The top 3PL companies for DTC brands and why

Researching third-party vendors is always a challenge–let alone for a service as complicated as fulfillment. Each company uses different measures of success, pricing models, and selling points, which makes it difficult to make a true apples-to-apples comparison for the top 3PL companies. 

To make the process easier, we vetted a dozen popular 3PLs, comparing data from each–like how they charge, what services they provide, their technical capabilities, and their customer support model–and putting it all together in common terms. 

In this article, you'll find our top 7 picks, their biggest strengths, and what you need to know to determine if they're a good fit for your company.

Why use a 3PL?

For the majority of ecommerce brands–particularly those in the direct-to-consumer space–outsourcing fulfillment is a pivotal part of their growth strategy. Taking the day-to-day, hands-on work of ecommerce fulfillment out of the equation frees the company's executives and their teams to focus on strategic initiatives like research and development, marketing, partnerships, and fundraising. 

Working with a fulfillment provider also converts would-be fixed costs, like warehouse overhead and employees, to variable costs–so the company only pays for the storage, materials, and labor they need at any given time. 

Even those companies that start out self-fulfilling typically move to a 3PL fairly quickly, because as the company scales, so does the complexity of fulfillment–often exponentially. High-growth DTC brands can set themselves up for success by securing a 3PL partner with scalable infrastructure early in the company's life.

ProTip: Establishing reliable distribution early is one of the 5 guiding principles successful DTC brands follow, according to The New Direct-to-Consumer Playbook, backed by data and insights from 100 DTC companies.  

The old 3PL model and the new 3PL model: What makes a top 3PL company?

Since ecommerce began its meteoric rise, the logistics industry has changed to match. The established leaders in the space have been slow to adapt, giving rise to new-age fulfillment companies powered by cloud technology, like Deliverr and ShipBob. 

But for all their emphasis on modern tech, those new 3PLs still adopted the old fulfillment model: owned infrastructure across the country. In most ways, these companies still function like their predecessors, but with a prettier UX. 

The second wave of logistics innovation introduced a new fulfillment model: managed warehouse networks. These networks enable the fulfillment company to be more nimble and accommodating to different fulfillment needs, like value-added services, B2B and DTC order fulfillment, and international expansion. 

In addition to the old vs. new (owned vs. network) warehouse model, the top 3PL companies vary in how they model their pricing and support. 

How to choose the right partner from the top 3PL companies

The ideal 3PL will look different for every company, but the largest considerations can be broken into four main buckets: 

• Fulfillment model
• Warehouse operations
• Technology 
• Pricing

Fulfillment model 

Every 3PL will define its model slightly differently, but for the purpose of our research, we considered whether the company owns its infrastructure or manages a warehouse network (including how many locations are available and in how many countries), how the company manages customer support, and whether the company implements multi-warehousing. Specifically, we sought out whether the company employs load balancing–a method of managing inventory across multiple warehouses in which the 3PL shifts inventory at will, often without the merchant's knowledge, in order to lower their own operational costs.

Warehouse operations

This is the 3PL's bread and butter: how they actually pick and pack orders to get them out the door and on their way to your customers. Since warehouse operations can vary significantly, we looked primarily at these deal-breakers: B2B and DTC order fulfillment, custom fulfillment logic, climate control, and competitive SLAs.

Technology

Your 3PL's software is your primary means of monitoring efficiency and communicating with your warehouses–so it needs to be powerful, intuitive, and dependable. We looked at whether these 3PLs had platforms that could support real-time order tracking, inventory management, direct ecommerce integrations, and EDI. 

Pricing

Quality is worth paying for, but at the end of the day, your fulfillment costs per order can make or break your margins. Since 3PLs tend to use different pricing strategies (and because pricing is so dependent on volume, product size and dimensional weight, and warehouse location), we spent less time looking at average price-per-shipment and more time examining billing transparency. The more you know about your costs, the more you can optimize your operations and increase your revenues.

What are the top 3PL companies?

