A 3PL, or third-party logistics provider, is a company that stores your inventory and handles the physical work of getting orders to customers on your behalf. Instead of packing boxes in a spare room or renting and staffing your own warehouse, you send stock to the 3PL, connect your store or marketplace account, and their team receives, stores, picks, packs and ships each order.
In short: "3PL" means you outsource warehousing and fulfillment to a specialist while you keep ownership of the product, the brand, the pricing and the customer relationship. For a Canadian ecommerce brand, or a US or international brand selling into Canada, the 3PL is usually the Canadian address your inventory lives at and the team that turns online orders into parcels.
What does 3PL mean?
The term comes from the way logistics roles are usually numbered. The first party is the seller that owns the goods. The second party is the buyer, or in some definitions the carrier that moves the goods. The third party is an outside company that takes over logistics work between the two: receiving, storage, order processing and shipping. You'll see "3PL logistics", "3PL warehouse", "fulfillment centre" and "fulfillment service" used almost interchangeably in ecommerce, although each provider defines its own scope.
What a 3PL is not: it isn't a dropshipper (you own and send in the inventory), it isn't a courier (it hands parcels to carriers such as Canada Post or private couriers), and it isn't a marketplace. It is the operational layer that sits between your sales channels and your customers.
What does a 3PL actually do?
The core work is the same at most fulfillment warehouses, even if the details and quality differ a lot:
- Receiving: checking in inbound shipments from your manufacturer or supplier, counting units against what you said was coming, and flagging damage or discrepancies.
- Storage and inventory management: putting stock away in known locations and keeping counts accurate so your store doesn't sell what isn't on the shelf.
- Pick and pack: pulling the right items for each order, packing them to your standards and printing the shipping label.
- Shipping: handing parcels to carriers and passing tracking numbers back to your store.
- Returns: receiving items customers send back, inspecting them and deciding (with you) whether they're restocked, refurbished or written off.
Many 3PLs also offer value-added services: kitting and bundling several SKUs into one set, gift wrapping, inserts and handwritten notes, relabelling, retail prep for store orders, and prep for Amazon's fulfillment network. These extras are often where providers differ most, so ask about them early if your products need anything beyond "put item in box". You can see the full list of what we handle on our services page.
How a 3PL works day to day
1. Onboarding and integration
You share your SKUs, packaging rules and any special handling, and the 3PL connects to your sales channels (see how this works for Shopify and DTC fulfillment in Toronto). On Shopify, a fulfillment service that integrates through an app lets you manage the workflow from your Shopify admin: you (or an automatic setting) request fulfillment, the service accepts it, and status and tracking updates flow back into the order. Shopify describes general fulfillment services as apps that "stock, fulfill, and ship orders on behalf of your store" (Shopify Help Center).
2. Inbound inventory
Your supplier ships stock to the warehouse. For brands outside Canada, this is also where importing comes in: goods have to clear Canadian customs before a Canadian 3PL can receive them, and the brand (or its importer of record) is responsible for that setup. A good 3PL will tell you exactly how to label and document inbound shipments so receiving is fast and counts are clean.
3. Orders, shipping and tracking
As orders come in, the warehouse picks, packs and ships them, and tracking numbers are added to the order so your customer gets the usual shipping notification. Shopify notes that if your fulfillment service provides tracking information, it's added to the order automatically (Shopify Help Center). Carrier choice matters here: Canada Post, for example, runs a Solutions for Small Business program and tools like Snap Ship for labels and pickups (Canada Post), while a 3PL shipping at volume may also have courier accounts to choose from.
4. Returns and reporting
Returns come back to the warehouse, get inspected and are processed according to your rules. Throughout, you should be able to see stock levels and ask questions about specific units without waiting days for an answer.
3PL vs 4PL vs doing it yourself
Brands usually compare three options:
- Self-fulfillment: you store and ship orders yourself. It's the cheapest way to start and gives you full control, but packing time grows with every order, and storage space, carrier accounts and peak-season staffing all become your problem.
- 3PL: a provider runs the warehouse and fulfillment operation for you. You trade some direct control for capacity, a professional receiving and shipping process, and time back to spend on product and marketing.
- 4PL: a fourth-party logistics provider manages and coordinates your supply chain across several partners, which can include multiple 3PLs, freight forwarders and carriers. 4PL arrangements are typically aimed at larger, more complex supply chains; most small and mid-sized ecommerce brands are choosing between doing it themselves and working with a 3PL.
Amazon's own fulfillment network is a special case. Fulfillment by Amazon (FBA) lets sellers outsource shipping, returns and customer service for Amazon orders (Amazon Canada), but inventory has to be prepared and labelled to Amazon's requirements before it goes in, and FBA is built around Amazon orders rather than your whole business. That's why many sellers use a 3PL alongside FBA: the 3PL holds the bulk of the stock, preps and sends replenishment shipments to Amazon, and fulfills Shopify, wholesale and merchant-fulfilled (FBM) orders from the same pool of inventory. Our Amazon FBA prep page explains how that works in Toronto.
