Third Party Logistics: What The Quote Leaves Out

Third party logistics is the decision to stop touching your own parcels. Somebody else holds your stock, picks it, packs it and ships it, and you send them orders.

It is usually framed as a cost comparison, which is the least useful way to approach it, because the numbers are close enough that the real differences are elsewhere.

When it actually makes sense

Not at a particular order volume, despite what the quotes imply. The signals are different.

Packing is consuming people who should be doing other things. If you or your best person spend afternoons at a packing bench, the cost is not the hour, it is what did not happen instead.

You cannot ship fast enough from one location. A single origin means a long tail of customers waiting several days. Two or three warehouses fix that, and running two or three warehouses yourself is a different business.

Your peak is much larger than your normal. Seasonal businesses either staff for the peak and carry it all year, or fail the peak. Outsourcing converts that into a variable cost.

You want your weekends back. Unfashionable and usually the real reason.

Against that: if your volume is modest and steady, if your product needs unusual handling, or if packaging is part of your brand experience in a way customers actually mention, staying in-house is a legitimate answer rather than a failure to scale.

What the quote will not tell you

Pricing is deliberately hard to compare and mostly made of pieces.

Receiving, per pallet or per unit, charged when stock arrives. Storage, per pallet or bin per month, which is where slow-moving inventory quietly costs you. Pick and pack, usually a base fee plus a per-item charge after the first. Packaging materials, sometimes marked up. The shipping itself, at their negotiated rates or yours. Then the ones that surprise people: special projects, meaning anything not standard, kitting, returns handling per item, and minimum monthly charges that make a quiet month expensive.

The only way to compare providers is to take your actual last month, order by order, and price it through each one. Averages hide the thing that will matter, which is usually storage on your slowest lines or the per-item charge on your multi-item orders.

The questions that actually separate providers

How do orders reach them, and how does status come back? A real API with webhooks, or a scheduled file drop. This decides whether your customers see accurate tracking promptly or hours later. Ask what the latency is, not whether an integration exists.

What is the cutoff, and what do they do past it? Same-day dispatch until a stated time is the promise your product pages depend on.

What is their accuracy rate, and what happens when they are wrong? Mispicks happen everywhere. Who pays, and how fast is it fixed, is the difference between a provider and a problem.

Can they handle your specific category? Anything regulated, age-restricted, temperature-sensitive or state-restricted narrows the field sharply. If you sell hemp or similar, this question comes first and eliminates most providers before price is discussed.

What do returns look like? Do they inspect, restock, and tell your system? A provider that receives returns into a corner and emails you a list is not doing returns.

How do you leave? Notice period, the cost of removing your stock, and what happens to inventory records. Ask before signing, because asking later is a worse conversation.

What changes in your own systems

The thing people underestimate. Once a third party holds your stock, your store is no longer the authority on where anything is.

Which means stock reconciliation becomes a routine job, because their count and yours will differ and you need to know which is right. Orders need a state for sent to the warehouse and not yet shipped, because that gap is now real and customers ask about it. Cancellation gets a deadline, since once a pick has started it is going out. And your cost of goods now includes fulfilment fees that arrive monthly rather than per order.

None of that is difficult. All of it is work that appears after the contract is signed and is rarely in the plan.

Where we fit, and where we do not

The integration is the part that touches us: orders leave over the API and status comes back as webhooks, order states model the warehouse gap including partial shipments from multiple locations, and stock is a first-class record so reconciling against a provider's count is a query rather than a spreadsheet exercise.

Where we are the wrong answer: we are not a warehouse management system and we do not run pick paths, bin locations or labour planning, which is what the provider does and what a real WMS does if you keep fulfilment in-house at scale. If your provider only exposes file-based integration, that is their constraint rather than something a backend fixes. And choosing a provider is a commercial and operational decision that no platform makes for you.

The short version

Decide on the operational signals rather than the volume. Price your actual last month through each quote rather than comparing rate cards. Ask about integration latency, accuracy, your category and the exit before you ask about price. And budget for the systems work that starts the day stock leaves your building.