# What is 3PL – Third Party Logistics?

What is 3PL – Third Party Logistics? An external company for storage, picking, packing, and shipping.

## How it works in practice

A 3PL is like hiring a skilled warehouse team without a fixed salary. You pay only for usage. During peak seasons, it offers flexible workforce capacity.

## Related metrics

- Fulfillment — the 3PL performs it
- SLA — the service agreement
- FBA — Amazon's version
- Last Mile — a 3PL sometimes includes it

## Common misconception

'3PLs are only for big companies.' There are 3PLs for as few as 20 orders/day at $3-5/pick.

## How to fix it

3PL not meeting SLA? (1) accuracy rate, (2) pick-and-pack time, (3) a monthly review meeting, (4) a backup 3PL.

## Real-world example

A sporting goods store: $6,000 for warehouse rent plus an employee. A 3PL at $3.75/order for 200 orders/day saved $10,500/month.

## Where to start

Consider a 3PL from 50 orders/day.

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Category: Logistics · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/3pl-third-party-logistics