Amazon FBA vs. 3PL: Which Is Best?

It’s the battle you’ve been waiting for. We compare Amazon FBA and 3PL solutions to see which order fulfilment and product logistics option is the best match for your business.

From distribution, storage and delivery to returns management, personalised packaging and refunds, any online business selling goods can now outsource practically all its logistics processes to an external partner.

With that in mind, let’s introduce our two titans facing off in this blog: Fulfilment by Amazon (FBA) and Third-Party Logistics (3PL).

Both solutions weigh in with the credentials to be your logistics and fulfilment provider. But in the fight of FBA vs. 3PL, which option is more suitable for meeting the demands of your business?

Judging this comparison piece, we’ve assessed each contender’s advantages, disadvantages and costs before discovering the ideal option to meet your operations and product fulfilment needs. 

May the battle commence.

What is Fulfilment by Amazon (FBA)?

FBA stands for “Fulfilment by Amazon”, and is a multi-functional logistics and fulfilment service where Amazon provides its sellers storage, packaging and shipping solutions alongside customer support and returns. 

With FBA, sellers simply send their products to Amazon fulfilment centres, where they get stored before being picked, packaged and delivered. Beyond shipping, Amazon also handles customer returns and refunds. 

It’s critical to note that FBA is only available to Amazon sellers using the Amazon platform. There is a separate Multi-Channel Fulfilment (MCF) service where Amazon will fulfil orders taken from sales platforms other than Amazon, such as selling items on your website.

What is a 3PL?

3PL translates to “third-party logistics” and performs the same function as FBA by outsourcing e-commerce logistics via a third-party company. Like FBA, these third-party providers handle product transportation, storage, distribution, and fulfilment alongside reverse logistics and customs brokerage for overseas shipments.

In other words, 3PL offers a complete turnkey solution for e-commerce fulfilment, ensuring your products are stored, processed and shipped correctly.

Unlike FBA, a 3PL will typically fulfil orders both from the Amazon platform and across your other sales channels, including your website, as standard.

Since e-commerce has skyrocketed in recent years, the demand for third-party logistics has created its own industry. That industry is projected to reach a worldwide market value of $1.44 trillion by 2028!

Why Use Either?

Ultimately, the winner of FBA vs. 3PL will depend on your business. If you’re selling via Amazon, both solutions provide a convenient option for outsourcing order fulfilment and operational requirements. By outsourcing your order fulfilment, your business can focus on growth and scalability while knowing your products are reaching consumers quickly.

However, FBA and 3PL come at a cost, so you should only invest if your company operations meet the approach on offer.  

Now, deciding the victor of FBA vs. 3PL for your businesses depends on evaluating the pros and cons for each.

FBA Pros

Let’s start crunching our FBA vs. 3PL comparison with what positives FBA offers its sellers.

1. Prime

With 12.4 million UK households registered with an Amazon Prime membership in 2023, Amazon offers its sellers faster deliveries with same-day, one-day or two-day delivery guarantees while shoppers gain early access to Lightning Deals on the marketplace. 

Plus, there’s also Prime Day, which offers consumers full access to special deals. All these various Prime benefits offered to consumers play into the hands of sellers on the platform. 

2. Infrastructure

As the largest global e-commerce brand in the world, Amazon has an enormous infrastructure in place, with an extensive logistics network that provides fast and reliable order fulfilment services.

3. Trust

Due to its fast and reliable reputation, Amazon has gained the trust of its consumers, taking its net sales from $4 billion to $33.6 billion over the past decade (2013-2023).

With that trust, you can share in the confidence of consumers on the platform, knowing they’ll receive high-quality products quickly.

4. Support

Including order fulfilment and logistics, FBA offers extensive customer support to handle complaints, returns and refunds. As one more thing not to worry about, this customer support can ease the burden on your business.

5. Scalability

Thanks to its vast infrastructure, Amazon can handle order fluctuations on demand. This flexibility can help you scale your business accordingly.

6. Transparency

FBA’s transparent pricing system helps you easily calculate costs and predict profits. Plus, the multi-channel fulfilment models integrate other selling platforms through Amazon.

FBA Cons

Now we know FBA benefits for your business, how about any drawbacks?

1. Costs

The main disadvantage of FBA is the costs and fees. Despite offering an exhaustive turnkey supply chain management solution, Fulfilment by Amazon is considered expensive by those in the industry, especially when comparing prices to other 3PL providers.

Choose FBA, and your business will have to pay storage fees, fulfilment fees and other additional costs such as removal and returns processing fees alongside labelling and repackaging costs.

What’s more, if you want to maintain control of your business and sell outside of the Amazon platform, MCF is significantly more expensive than FBA and does not include many of its top benefits, like speedy Prime deliveries.

2. Branding

Sell with FBA, and your consumer receives your product in standard Amazon packaging. Those who vouch for the “unboxing experience”, with nearly 50% of UK shoppers claiming its importance, must suffer this standardised product reception. 