When does a brand need a 3PL?
There's no single order count that makes the decision for you. These are the signs we see most often:
- Packing orders is eating the hours you should spend on product, marketing or wholesale accounts.
- Your stock has outgrown your home, office or storage unit.
- You're shipping to Canadian customers from the US or overseas, and cross-border delivery times or surprise charges at the door are costing you sales.
- You sell on several channels (Shopify, Amazon.ca, wholesale) and keeping inventory and shipping consistent across them has become messy.
- Your products need extra handling, such as kits, personalization or high-value security, that your current setup can't do reliably.
If you're a brand outside Canada, a Canadian 3PL is often the piece that makes selling here practical, because inventory is already in the country when the order is placed. Our sell in Canada fulfillment page covers what that setup involves.
How 3PL pricing is usually structured
Every provider quotes differently, so compare line items rather than headline rates. The common building blocks are:
- Receiving: charged per unit, carton, pallet or hour of labour when inventory arrives.
- Storage: charged per pallet, shelf, bin or cubic measure, usually monthly.
- Pick and pack: a per-order fee, often with a per-additional-item charge.
- Packaging materials: boxes, mailers and void fill, unless you supply your own.
- Postage: the carrier cost of each label, which may be passed through or bundled.
- Value-added services and returns: kitting, labelling, gift wrap and returns processing, usually priced per unit or per task.
- Account terms: setup fees, monthly minimums and contract length.
To compare quotes fairly, run the same sample month through each one: your real order count, average units per order, typical parcel sizes and destinations, and how much stock you'll hold. Ask what happens when your volume drops in a slow month, not just when it grows.
What to look for in a 3PL in Canada
- Location: where the warehouse sits relative to your customers, your inbound freight route and the carriers you'll use.
- Channel fit: whether they already work with Shopify, Amazon.ca and wholesale orders like yours.
- Communication: who you actually talk to when something goes wrong, and how quickly.
- Visibility: whether you can see your stock and get answers about specific units.
- Terms: contract length, minimums and how easy it is to leave if it isn't working.
- Special handling: kitting, personalization, Amazon prep or high-value storage if your products need them.
For a longer list of questions to ask on a sales call, see our guide to choosing a 3PL in Toronto you can trust.
How Redwolf 3PL fits in
We're a Toronto 3PL at 160 Tycos Drive, near Toronto Pearson Airport (YYZ), built for small and medium-sized ecommerce brands, including US and international brands selling into Canada. We were founded by an active Amazon seller, so we run the warehouse the way we'd want our own inventory handled: you get direct access to the warehouse team instead of a ticket queue, photo and video checks of your inventory on request, and no long-term contracts.
From one facility we handle DTC and Shopify fulfillment, B2B orders, Amazon FBA prep and FBM, returns and Amazon removal orders, warehousing and kitting, plus in-house laser engraving, embroidery, gift wrapping and handwritten notes. For fine jewelry, watches and other high-value goods, Vault by Redwolf adds a white-glove service line.
Frequently asked questions
What is a 3PL in simple terms?
A 3PL (third-party logistics provider) is an outside company that stores your inventory and fulfills your orders for you. You send stock to their warehouse and connect your store; they receive, store, pick, pack and ship each order, and usually handle returns too.
What is the difference between a 3PL and a 4PL?
A 3PL runs warehousing and fulfillment for you. A 4PL manages and coordinates your wider supply chain across several partners, which can include multiple 3PLs, forwarders and carriers. Most small and mid-sized ecommerce brands work directly with a 3PL.
Is Amazon FBA a 3PL?
FBA is Amazon's own fulfillment service for Amazon orders: it handles shipping, returns and customer service once your inventory is in its network. Many sellers also use an independent 3PL to prep and replenish FBA inventory and to fulfill Shopify, wholesale and FBM orders from the same stock.
When should an ecommerce brand start using a 3PL?
Common triggers are packing taking too much of your time, running out of storage space, selling on several channels, needing special handling such as kitting, or shipping into Canada from abroad. There's no universal order count; compare your real costs and time against a 3PL quote.
How do 3PLs charge for their services?
Most 3PL quotes combine receiving, monthly storage, per-order pick and pack, packaging, postage and per-task value-added services, sometimes with setup fees, minimums or contract terms. Compare quotes by running the same sample month of orders through each one.
Sources
- Shopify Help Center — Order management and fulfillment
- Shopify Help Center — Fulfilling orders using a fulfillment service with an app
- Amazon Canada — Fulfilment by Amazon (FBA)
- Canada Post — Shipping solutions for small business