Outsourcing logistics: when and how to switch to a 3PL

Outsourced fulfillment: what you hand over and what you keep

A 3PL takes over the physical operations: receiving your goods, warehousing, order picking, packing, shipping and, often, returns. It can also provide value-added services such as kitting, labeling or customization, and coordinate inbound freight for your imports.

You keep the business decisions: purchasing and replenishment, pricing, customer service, packing rules and priorities. Outsourcing can be partial (only ecommerce orders, for example, or only the U.S. market) or complete. In the latter case, the 3PL becomes your distribution center; that is our logistics outsourcing service.

When to use a 3PL: 7 signs it is time

1. You are out of space. Inventory is taking over the office, the garage or the rented warehouse, and the next shipment has nowhere to go.
2. Leadership is packing boxes. If founders or managers spend their evenings fulfilling orders, that time is not going into growth.
3. Errors keep piling up. Wrong item, wrong quantity, forgotten parcels: every mistake costs a reshipment, customer service time and sometimes a customer.
4. Shipping costs keep climbing. You pay close to counter rates because your volume is too small to negotiate.
5. Peak season overwhelms you. Black Friday or the holidays become a race against the clock instead of an opportunity.
6. A big decision is coming. Your lease is up for renewal, or you would need to buy a forklift or hire a warehouse manager.
7. A new market is opening. A retailer like Walmart or Costco imposes its B2B compliance requirements, or you want to sell in another country without opening your own warehouse there.

If two or three of these sound familiar, it is probably time to start looking for a partner.

When it is better to wait

Outsourcing is not always the right call, at least not right away:

• Your volumes are still very low or irregular. A 3PL’s fixed fees (setup, possible minimums) can then outweigh your savings.
• Your product is still changing a lot. If formats, packaging or your catalog change every month, stabilize them first: a 3PL works best with reliable product data.
• Every order is custom-made. Engraving, complex assembly or one-off personalization need a careful assessment before you hand the work over.
• You are in the middle of peak season. A transition should be planned during a quiet period, never a few weeks before the holidays.

Run the numbers: your real in-house cost

To compare fairly, you need the full cost of your current logistics, not just the rent. Add up:

• rent, property taxes, power, heating and insurance for the space you use;
• equipment: racking, forklift or pallet jack, printers, scales, barcode scanners;
• software: inventory management, shipping labels, integrations;
• wages and payroll costs for warehouse staff, including coverage and training time;
• the time you and your managers spend on logistics;
• the cost of errors, delays and non-negotiated shipping rates.

Then compare that total with a 3PL estimate based on your actual volumes. Our article on fulfillment costs in Canada breaks down each line, and our 3PL cost calculator gives you a range in about a minute.

What to prepare before you contact a 3PL

The more complete your information, the more accurate the quote and the faster the onboarding. Gather:

• your product list (SKUs) with dimensions, weights and barcodes;
• your monthly order volumes for the past year and your forecasts, including peaks;
• the average number of items per order and the split between ecommerce and retail orders;
• your main destinations: Québec, the rest of Canada, the United States;
• your ecommerce platform and other channels, such as Amazon or other marketplaces;
• any special requirements: branded packaging, inserts, lot numbers, expiry dates, retailer compliance.

How to choose the right 3PL

Price matters, but it should never be the only criterion. Assess each candidate on these points:

• Location relative to your customers and suppliers, and the ability to serve other markets. Kolineo, for example, runs a warehouse in Sherbrooke, Québec, and another near Chicago.
• Experience with products like yours: fragile, heavy, dated, sold to retailers.
• Integrations with your platform (Shopify, WooCommerce, Amazon or others) and real-time inventory visibility. See our integrations to learn what a connection syncs.
• Measured performance: order accuracy and on-time shipping. Ask for numbers, not adjectives. At Kolineo, they are 99.98% and 99.87%.
• Transparent pricing and a clear contract: term, notice period, exit terms.
• Communication: who your day-to-day contact will be and how issues will be flagged to you.

For a full comparison checklist and the questions to ask, read our guide What is a 3PL?

Avoiding stockouts during the switch

The trickiest moment is the inventory transfer: while your products are in transit, neither you nor the 3PL can ship them. A few strategies limit the impact:

• Have your next inbound shipment delivered straight to the 3PL instead of moving all your existing stock at once.
• Move in two waves: fast movers first, then the rest, while you keep shipping from your own space for a few days.
• Sync quantities in your store only after the 3PL’s count, so you don’t sell products still in transit.
• Warn your customers if a short delay is possible, and avoid promotions during the transfer week.

Common mistakes to avoid

• Choosing on price alone. The lowest rate sometimes hides fees elsewhere, or a service that costs you dearly in errors.
• Showing up with incomplete data. Products without barcodes, rough dimensions, undocumented packaging: these are the main sources of problems at go-live.
• Switching during peak season. Plan the transition several months ahead of your busiest period.
• Not setting KPIs. Without accuracy and turnaround targets agreed upfront, it is hard to evaluate the relationship.
• Ignoring exit terms. Read the contract term, notice period and inventory removal fees before you sign.