How Much Do Order Fulfilment Companies Charge? 3PL Costs Explained

Efficiency in logistics can make or break your business. As an e-commerce entrepreneur, you’ve likely come across the term “third-party logistics” or “3PL.” But what exactly is 3PL, and how can it help you scale your operations? This guide provides a comprehensive look at 3PL services – explaining how they work, what you can expect to pay, and the many ways they can propel your e-commerce business forward.

What is 3PL?

Third-Party Logistics (3PL) involves outsourcing your e-commerce logistics processes to a specialist company. This can encompass everything from warehousing and inventory management to order fulfilment and delivery. By working with a fulfilment service provider, you can focus on growing your business while the 3PL handles the logistics.

Key Benefits of 3PL:

• Expertise – 3PL providers have the experience and infrastructure to manage logistics efficiently.

• Cost Savings – Outsourcing can reduce overhead costs related to warehousing and staffing.

• Scalability – Easily scale your logistics operations up or down based on demand.

• Focus on Core Business – Free up time and resources to focus on product development, marketing, and customer service.

• Speed – Improve delivery times with a streamlined, professionally managed supply chain.

How Does 3PL Work?

3PL providers are essential partners for e-commerce businesses, enabling them to outsource complex logistics operations. Here are the key processes involved in a 3PL partnership:

Integration and Management

When you partner with a 3PL, the first step is integration. 3PLs use advanced technology to connect their systems with your online store, inventory management, and other software. This real-time data exchange enables efficient order processing, inventory tracking, and status updates. The seamless flow of information ensures both you and the 3PL stay on the same page, reducing errors and delays.

Warehousing

3PL providers offer professional warehousing solutions tailored to your products. They handle storage, inventory management, and security within their warehouses. By leveraging a 3PL’s warehouse management system (WMS), your products are stored efficiently and accurately managed, allowing you to accommodate large volumes without investing in your own warehouse space.

Order Fulfilment

A critical component of 3PL is order fulfilment, which involves picking, packing, and shipping products to customers. 3PLs streamline these processes using technology and best practices to optimize each step. For example, they may use batch picking (picking multiple orders at once) and implement quality checks to ensure each order is accurate and well-packed. Leveraging professional fulfilment services means your customers receive their orders promptly and correctly.

Transportation and Distribution

3PLs manage the transportation of your orders, from selecting appropriate shipping carriers to planning delivery routes and schedules. Thanks to their relationships with carriers, 3PL providers often negotiate better shipping rates on your behalf. They ensure packages are shipped cost-effectively and delivered on time, and many 3PLs can handle international shipping — helping you expand globally with ease.

Returns Management

Beyond outbound shipping, many 3PL providers also handle returns (reverse logistics). They inspect returned items, restock salable products, and process refunds or disposal of damaged goods. A smooth returns management process provided by a 3PL improves customer satisfaction by making returns hassle-free for your buyers.

Scalability and Flexibility

One of the biggest advantages of using a 3PL is the ability to scale operations quickly. During peak seasons or sales events, a 3PL can ramp up resources to handle increased order volume without significant delays. Conversely, in slower periods, you can scale down to avoid paying for unused capacity. This flexibility means you only pay for what you need, when you need it.

Expertise and Advisory

3PL providers don’t just offer manual labour – they bring expertise. A good 3PL will advise you on supply chain optimisations, help ensure compliance with shipping regulations (especially for international orders), and suggest improvements for efficiency. Tapping into their industry knowledge can streamline your overall logistics strategy.

Streamlining Operations

By outsourcing logistics to a capable 3PL, you can concentrate on core business activities like product development, marketing, and customer service. The 3PL handles the operational details of storage and delivery, allowing your operations to run more smoothly. In turn, this can lead to better customer experiences – orders go out faster, arrive on time, and any issues are handled by logistics professionals.

Key Factors Influencing 3PL Costs

Several factors can influence the cost of 3PL services. Below are the key factors and how they impact pricing:

• Volume of Goods: The number of orders and quantity of products you handle will affect costs. Many 3PLs offer volume-based pricing, meaning the more orders you fulfil, the lower the cost per order. For instance, small volumes might cost around £3–£5 per order, whereas large volumes could be £1.50–£2.50 per order.

• Storage Fees: Costs for storing your inventory in the 3PL’s warehouse, typically charged per pallet, shelf, or cubic foot per month. Fees vary based on the type of storage needed (e.g., standard vs. climate-controlled) and warehouse location. Example: ~£10–£15 per pallet per month, or £0.50–£1.25 per square foot per month.

• Pick and Pack Fees: Labour charges for selecting items from shelves and packing them for shipment. Often charged per order or per item picked. This depends on order complexity – a simple one-item order is cheaper than an order with multiple items or special packing requirements. Standard picking might be £1–£3 per item, while complex orders can be £5 or more per item.

• Shipping Costs: The expense of shipping orders to your customers. These costs depend on shipping speed (standard vs. express), distance, parcel weight and dimensions, and carrier rates. 3PLs often have discounted deals with carriers, but shipping will still be a significant part of your fulfilment expenses.

• Receiving Fees: Charges for handling inbound stock deliveries from you or your suppliers. This covers unloading, checking incoming inventory, and shelving it. Some 3PLs charge by the hour for receiving (e.g., £20–£40 per hour), or a flat fee per delivery or per pallet received.

• Service Level: The scope of services you choose from a 3PL will influence cost. A basic service (just storage and shipping) costs less than a full-service package that includes extras like kitting or custom packaging. There may also be monthly account management fees for comprehensive solutions. Basic fulfilment packages might start a few hundred pounds per month, whereas full-service solutions could run in the thousands per month.