Based on our research, the top 3PL companies are: 

• ShipBob: Top 3PL for no-frills fulfillment
• ShipMonk: Top 3PL for easy-to-use software
• ShipHero: Top 3PL for automated reporting
• Red Stag Fulfillment: Top 3PL for oversized products
• Local, independent 3PL: Top 3PL for starting out

Top 3PL company for no-frills fulfillment: ShipBob

• Biggest pro: Can manage high volume and offers room to expand
• Biggest con: Little freedom to customize operations and limited customer support

ShipBob fulfillment model 

Shipbob was one of the first tech-forward 3PLs to spring up in response to ecommerce growth. Of its 30-plus warehouses, some are owned, while others are subcontracted.

• Locations: 30+ across 6 countries
• Support model: Ticketing system–merchants must call a generic number or submit a ticket via email or instant messaging. This is a primary complaint among ShipBob users.
• Multi-warehousing: ShipBob uses load balancing, meaning the company may move merchants' inventory from warehouse to warehouse based on demand and available space. Merchants can choose which warehouse locations they use.

ShipBob warehouse operations

Since ShipBob owns many of its warehouses, operations from location to location will be fairly consistent; however, this also means that there's significantly less wiggle room when it comes to customizing your brand's fulfillment specifics. 

• Wholesale fulfillment: Offered, but only to specific retailers. 
• Custom fulfillment logic (if/then rules): Supported across a wide range of variables except SKU; SKU-based rules not supported.
• Climate control: No temperature guarantee. 
• DTC SLA: Same day with a 12 p.m. local time cutoff
• Wholesale SLA: Within 4 days with a 12 p.m. local time cutoff
• Receiving SLA: 3-5 days

ShipBob technology

As one of the pioneers of tech-enabled 3PLs, ShipBob has a robust platform for its users to track incoming inventory and outgoing orders. Many of the company's integrations with leading ecommerce platforms like Shopify are direct, though some are only through middleware or API.

ShipBob supports real-time order tracking and simple inventory management with customizable reorder notifications. However, merchants are responsible for buying and managing their own EDI software–and they're required to use SPS Commerce.

ShipBob pricing

ShipBob's pricing structure follows the all-in-one model, which is often appealing for its simplicity, but can disguise important price fluctuations and make it harder for merchants to understand their real costs on a per-order basis. 

• Pick and pack: Flat rate per order (plus a fee for each pick over a certain amount) that depends on merchant's volume.
• Shipping: Follows a tiered pricing plan.
• Implementation fee: $975
• Contractual shrinkage rate: 0.5% (anything over this threshold reimbursed up to $2,000)
• Contractual protection against mispicks: None

Top 3PL company for easy-to-use software: ShipMonk

• Biggest pro: Cost-effective, with an intuitive software interface
• Biggest con: Frequent load balancing and uncompetitive SLAs

ShipMonk fulfillment model

While smaller than ShipBob, ShipMonk still offers room for successful ecommerce brands to grow into–all of which are owned by the company. 

• Locations: 11 across 4 countries
• Support model: Ticketing system–merchants must call a generic number or submit a ticket via email or instant messaging. 
• Multi-warehousing: ShipMonk uses load balancing, meaning the company may move merchants' inventory from warehouse to warehouse based on demand and available space. Merchants can choose which warehouse locations they use.

ShipMonk warehouse operations

ShipMonk's ownership of its warehouses means customers can expect consistency from location to location; but it may also limit the amount of customization each merchant can expect. 

• Wholesale: Offered, but the merchant is responsible for providing retailer requirements, labels, and documentation to the warehouse.
• Custom fulfillment logic: Supported, but any additions to an order depending on SKU cannot exceed 8 oz. 
• Climate control: No temperature guarantee‚Äç
• DTC SLA: No guarantee
• ‚ÄçWholesale SLA: No guarantee‚Äç
• Receiving SLA: 2 days

ShipMonk technology

ShipMonk users regularly cite the company's technology and easy-to-navigate interface as one of their favorite parts of their fulfillment service. The company offers a direct integration with Shopify, but connects to other ecommerce platforms through middleware or API.

ShipMonk offers the standard table stakes of real-time order tracking and inventory management, but users can't set email notifications for when stock is running low. Merchants also must provide their own EDI software, which can be integrated with ShipMonk's WMS platform through middleware.

ShipMonk pricing

Following an all-in-one pricing structure, ShipMonk delivers its invoices as aggregate totals for shipping, receiving, storage, and projects over the entire billing period. 