These branding limitations with FBA include fewer opportunities for custom inserts, materials and personalised touches that can altogether enhance the unpackaging experience, customer loyalty and brand recognition.

3. Quality Control

Some companies can be reluctant to use FBA due to quality control concerns. Without private label products, when Amazon processes your order, it might not be the exact product you initially sent as FBA simply selects the product from the closest warehouse to your buyer.   

While this convenience helps reduce costs and speeds up delivery, it does reduce your quality control ability.

4. Competition

FBA also has a double-whammy competition issue. Firstly, by utilising the platform to showcase your products, you’re pitting yourself against thousands of others with similar products.

Secondly, Amazon might be a direct competitor by selling, shipping and marketing its own product line. This competition can create some conflict of interest for your business moving forward.

5. Communication

Besides a few forums where you can find FAQs, Amazon offers minimal direct communication with its sellers. Therefore, investing in FBA only gives you a single hotline and no dedicated account manager.

So, if you’re someone who likes dealing with actual people when issues or questions arise, remember that FBA offers cloud-based solutions, not people-based. 

6. Dependence

By relying on FBA, you’re placing your trust in its system and network. If issues arise, policies change, or fees increase, it can create problems for your order fulfilment.

7. International

Lastly, despite Amazon being a global brand, its FBA services are region-specific. As an international enterprise, this means managing separate FBA accounts when shipping worldwide or planning international expansion.

3PL Pros

The first round of this FBA vs. 3PL match-up draws to a close with FBA striking some heavy blows. But with plenty of time still to go, how does 3PL stack up to the competition?

1. Costs

In direct opposition to FBA, 3PL is much more cost-effective, especially when avoiding paying a third-party fulfilment provider to build up the stock to send to Amazon before paying for logistics and FBA fulfilment.

Utilising the expertise of a 3PL can help your business reduce logistic costs while improving its overall operations and fulfilment efficiency.

2. Storage

By choosing an established 3PL provider, you can rest assured knowing you have plenty of storage space within their warehouses and fulfilment centres. Depending on your scalability and the number of facilities, you can distribute your products to multiple warehouses in the UK to reduce your shipping fees.

3. Flexibility

Managing logistics for multiple sales channels such as websites and other marketplaces (other than Amazon) makes 3PLs more flexible in managing and delivering your products. This advantage is particularly convenient during demand fluctuations, where you can scale up or down during seasonal and off-season peaks. 

4. Management

The warehouse management software inside 3PL fulfilment centres integrates your inventory, enabling you to manage and analyse your product orders in real-time as you evolve.  

5. Expertise

Partnering with a 3PL provider means you’ll have professionals handling your order fulfilment. From distribution through to packing and shipping, every aspect of your product fulfilment is under the trustful control of experts.

6. Specialists  

Whether food and beverage, retail or technology, many 3PLs are specialists in specific industries or at least started with a particular niche. So, before you invest, see if you can find a specialist in your industry with experience in your product type, or a 3PL that is tailored to your stage of growth.

7. Customisation

Back to the “unboxing experience”. If you want to add a personal touch to your packaging, 3PL offers this service with packaging inserts, speciality packaging and in-person product counts/selection.

Beyond consumer personalisation, this customisation service stretches beyond the products and applies to your logistics services, with tailored solutions available across warehousing, distribution and fulfilment.

8. Branding

With more control over your packaging and the possibility of adding personalised features, you receive more branding opportunities to display your identity and build a connection with your consumers.

9. Communication

When choosing a 3PL provider, you can rely on correspondence with a dedicated account manager. Whether it’s discussing scalability or raising issues, you know you have an expert on the line to answer your needs. Having this point-of-call can prove invaluable if challenges arise and support is needed.

3PL Cons

With all those 3PL advantages in mind, how about the downsides?

1. Unknown

If you’re a small business just starting your e-commerce journey and you’re unsure of order volumes, then it might not pay to have your products in storage with a 3PL provider straight away. Your 3PL strategy may not align with your profitability so you can end up making a loss with storage and fulfilment costs.

But at least with experts on hand, an experienced 3PL company can still suggest the best option for your business that sets you up for healthy scalability and development.

2. Control  

In delegating so many of your processes to another entity, you're relinquishing some control over your operations. A good relationship with your 3PL provider is necessary to align your vision with their processes as your operations grow into the future.

3. Fees

While 3PL will likely prove more cost-effective than FBA in the long run, initial fees are sometimes required to get off the ground. These costs can include set-up, shipment received, storage, fulfilment and shipping fees.

Unlike most other 3PLs, we offer a simple pay-per-order pricing model across our ecommerce fulfilment service to help sellers avoid these complex fees.

4. Integration

Depending on your product and the 3PL technology, integrating inventory into warehouse software systems can sometimes prove complex and time-consuming.

However, these processes are constantly improving, and by choosing a specialist 3PL in your industry, inventory integration should prove no big issue as they already have experience.

