As your business grows, so do your logistics needs. When it’s time to scale fulfillment, you face a pivotal decision: should you continue managing operations internally or outsource to a third-party logistics (3PL) provider?
This guide breaks down the cost, control, scalability, and hidden fees in the third-party logistics vs in-house fulfillment debate—so you can choose a model that supports your long-term goals.
What Is Third-Party Logistics (3PL)?
Third-party logistics providers (3PLs) offer outsourced warehousing, inventory management, order fulfillment, shipping, and returns. Many also provide value-added services like kitting and custom packaging, temperature-sensitive storage, and tech integrations that streamline operations.
The core benefit of 3PLs is flexibility. You don’t need to lease warehouse space or hire a team—your provider handles it all, making it easier to scale with demand.
What Is In-House Fulfillment?
In-house fulfillment means managing everything internally. You lease or purchase warehouse space, hire and train staff, invest in equipment, and negotiate shipping contracts yourself.
This model gives you direct control over packaging, branding, and operations—but it also requires significant capital investment and time to manage. For brands with specialized needs, partnering with a 3PL that offers services like pick, pack & ship operations may still provide a more efficient solution.
Cost Comparison: Third-Party Logistics vs In-House
To compare the true cost of third-party logistics vs in-house fulfillment, you need to look at both surface-level pricing and hidden expenses.
Example: Monthly 3PL Cost for 1,000 Orders
A brand using a 3PL may pay:
- $2.00 per order for fulfillment ($2,000)
- $0.75 per pallet/day for storage across 10 pallets ($225)
- $30/hour for 10 hours of receiving ($300)
Total: $2,525/month (excluding shipping)
(For reference, Tighe provides similar services in its New England fulfillment centers.)
Example: In-House Monthly Cost for Similar Volume
Managing fulfillment internally might cost:
- $3,000 for warehouse lease
- $6,000 for two full-time warehouse employees
- $800 for software and equipment maintenance
Total: $9,800/month (excluding shipping)
At face value, 3PL services offer significant savings. While providers may include fees for things like overage storage or returns processing, in-house operations face their own hidden costs—overtime wages, equipment breakdowns, or tech upgrades.
Scalability and Time to Launch
One of the biggest advantages of third-party logistics is speed. Brands can typically launch with a 3PL in 1–3 weeks, compared to the 3–6 months required to build and staff an in-house operation. And because 3PLs are built for scale, they can flex with your order volume, seasonal spikes, or new market expansions.
Tighe’s network of facilities—including locations in Clinton, Winchester, and Avon—helps brands scale without new real estate investments.
In-house teams are slower to adapt, and scaling often requires additional space, staff, and capital—something that can delay growth.
Technology and Transparency
Most modern 3PL providers offer inventory tracking, real-time order visibility, and automated reporting. This lowers your tech overhead and simplifies integration with your ecommerce platform or ERP.
For example, Tighe offers advanced logistics technology that supports real-time visibility for fulfillment and freight operations through its technology solutions.
When managing fulfillment in-house, you’ll need to buy, build, or license these systems yourself—often at a higher long-term cost.
Transparency varies too. 3PLs typically issue monthly invoices that may include variable charges, so it’s important to vet providers carefully. In-house operations offer clearer line-item control, but at the expense of time, labor, and management.
Operational Control: What You Give Up vs What You Gain
In-house fulfillment gives you complete control over warehouse layout, staff training, and packaging quality. This can be valuable for brands with premium presentation standards or highly customized packing needs.
But that control comes at a cost. Managing staff, handling returns, and troubleshooting last-mile issues take time and expertise. For many brands, the convenience of outsourcing—and the ability to focus on growth—makes up for the loss of hands-on oversight.
If you need specialized handling or product-specific solutions, Tighe’s industry services—like retail & CPG logistics or food-grade warehousing—can help bridge the gap.
When Should You Use a 3PL?
Outsourcing to a 3PL may be the right move if:
- Your order volume is growing rapidly or seasonally
- You want to expand into new markets without opening new locations
- Your team is stretched thin on logistics and customer service
It’s also ideal if your business model is DTC-focused or if you sell across multiple channels and need a centralized fulfillment hub—something Tighe supports through its direct-to-consumer 3PL services.
When Does In-House Fulfillment Make Sense?
You might benefit from keeping fulfillment in-house if:
- You’re early-stage with low volume and excess space
- Your team has logistics experience and capacity
- You have highly specific handling or branding requirements
In-house fulfillment can work well as a temporary or hybrid model before transitioning to a 3PL when you’re ready to scale.
Final Thoughts: Align Cost With Strategy
Choosing between in-house fulfillment vs third-party logistics isn’t just about upfront cost—it’s about flexibility, control, and long-term scalability. A 3PL helps fast-growing brands streamline fulfillment, reduce overhead, and unlock new markets. But for some early-stage or niche businesses, in-house operations may offer the customization and control they need.
The best choice depends on your order volume, team capacity, and strategic goals. Evaluate your cost per order, time-to-ship, and ability to scale—then choose the model that supports your next stage of growth.