• Special Requirements: If your products need special handling – for example, fragile items, hazardous materials, or oversized goods – the 3PL may charge extra. Special storage (like refrigeration) or handling needs can increase costs (fragile item handling might add ~10–20% per order; oversized items could double or triple the cost to fulfil that item).

• Location and Reach: Where the 3PL’s warehouses are located can impact costs. Warehouses in major cities may have higher storage and labor rates than those in less expensive areas. However, urban warehouses might be closer to your customers, potentially reducing shipping costs and delivery times. A rural warehouse might be cheaper for storage but could result in higher transport costs to reach customers.

• Additional Services: Extra services provided by the 3PL will add to your costs. This includes custom packaging (using special boxes or adding marketing inserts), kitting (assembling multiple items into bundles), subscription box assembly, and processing returns. Each service has its own fee structure (e.g., custom packaging might add £0.40–£4.00 per unit; kitting could be £0.24–£1.60 per unit; processing a return might cost £1.60–£8.00 per return).

3PL Costs Breakdown

Below is a comparison table showing typical 3PL cost ranges for key services:

Storage Fees: Storage fees can vary significantly based on the type of storage required (for example, standard ambient storage versus refrigerated storage). Some 3PL providers also offer volume discounts if you need a large amount of warehouse space.

Pick and Pack Fees: These fees often depend on order complexity. Orders with many items or requiring special handling will incur higher pick and pack fees than simple, single-item orders.

Shipping Costs: Shipping costs are influenced by the carrier, shipping speed, and distance. Many 3PL providers have bulk shipping agreements with carriers, which can reduce the shipping rates you pay.

Receiving Fees: Receiving fees may include additional charges for services like quality inspections of incoming goods, applying barcodes or labels, or conducting inventory audits when stock arrives.

Custom Packaging: Brands that want a unique unboxing experience often use custom packaging. 3PLs can accommodate this, but the costs will depend on materials and the complexity of the packaging design.

Kitting Services: Kitting involves assembling individual items into a set or bundle (for example, preparing a subscription box or gift set from separate products). 3PLs charge kitting fees for this labour.

Return Processing: Processing returns involves receiving returned items, inspecting them, restocking what can be resold, and disposing of or refurbishing damaged items. 3PLs charge return fees to cover these steps.

Additional Fees to Consider

Beyond the basic operational costs, be aware of the following potential additional fees when working with a 3PL:

• Account Setup Fees – A one-time fee for setting up your account and initial integrations (covering the configuration of your inventory systems with the 3PL’s software).

• Minimum Monthly Fees – A minimum charge that some 3PLs require per month, regardless of order volume, to ensure costs are covered during slow periods.

• Long-Term Storage Fees – Higher fees applied to inventory stored for extended periods (e.g., items sitting in the warehouse for more than 6 or 12 months), encouraging you to rotate stock.

• Expedited Handling Fees – Extra charges for rush orders or special handling requirements (for instance, same-day dispatch or careful handling of extremely fragile items).

Example of Additional Fees:

How to Choose the Right 3PL Provider

When selecting a 3PL partner for your e-commerce business, consider the following to ensure a good fit:

• Assess Your Needs – Determine which logistics tasks you want to outsource versus those you will keep in-house. This will help in selecting a provider whose services match your requirements.

• Compare Providers – Evaluate several 3PL companies based on their services, pricing, and reputation. Look for reviews or case studies, and don’t hesitate to ask for references from businesses similar to yours.

• Technology & Integration – Ensure the 3PL’s technology (warehouse management systems, order tracking, etc.) is compatible with your e-commerce platform and other software. Seamless integration is crucial for real-time inventory tracking and order updates.

• Scalability – Choose a 3PL that can handle your growth. Ask how they manage peak seasons or sudden surges in order volume, and whether they have capacity to scale operations up or down as needed.

• Cost Transparency – Make sure all fees are clearly outlined. A reputable 3PL will provide a detailed breakdown of costs and be upfront about any potential extra fees (so you can avoid surprises later).

• Reputation & Reliability – Research the provider’s track record. How long have they been operating, and what do their current clients say? A reliable 3PL should have positive testimonials and a proven history of fulfilling promises.

• Customer Service – Strong customer support is vital. If issues or questions arise, you’ll need a 3PL that is responsive and helpful. Consider testing their support responsiveness during your evaluation.

Questions to Ask Potential 3PL Providers:

1. What technology do you use for inventory management and order tracking?

2. Can you provide references from businesses similar to mine?

3. Are there any hidden fees or charges we should know about?

4. How do you handle peak season demand and scalability?

5. What is your process for handling customer returns and reverse logistics?

Conclusion

Understanding the costs and benefits of 3PL services is essential for e-commerce success. By breaking down each cost component and comparing different providers, you can make an informed decision that fits your budget and operational needs. Partnering with the right 3PL can streamline your order fulfilment process, improve customer satisfaction through faster and more reliable deliveries, and ultimately support the growth of your business.

Impact Express’ Fulfilment Services for E-commerce Businesses

Ready to take your e-commerce logistics to the next level? Choosing Impact Express as your 3PL partner means you gain a provider offering comprehensive fulfilment services along with an expansive network of couriers and worldwide shipping destinations. Our team can handle your storage, packing, and delivery needs, freeing you to focus on growth and customer satisfaction. If you’d like to learn more or get personalised pricing, don’t hesitate to get in touch for a free quote today!