total revenue generated by the 3PL market is expected to reach over $310 billion in 2025, and to grow to over $334 billion by 2029. Their efficiency, affordability, and supply chain expertise has made 3PLs a go-to for small to midsized businesses (SMB), large enterprises, and many other merchants seeking to expand their logistical scope. But how do you know if they're right for you?
In this comprehensive guide, we'll examine why so many suppliers choose 3PL providers as an order fulfillment solution.
First we'll define third-party logistics and what 3PL partners actually do. Then we'll look at what makes them so effective for merchants building their brand. Next we'll show the main benefits that 3PLs bring to the table. Finally we will list some of the factors that companies consider when they choose to work with them.
Read on to see if 3PL solutions could be right for you.
What Is a 3PL Provider?
A 3PL provider is broadly defined as any commercial firm that provides outsourced logistics services to its customers. More specifically, 3PL must store, manage, or process inventory on behalf of their clients, and perform shipping workflows such as:
- Storage and distribution
- Warehousing processes (picking, packing, kitting and assembly)
- Order fulfillment
- Transportation and last-mile shipping
- Reverse logistics and return processing
As supply chains have grown increasingly complex they have been disrupted by a number of social and global factors. So, companies have found 3PL providers to be a key solution to solving their logistics challenges.
Roughly 60% of SMBs reported having lost at least 15% of their revenue due to supply chain delays in 2023 and shipping rates have risen by 5.9% among major carriers, further dampening the bottom line.
Companies have turned to 3PLs to help them resolve their supply chain dilemmas and streamline their order fulfillment operations. In turn this has boosted customer satisfaction.
Given that over 90% of Fortune 500 companies now use 3PLs, their strategy is proving successful.
Why Do Companies Choose to Work With a 3PL Provider?
Whether they find their customer satisfaction hampered by lengthy shipping speeds or they're struggling to achieve their vision for a sustainable future, companies choose to work with 3PL providers for many reasons.
Typically, businesses make the decision to offload their order fulfillment workflows to a 3PL because the rest of their operations are constrained by supply chain bottlenecks. However, some may just prefer the ease and efficiency of working with a 3PL.
Scalability, customer satisfaction, and access to resources are the main factors that motivate companies to choose a 3PL partner. But the ultimate factor is the same: higher profitability.
Cost Savings
3PL providers can help reduce a company's operational expenses. Small startups may be able to get away with shipping orders from their home or office for a while. But as their brand grows, the cost of getting products to consumers will grow with them.
3PL order fulfillment companies let you cut your costs by supplying you with:
- Storage space. The exact numbers vary significantly by location. But the cost of storage space can range from $1–$8/sq.ft. This can significantly reduce your profitability, especially for inventory that stays on the shelves.
- Labor. If you run your own order fulfillment operations yourself, you'll need to hire and train employees to ship your products quickly and correctly. 3PL providers already have a team of highly qualified staff in place to handle your inventory, saving you on labor.
- Technology. Autonomous vehicles, cooperative robots ("cobots"), and AI-powered warehouse management software (WMS): 3PL partners possess a wide array of cutting-edge order fulfillment technology, helping you avoid the cost of implementing the most modern tools.
- Fleets. From forklifts to freight trucks, 3PL providers have the fleets needed to get your products to your consumers as quickly as possible.
From their strategically located fulfillment and distribution centers to their fleet, employee, and tech, 3PL providers have the shipping infrastructure it takes to successfully move your inventory. This saves you costly logistics expenses.
Scalability
Consumer demands vary rapidly in today's ecommerce-driven world. So, companies need a logistics solution that can adapt at a moment's notice. 3PL providers deliver greater scalability to their merchants, allowing them to toggle the services they receive up or down without paying for more than they need.
For example, a company specializing in seasonal products may need greater storage capacity during times of peak demand. If they're using 3PL services, they can adjust their allotted space accordingly, letting them adapt to demand spikes with ease.
3PL partners also offer custom packaging services to help merchants deliver their products with the appropriate logos, branding, and kit assembly. This allows companies to tailor their products to their customers' interest more closely.
The result is a fulfillment solution that not only enables you to evolve alongside your customers, but a logistics network that grows along with you.
Expertise and Technology
When companies leverage 3PL services, they tap into the experience and technology that these shipping experts already have. 3PL providers fully equipped with the advanced logistical systems, AI-driven tools, and innovative warehouse technology it takes to maximize their clients' order fulfillment efficiency.
They also have teams of logistics professionals who know how to make your supply chain stronger and more agile. Some technological and personnel upgrades that you can expect as a result of a 3PL are:
- Software. 3PL fulfillment providers such as QuickBox possess WMS solutions such as the iQ Client Portal, which provides transparency into your shipping processes. Its data analytics capabilities help you anticipate shifts in consumer demand, bolstering your supply chain resiliency. They also provide recommendations on warehousing processes and layout. They simultaneously automate reordering and restocking workflows, giving you full visibility into your operations.
- Hardware. 3PL providers possess innovative technology that helps them pick, pack, ship, and store orders with greater speed and accuracy than ever. Cobots work alongside human employees to perform warehousing tasks with greater safety and productivity. Autonomous vehicles and drones move your parcels from point A to point B with less risk of damage. And radio frequency identification (RFID) tags and barcode scanners help humans pick inventory with ease. The result is higher throughput — without the cost of implementation.
