If you’re a small retailer or wholesaler exploring third-party logistics (3PL) warehouse options, you might find the search more difficult than expected. Many 3PL providers simply aren’t interested in low-volume clients — and while that can be frustrating, there are good reasons behind it.
3PLs Need to Maximise Return on Space
At the heart of a 3PL warehouse’s business model is efficient space and resource utilisation. Every square metre of racking, every staff member’s time, and every delivery bay must be optimised to drive the best possible return. When a 3PL evaluates a new client, they look at how much space that business will occupy and what level of revenue that space will generate.
Naturally, high-volume clients with steady order flows are more appealing — they use space efficiently and generate predictable income. On the other hand, a low-volume client might take up the same amount of physical space but bring in far less revenue. From the 3PL’s perspective, it’s a simple case of opportunity cost: they must prioritise clients who deliver the best return per square metre.
Fixed Costs and Minimum Spend Requirements
From the retailer or wholesaler’s point of view, using a 3PL warehouse can also be uneconomical if your order volumes are low. Most 3PLs have fixed monthly fees or minimum spend requirements to ensure they cover their operational costs. These may include inbound handling charges, pick and pack fees, storage rates, account management, and system access costs.
For a business processing only a small number of orders each month, these fixed costs can quickly add up. With fewer orders to spread the costs across, the average cost per order becomes disproportionately high. In some cases, outsourcing to a 3PL may end up costing more than fulfilling orders in-house — especially if your operation is still small and manageable.
When Is the Right Time to Use a 3PL?
While 3PL warehouses offer immense benefits in terms of scalability, efficiency, and logistics expertise, timing is key. Many businesses consider a 3PL too early — before their volumes justify the investment. A good rule of thumb is to assess how many orders you’re processing per day or month, whether storage and fulfilment are creating bottlenecks, and whether you’re hitting the minimum spend thresholds of reputable 3PL providers.
If your volumes are still on the lower end, it may be better to manage fulfilment in-house or explore alternative solutions, such as shared warehousing or fulfilment partners that specialise in start-ups or low-volume ecommerce businesses.
Final Thoughts
3PL warehouses are built to serve growing and established businesses with consistent order volumes. Their model depends on maximising return on space and labour, which is why smaller businesses can often struggle to find a 3PL willing to take them on. And even if they do, the cost structure may not make financial sense at an early stage.
Before committing to a 3PL, it’s worth understanding your current order volume, forecasting growth, and exploring whether the economics truly work for your business.
Looking for a reliable 3PL warehouse for your small business?
At Warenous, we offer a free service to help you find the right 3PL partner. We work with a range of 3PL warehouses servicing start-ups through to multinational enterprises. We’ve identified reliable 3PL warehouse providers from around the world, so you can feel confident knowing that every recommendation we make is reliable and backed by experience.
Contact us today for a free consultation.