It should be noted that ShipMonk has a minimum monthly fee, which is the greater of monthly storage fees or the result of a formula based on monthly average order volume. At its lowest, this fee is $250 per month; but companies with higher volume could be held to a higher minimum.

• Pick and pack: Flat rate per order–rate varies based on the merchant's order volume and number of picks.
• Shipping: Charged by package weight, dimensions, destination, and shipping method.
• Implementation fee: $0‚Äç
• Contractual shrinkage rate: None specified. Full cartons of inventory that are lost due to warehouse error may be reimbursed up to $10/unit. ‚Äç
• Contractual protection against mispicks: Merchant will be reimbursed for the lesser of return postage or product replacement, plus no-cost reshipment.

Top 3PL company for automated reporting: ShipHero

• Biggest pro: Detailed, filterable, auto-generated reports 
• Biggest con: Frequent load balancing, buggy software

ShipHero fulfillment model 

ShipHero has invested heavily in its software–so much so that its business is divided between providing fulfillment services to ecommerce companies and providing software to other 3PLs. 

• Locations: 7 across 2 countries
• Support model: Ticketing system–merchants must submit a ticket via the platform or email. 
• Multi-warehousing: ShipHero requires all businesses that use multiple warehouses to be pre-approved for load balancing. Merchants cannot choose which warehouse sites they use.

ShipHero warehouse operations

ShipHero owns and operates its warehouses and uses a ‚Äúno shipping zone‚Äù delivery method in which orders are sent via freight to the warehouse nearest their destination before being handed over to a carrier. 

• Wholesale: ShipHero supports wholesale fulfillment. The merchant is responsible for communicating retailer requirements, labels, and documentation.
• Custom fulfillment logic (if/they rules): Supported across a wide range of variables in-platform. Dynamic carrier pricing at checkout is not supported. 
• Climate control: ShipHero can support ambient temperatures in its warehouses.‚Äç
• DTC SLA: Same day with a 12 p.m. local time cutoff
• Wholesale SLA: Cost and timeline provided in 24-72 business hours
• Receiving SLA: 3-14 days

ShipHero technology

ShipHero's technology is used by both its owned warehouses and some 3PLs who license the software from ShipHero. Technology glitches are often cited on review sites, but the company is also credited for making routine improvements. 

ShipHero offers direct integrations to some ecommerce platforms, while others are connected using middleware or API. The software also offers real-time order tracking, inventory management, and EDI software through SPS Commerce.

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ShipHero pricing

ShipHero follows an all-in-one pricing structure and delivers its invoices as aggregate totals per outgoing order, receiving, project, and storage fee.

• Pick and pack: Flat rate per order plus pick fees–rate varies based on the merchant's order volume.
• Shipping: Charged by package weight and dimensions only. Packages subject to surcharges for oversized, fragile, and hazardous items.
• Implementation fee: $0‚Äç
• Contractual shrinkage rate: 3%. Further losses and damages are reimbursed as a ShipHero credit equal to the cost of manufacturing. ‚Äç
• Contractual protection against mispicks: Merchant will be reimbursed for the cost of shipper and/or return fees at ShipHero's discretion.

Top 3PL company for oversized products: Red Stag Fulfillment

• Biggest pro: Willing and able to ship products other 3PLs will not
• Biggest con: Basic software and non-transparent pricing

Red Stag fulfillment model 

Red Stag Fulfillment is a more traditional 3PL than ShipBob, ShipHero, or ShipMonk. The company's focus is primarily on logistics and operations within its two owned and operated warehouses. Red Stag specializes in moving large and/or hazardous goods. 

• Locations: 2, domestic only
• Support model: Ticketing system–merchants must submit support tickets through a third-party software platform.
• Multi-warehousing: Red Stag has two owned and operated warehouses, and each serves one half of the country. Merchants may use one or both; Red Stag does not use load balancing.

Red Stag warehouse operations

Red Stag specializes in moving large and/or hazardous goods. While it only has two warehouses, they're strategically located to optimize delivery efficiency across the country.