- Fleets. It's not enough for your products to be stationed at distributions centers that are closest to your consumers. Your 3PL partner must have the fleets in place needed to get them to the customer on time. Some 3PL providers have their own freight trucks to help move your inventory, and all of them have their own contracts with leading carriers. Leverage their logistic connections, and get your package to the consumer at a price you can afford.
- Experts. Is your inventory imported overseas, requiring special regulations and certifications? Do you know where your products would best be stored so that they travel a minimum distance to the consumer? 3PL providers such as QuickBox have a team of seasoned logistical experts with over 100 years of combined experience. They have answers to the supply chain questions you may not even know you should ask.
Smarter software, helpful hardware, and a team of experts working on your behalf. Companies gain all that and more when they leverage 3PL services, so it's not surprising that so many are making the switch.
Focus on Core Competencies
Chances are, you didn't launch your business with the dream of handling shipping processes all day. You launched your business because you had a vision of building a better product or delivering a new service that would improve your customers' lives.
By removing the burden of order fulfillment from your shoulders, 3PL partners help you return to the vision you had at the start.
Packaging products, assembling kits, shipping them off with the right carrier — these workflows all pull time and money away from what you got into business to do. By offloading these tasks to the experts, you free up more businesses to concentrate on refining your product, making more sales, and otherwise building your brand.
The result is less resources spent on logistics and more on innovation, giving you a competitive edge.
Enhanced Customer Satisfaction
It's no secret that customer standards are higher than ever. Of consumers, 73% expect better personalization as technology evolves. And 83% say they won't buy from a brand again if they've had a poor post-purchase experience. A happy customer is a returning customer, so companies are looking to 3PL providers to help them meet evolving consumer demands.
3PL services can directly impact a host of post-purchase tasks, making it crucial for achieving the fulfillment excellence that consumers have come to expect. A few ways that 3PL providers can enhance customer satisfaction are:
- Improving personalization, for a more tailored user experience.
- Providing notifications, to inform the consumer about the status and location of their product.
- Increasing shipping speed, to reduce unwanted delays.
- Offering reverse logistics, to simplify returns processing and maintain retention.
By offering faster delivery, better tracking, and reliable service to delight customers, 3PL providers can help businesses increase their consumers' satisfaction. This can result in a ripple effect, as positive reviews can draw other consumers to your brand — further increasing profitability.
5 Benefits of Partnering With a 3PL Provider
From their access to leading-edge technology to their established logistics network, the infrastructure that 3PL partners have in place provides a host of benefits to the companies they serve.
Some of the main 3PL benefits are:
- Improved efficiency. From their use of innovative shipping technology to their team of highly trained warehousing and supply chair professionals, 3PL providers like QuickBox know how to streamline your order fulfillment operations and maximize your efficiency .
- Fewer errors. Technologies such as RFID tags or pick-to-light methodologies reduce the number of errors in your fulfillment processes. This increases order accuracy, improves customer satisfaction, and lightens the load on your reverse logistics operations, improving profits at the same time.
- A broader reach. Complete with their own transportation fleets and distribution centers strategically located across the globe, 3PL providers have access to a wider range of shipping networks that you can leverage to build out your brand. Take advantage of QuickBox's supply network, and tap into new markets today.
- Easier returns. 3PL providers offer reverse logistics solutions. These solutions deliver a more seamless user experience and improve retention rates, even creating opportunities for new sales.
- Greater sustainability. 3PL providers can help their clients build sustainability into their business practices in multiple ways. This includes electric or hybrid-powered fleets, route optimization software that minimizes emissions, to biodegradable packing material that reduces the amount of waste that goes to a landfill. Some also participate in carbon-offset programs, contributing to sustainability initiatives across the globe
While one of the main 3PL advantages is cost savings, businesses turn to these logistics experts for many more reasons than that. 3PL providers help companies of all sizes elevate their operational excellence and achieve their business goals, creating a brighter tomorrow.
How to Know if a 3PL Is Right for Your Business
While they have many benefits to offer, using a 3PL may not be for everyone. Companies must decide whether 3PL or in-house shipping is more cost-effective, and should evaluate how each aligns with the rest of the operations. Some factors to consider are:
- Order volume: Those filling more orders than they're used to may find themselves bogged down by shipping, and should turn to 3PL.
- Internal logistics resources: Those lacking the trained supply chain personnel needed to support their logistics should consider a 3PL.
- High operational costs: If the cost of getting your product to your consumers is eating into your bottom line, a 3PL may be able to help.
Another key factor to consider is control. Some companies prefer to maintain their own fulfillment workflows in-house because it gives them more immediate interactions with their customers. It also offers greater control over their logistics processes. Some are also concerned that working with a 3PL would reduce their oversight and visibility.
However, a quality 3PL provider like QuickBox will go out of their way to keep you informed as to your supply chain and logistics processes, giving you all the control and insight you need.
Is it Time to Partner With a 3PL?
Streamlined efficiency, higher speed, a broader logistical reach. These are just a few of the benefits that companies experience when they tap into the expertise and technology that 3PL solutions provide.
Some have hesitated to relinquish their hands-on control over their own fulfillment processes. But when they do, they not only find that the efficiency of their shipping workflows improves. They also find that the rest of their team is freed up to focus on what the do best: Build a better brand.
Ultimately, the result is improved order accuracy, stronger supply chain resiliency, and an order fulfillment framework that delights customers and promotes your brand growth.
The best strategy is to assess your own logistics challenges and explore if 3PL options could work best for you. If you'd like to see how QuickBox's services elevate order fulfillment processes, contact us today to learn how our 3PL solutions can optimize your supply chain and improve your bottom line.