When your Australian ecommerce business starts to grow, handling orders on your own can get harder. Packing a few parcels at home can quickly become a daily job that needs warehouse space, staff, inventory tracking, courier pickups, and customer support.
At this stage, you might consider outsourcing to a third-party logistics provider (3PL) for your ecommerce fulfilment needs. However, outsourcing does not always lower your costs. The best choice depends on your order volume, product type, labour costs, and how much control you want over the customer experience.
Summary: The Volume Thresholds at a Glance
No single order volume makes outsourcing cheaper for everyone. Still, your monthly order numbers can help you decide when to compare both options.
These are just decision points, not fixed break-even numbers for the whole industry. For example, a business sending 1,000 small items from a small space will have very different costs than one shipping large, bulky products that need special care.
The best way to compare is by looking at your total cost per order, including hidden costs that may not show up on your invoice.
What a 3PL Actually Charges For
A third-party logistics provider stores your inventory and manages some or all of your ecommerce fulfilment operations. Depending on the agreement, this can include receiving stock, storage, picking, packing, dispatch and returns processing.
Most 3PLs don't charge a single fulfilment fee. Instead, they charge several cost components. It is important to know how each one is calculated before you compare providers.
Receiving, Storage, Pick and Pack, Freight
- Receiving: The provider charges to accept incoming inventory, check quantities and record stock in its warehouse management system. Pricing may depend on cartons, pallets, units or labour time.
- Storage: Inventory is typically charged by pallet, bin, shelf location or cubic volume, often on a weekly or monthly basis. Slow-moving products can increase your ongoing storage costs.
- Pick and pack: This covers retrieving products, preparing orders and packing them for dispatch. Some providers charge a base fee per order, with additional charges for extra items, packaging or special handling.
- Freight: Delivery is usually charged separately. Some providers negotiate carrier rates and pass those savings to you. Make sure to compare the real service and any extra fees, not just the advertised shipping price.
The Line Items That Surprise People
The main pick-and-pack price often does not show all the costs. You might also face extra charges such as:
- Inbound receiving and inventory-counting fees.
- Returns inspection, restocking and disposal.
- Packaging materials, branded inserts and special packing.
- Minimum monthly charges or account-management fees.
- Stock transfers, relabelling and inventory adjustments.
- Long-term storage or peak-season surcharges.
Some providers require a minimum number of orders each month or have contract commitments. A low per-order fee might not be a good deal if you have to pay a high minimum during slow months.
What In-House Fulfilment Really Costs
Some costs are clear, like packaging and courier fees. Others, such as your own time and the space your stock takes up, are easy to miss.
Labour, Space, Consumables, Software
- Labour: Include wages, superannuation, leave, training and the time spent picking, packing, labelling and handling exceptions. If you're doing the work yourself, your time still has an economic cost.
- Space: Your warehouse, commercial storage or allocated home space has a cost. Include rent, utilities, insurance and any additional expenses associated with storing inventory.
- Consumables: Cartons, satchels, tape, labels, protective materials and branded packaging all contribute to the cost of each shipment.
- Software: Inventory systems, order-management tools, shipping integrations and label-generation software can involve monthly subscriptions or transaction fees.
- Remember to include costs for equipment, maintenance, packing benches, printers, and any losses from mistakes, damaged goods, or missed shipping deadlines.
Cost Per Order at 50 / 200 / 1,000 / 5,000 Orders a Month
Your cost per order changes as you ship more because fixed costs are shared across more orders. However, you may also need more staff, and your operations can get more complex.
For example, a small business might pay a lot for software and space per parcel when shipping only 50 orders a month. At 1,000 orders, those costs are spread out, but you might need more staff or warehouse space.
When you reach 5,000 orders, ask whether your processes, staff, and space can keep up without causing delays.
Don't assume that cost per order will fall indefinitely. Growth can trigger additional shifts, equipment, storage and management requirements.
Side-by-Side Cost Comparison
The next example uses made-up Australian-dollar costs to show how you can compare the two models. It assumes a simple product range with one item per order and does not include the product cost. These numbers are just for illustration, not real market prices.
Monthly fulfilment costs (AUD)
Assumptions: This example uses hypothetical costs for a straightforward product range, with one item per order. Both models include freight. In-house variable labour is assumed to be $2.00 per order, plus $1.00 for packaging. The 3PL charges $3.00 per order for pick and pack, with storage and packaging charged separately.
Beyond Cost: Control, Speed and Brand Experience
Cost is important, but fulfilment also shapes your customers' experience. Fast delivery, good packaging, accurate stock, and quick problem-solving can all help bring customers back.
What You Give Up with a 3PL
When you outsource, you trust another business with key parts of your customer experience. You might have less say over packing, warehouse routines, pickup times, and how problems are handled.
Branded packaging, promotional inserts, gift orders and unusual product requirements should all be discussed before onboarding. Ask how quickly the provider processes orders, how inventory discrepancies are investigated and what happens during peak periods.
What You Gain Back in Time
A 3PL can save you time on daily ecommerce fulfilment, especially as your order numbers grow or change. This lets you spend more time on marketing, developing products, helping customers, and planning your business.
Outsourcing also gives you access to proven warehouse systems and extra capacity, without needing to hire and manage a full fulfilment team.
But outsourcing does not mean you stop managing. You still need to keep an eye on your stock, check invoices, review service quality, and manage restocking.
The Hybrid Model (and Why More AU Sellers Are Using It)
A hybrid approach mixes in-house fulfilment with outsourced logistics. Instead of using just one method for everything, you pick what works best for each part of your business.
For example, you could use a 3PL for fast-moving products that need daily shipping, but handle custom, fragile, or special orders yourself. Or, you might outsource during busy seasons and do fulfilment in-house the rest of the year.
Hybrid fulfilment is helpful if your products need different storage or handling, or if your demand changes a lot during the year.
Questions to Ask Before Signing a 3PL Contract
Before committing to a provider, ask:
- What is included in the quoted price? Request a complete breakdown of receiving, storage, pick and pack, packaging, freight and additional services.
- Are there minimums or long-term commitments? Understand minimum monthly spend, contract length, exit fees and price-review conditions.
- How is inventory managed? Ask about stock accuracy, cycle counts, damaged goods and discrepancy investigations.
- What are the service-level commitments? Confirm dispatch cut-offs, processing times, peak-season capacity and how service failures are handled.
- Can the provider integrate with your sales channels? Check compatibility with your ecommerce platform, inventory software and order-management process.
- What happens when you leave? Establish how stock is counted, prepared and transferred, including the costs and timeframe.
Make sure you get all answers in writing and ask the provider to use your real order details, not just a generic example.
FAQs
At what order volume should I switch to a 3PL?
There is no set number. Start looking at providers when fulfilment takes up a lot of your time, space, or management, or when you struggle to meet shipping deadlines.
Is a 3PL cheaper than in-house fulfilment?
It can be, especially if outsourcing helps you avoid big fixed costs or gives you more efficient operations. But if per-order fees are high, in-house fulfilment might be cheaper at higher volumes. Always compare your total costs.
Can I use my own courier with a 3PL?
Some providers let you choose your own carriers or shipping methods, while others use their own network. Check the options, integrations, and any extra fees before you sign up.
Can Zappy help with in-house fulfilment?
If you run your own warehouse, comparing courier options and organising deliveries are key to keeping ecommerce fulfilment costs down. Zappy can help you handle shipping without needing to outsource your inventory or packing.
Should I outsource everything as my business grows?
Not always. The best setup depends on your products, what your customers expect, your order patterns, and your business priorities. Keep checking the costs and service of each fulfilment model as your business grows.