• Wholesale: Red Stag supports wholesale fulfillment. Merchants must submit their orders through the company's software platform and flag it with a separate support ticket. The merchant is responsible for  communicating retailer requirements, labels, and documentation.
• Custom fulfillment logic (if/they rules): Some custom logic is supported within Red Stag's platform, but it requires custom coding. 
• Climate control: Red Stag's warehouses are climate controlled.
• DTC: Same day with a 3 or 5 p.m. EST cutoff
• Wholesale: SLAs not disclosed
• Receiving: 2 days 

Red Stag technology

Red Stag's primary focus is on logistics and inventory movement as opposed to technology. Its software is more rudimentary than most modern 3PLs, but is still more accessible than more traditional 3PLs that require all communication to be handled via email. 

The Red Stag platform can track orders and inventory levels in real time, but merchants cannot set low stock notifications or notify the warehouse of incoming inventory through the platform. There is a direct integration with Shopify, but other ecommerce platforms are connected via middleware or API. Red Stag does not provide EDI software to its customers, but merchants that use SPS Commerce may integrate with Red Stag through middleware.

Red Stag pricing

Red Stag uses a hybrid of the all-in-one and a la carte model, but will only deliver itemized invoices upon request, and for a fee. 

• Pick and pack: Flat rate per order plus pick fees–rate varies based on the merchant's order volume. 
• Shipping: Charged by package weight, dimensions, destination, and shipping method.
• Implementation fee: $0‚Äç
• Contractual shrinkage rate: 0%. Losses and damages may be reimbursed for the wholesale value of the inventory.‚Äç
• Contractual protection against mispicks: Mispicks' cost of shipping is reimbursed, order is reshipped at no additional cost, and Red Stag will pay $50 to the merchant.

Top 3PL company for starting out: Local 3PLs

• Biggest pro: Personal relationships and low prices
• Biggest con: No room for scaling brands to grow

Local 3PL Fulfillment Model 

Locally owned, independent 3PLs are a common starting point for DTC brands' fulfillment needs because they're close to home and offer a more personal experience. Since these mom-and-pop 3PLs are run by their owners and typically operate just one warehouse, they can often provide quality service for small brands; but scaling ecommerce companies tend to outgrow them quickly. 

• Locations: Usually 1, domestic only
• Support model: Email–merchants can typically contact employees on-site, but without a dedicated support team, response times can vary.
• Multi-warehousing: Most independent 3PLs operate just one warehouse.

Local 3PL Warehouse Operations

Local 3PLs are usually focused on a specific type of fulfillment logistics–DTC. Since they're a common starting point for small brands, they don't move many wholesale orders, leaving them without much experience in the nuance of B2B fulfillment. 

• Wholesale: Some local 3PLs will offer to send wholesale orders, but without much experience or EDI capabilities, merchants are left with most of the responsibility outside of packaging the order and loading it onto a freight truck.
• Custom fulfillment logic (if/they rules): Not supported (in most cases)
• Climate control: Not supported (in most cases)‚Äç
• DTC SLA: 2-3 days, on average
• Wholesale SLA: 2-3 weeks, on average
• Receiving SLA: 1-2 weeks, on average

Local 3PL Technology

Most mom-and-pop 3PLs have been in business for decades, meaning they follow the old fulfillment model (owned) and have little to offer in the way of technical capabilities. These warehouses usually license WMS software from a third party, so it's slow to update. Plus, the tech is designed to be warehouse-facing–not merchant-facing. 

As a result, merchants that use independent 3PLs can't track orders or inventory levels in real time, and all communication about incoming freight, missing or on-hold orders, and other operational changes has to be conducted over email. 

These 3PLs aren't directly integrated with ecommerce stores. Some are connected through API or middleware, while others require the merchant to send batches of order information from their online store to the warehouse manually. EDI software is not available. 

Local 3PL Pricing

Independent 3PLs usually deliver invoices by email in large spreadsheets, with separate files for order preparation, shipping, receiving, and other fees. Itemization for each charge is minimal, or invoices only show aggregate total for billing period.

It should also be noted that these 3PLs typically pass on the licensing fee for their software to their customers in the form of a small monthly account fee.

• Pick and pack: Independent 3PLs typically do not present a clear pricing structure per package; fees are charged as a lump sum per billing period.
• Shipping: Charged based on warehouse-negotiated carrier rates, determined by package weight, dimensions, destination, and shipping method. As small companies, local 3PLs typically have less negotiating power and higher shipping rates.
• Implementation fee: Up to $1,000‚Äç
• Contractual shrinkage rate: Varies‚Äç
• Contractual protection against mispicks: Typically none offered

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