5. Contracts

Some 3PL providers require long-term contracts that can lock in your operation even if it no longer suits your business. Whether it's down to growth or entering new markets, try to find a 3PL partner that offers flexibility.

FBA vs. 3PL Costs

Both FBA and 3PL solutions offer efficiency and convenience, but these benefits do come at a cost. After alluding to the costs in our pros and cons list, let’s take a closer look at the damage in this section.

FBA Costs

We mentioned the transparent fee system with FBA, but what are they exactly?

Well, first, you’ll need to become a seller on the platform with either an individual or professional plan:

• Individual plan: £0.75 per sale item + referral fees (~8-15% of order value) + additional fees.
• Professional plan: £25 per month + referral fees (~8-15% of order value) + additional fees.

After registering as a seller, FBA allows you to pay for services without subscription fees, contracts, or minimum inventory requirements. Simply send your products to their fulfilment centres, and away you go.

Upon receiving your inventory, you’ll be charged based on:

• Fulfilment fee: Based on product type, size, and weight.
• Storage fee: Charges for cubic feet alongside fuel and inflation surcharges.

Other fees can include aged inventory surcharge, inventory storage overage fee and removal and disposal fees.

You can find out more about the latest Amazon seller fees here.

3PL Costs

Rather than individual pricing for each item, 3PL providers tend to offer fixed monthly fees depending on your business model and the number of products you can shift.

We can break down these average 3PL costs across the following stages:

• Goods in: Pallet (1,000kg) = £2.50.
• Storage: Pallets per week = £5.
• Picking and packing: Per item = £1.75.
• Delivery: 100-750g = £1-£2.50.

We advise speaking to a number of 3PLs directly to allow them to explain how their pricing would relate to your specific circumstances. After all, one of the advantages of a 3PL over FBA is this personalised experience!

Unlike many 3PLs, at Tap’in, we drop many of these complex fees and charge per order, giving you predictable costs that protect your cash flow.

To gain a good understanding of costs before investing in either FBA or 3PL, you should consider the following questions:

• What is your current monthly order volume?
• What are your monthly order future projections?
• How long does it take for your product to go from manufacturer to fulfilment centre?
• Are you shipping in the UK or overseas?

By answering these questions as accurately as possible, you have a better chance to calculate your costs and apply them to either fulfilment option.

When is FBA the Wrong Choice?

FBA can prove the wrong choice for a few reasons:

• Slow-moving products can cause high storage fees. Plus, Amazon charges higher rates for items stored over one year.
• The profitability of low-margin products can be outweighed by fulfilment and storage fees alongside additional costs.
• Heavy or large items will incur more fees across storage and fulfilment.
• Customisation limitations will limit your ability for brand exposure and consumer “unboxing experience”.
• If your products require special handling, like fragile or hazardous materials, FBA may be unwilling to meet your needs.

When is 3PL the Wrong Choice?

Before opting for a 3PL provider, you should consider the following situations:

• Set-up fees and other high initial costs can cause significant upfront lump sums (unless you choose Tap’in).
• Low-volume sales can make 3PL more expensive than managing your operations in-house.
• Special handling requirements can draw additional expenses and complications.

What if You Sell Internationally?

If you sell internationally, using FBA will require managing multiple accounts for each region you deliver to. Plus, further inventory management across multiple Amazon marketplaces requires careful planning to avoid stockouts or overstock situations. Then you have international FBA fees to consider alongside regulatory compliance of your products in different countries.

On the other hand, depending on your provider, 3PL can offer more flexible international capabilities for your order fulfilment. However, technology integration can prove complex with compatibility challenges across international warehouses.

The FBA vs. 3PL Verdict: Which is Right for You?

At the end of the day, the all-important decision comes down to preference and the nature of your business.

For instance, if you primarily sell on Amazon, FBA may make sense due to the ease of integration and other associated benefits. However, it’s still worth considering product fulfilment through a 3PL provider as it can work out much cheaper.

On the other hand, if you are selling through your own site or have a multi-channel sales system, 3PL will offer greater flexibility and is usually more cost-effective. Unlike FBA, it also gives you more control over your branding, packaging and the full customer experience, as well as a real person to speak to if anything goes wrong.

Looking ahead, both solutions offer scalability, but 3PL will provide a more bespoke approach based on your business growth and order demands.

Alternatively, you can always opt for a split decision, as both logistics providers can work in tandem if you want to utilise FBA for Amazon sales while using 3PL for other sales channels.

Speak to Experts in Order Fulfilment and Logistics 

At Tap’in, we offer a personalised e-commerce fulfilment and logistics service that helps streamline your operations with cost-effective and efficient fulfilment solutions.

We take the time to help business owners understand their options while delivering a custom service tailored to their needs.

With bespoke fulfilment and transparent pricing across the UK, we can handle all your needs from click to pick to doorstep.

Speak to a friendly member of our team today to learn more about how our logistics and e-commerce fulfilment services can elevate your brand.