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Third-party logistics (3PL) is one of the ways that a company can outsource order fulfillment. An eCommerce order fulfillment process starts when a customer submits the order and finishes when the product reaches their door.
What seems like a simple process can become quite complex depending on the storage location of your company's inventory, the customer's location, the size of the order and the timetable for delivery. It becomes even more complicated when you factor in the potential for returns.
Suppose you can't handle your eCommerce fulfillment in-house. In that case, it's probably time to outsource and let a third-party logistics company take over.
Keep reading to learn everything you need to know about 3PLs.
3PL companies are companies that offer various eCommerce logistics processes to online businesses. Some services they offer include warehousing, inventory management and order fulfillment.
3PL involves the business, the logistics provider and the shipping carrier. In simple terms, a 3PL provider offers logistics services to manage certain aspects of a company's shipping operations. 3PLs are renowned for their logistics industry expertise and can help companies better fulfill orders to keep their customers happy.
Some people think 3PLs and freight brokers are essentially the same. However, 3PL companies are more active than freight brokers because they take over your fulfillment operations. Meanwhile, freight brokers only connect you to shipping carriers without touching your products.
A 3PL becomes integrated into the company's inventory storage and transportation procedures. Rather than storing, packaging and shipping orders, companies hire a 3PL to manage the entire process. The 3PL owns or leases its storage and transportation assets to fulfill the client's orders remotely, ensuring you can focus on growing your business.
Third-party supply chain models first appeared in the 1970s when intermodal marketers took packages from businesses and brought them to rail stations for delivery. People developed 3PL software to help companies manage inventory and deliveries as the field grows. Nowadays, all kinds of businesses, from Fortune 500 to small businesses, use third-party logistics.
Here are the benefits of working with a 3PL company:
Third-party logistics companies often have connections in the sector, meaning they have better access to vendors and can negotiate higher discounts for you. By partnering with them, you can use their contacts and influence to reduce shipping supply and warehousing expenses, ultimately saving you money.
Many third-party logistics service experts have decades of combined experience in the industry. When you hire a 3PL company, you get access to this expertise to get insights on transport documentation, shipping regulations and other logistics issues. They can also answer your questions about how to increase operational efficiencies.
Running an in-house logistics division takes a lot of time and money. By hiring a 3PL company, you can instead focus on core business processes like developing marketing materials and improving sales channels. Better yet, you can do this without dedicating any internal staff or resources to run an in-house logistics division.
3PLs provide custom-made services based on your company's needs and performance. If your business grows and product orders increase, you can sign them for a more significant contract with more benefits. Conversely, considering downscaling your business, you can opt out of some of their services.
Working with a 3PL company helps you save time. You save time not only by streamlining various supply chain operations but also by being proactively aware of any potential issues in the supply chain. Addressing these issues early on means you donât need to spend a lot of time fixing them after the damage is done.
Many 3PL companies offer all-in supply chain and logistics management, which means they handle your entire supply chain. This means your entire supply chain and logistics operation is handled by one party, reducing the chance of miscommunication and mistakes. Itâs also more efficient since all the information flows within one organization instead of many.
Customers want to get their purchased items on time. Working with a 3PL company helps you get products to customers on time, increasing their satisfaction. Many 3PL companies also offer returns management, restoring customer satisfaction when they receive defective items.
As the name implies, 3PL involves three parties that help bring products to the market. Here are the three parties involved in the 3PL model:
The business is your company â you're responsible for producing goods and running the eCommerce business. Once people buy your products, you send the orders to your logistics company.
The logistics company is the intermediary between your company and the shipping providers. Third-party logistics companies offer many services, including warehousing, packaging and inventory management.
The shipper carries your products to physical stores or the buyers' doors. Major shippers include USPS, UPS and DHL.
A 3PL can scale and customize its services according to the client's specific needs. The client still retains some oversight when managing shipping operations. Before signing a contract, you can outline what services you want the 3PL to provide and what services you will maintain in-house. As your business grows, your 3PL provider can take over a significant role in expanding your supply chain and procurement operations.
Here's an overview of the services a 3PL typically provides:
3PL companies provide warehouse spaces to handle order fulfillment for multiple companies in one place. This improves efficiency and reduces costs because they don't have to switch between numerous warehouse locations to finish orders. Moreover, you don't have to lease warehouse space, buy forklifts, or rent trucks to handle your merchandise.
Managing inventory involves more than simply storing your company's products. Integrative technology also syncs your inventory with your online store in real-time, so you can track inventory and predict demand to avoid sell-outs. Your 3PL also helps organize items with multiple parts into proper categories, ensuring nothing is misplaced.
Most 3PL providers have fulfillment centers across the country to store your products. 3PL companies distribute your inventory across the country to ensure fast shipment times.
A 3PL automatically routes orders to fulfillment centers based on the customer's location. 3PLs use extensive automation to save hundreds and thousands of dollars on inventory distribution, raising their clients' profits.
Alongside storage, 3PL companies assign staff to pick products for each order and package them for delivery.
Once the products are picked and packaged, the 3PL forwards them to a shipping carrier for delivery. Different 3PLs work with other carriers, and a good 3PL will choose the one that offers the best price and delivery speed. Some 3PLs even work with local carriers for less than truckload (LTL) shipping for local orders.
By partnering with a 3PL, your company can offer expedited shipping options to your customers since fulfillment centers send out orders daily. 3PLs often negotiate discounts with carriers like FedEx, DHL, USPS and others to offer faster delivery speeds at a manageable cost.
In addition to handling the shipping process, a 3PL will also manage the tracing and tracking process. Customers will receive shipping information to track their orders throughout the fulfillment process.
Not only do 3PLs offer shipment services, but they can also provide reverse logistics to handle returns. A 3PL can provide customers with return labels to drop the item off with a carrier for return to the fulfillment center.
Again, when you sign a contract with a 3PL company, you can customize its services according to your business's needs. An experienced 3PL provider will be able to handle the logistics of the entire supply chain from when your customer submits their order to when it arrives on their doorstep.
So you can visualize what this looks like, here is an outline of the order fulfillment process from a 3PL provider's perspective:
A 3PL needs inventory to complete customer orders, so your first act should be moving inventory to their warehouse. Depending on your business size, your inventory may be divided into several fulfillment centers. Each 3PL has its process for receiving and storing inventory. Most providers can customize this service according to the client's needs.
Depending on the 3PL's software, your partner may get the orders automatically, or you may have to send them manually. After placing the order, the 3PL starts the order fulfillment process by packing the items at the warehouse and then passes it to the next stage of the supply chain for packaging.
Once the 3PL has picked up all ordered items, they are prepared for delivery.S
tandard shipping materials for your products include cardboard boxes, poly mailers, bubble wrap, packing tape and bubble mailers. The best 3PL company can balance package protection and small dimensional weight so your products arrive safely and within budget.
Some 3PL companies charge extra for packing material, but others fold the costs into the service fee. Depending on your working relationship, 3PL companies may also let brands customize their packaging.
After the products are prepared, they're handed off to a courier for final delivery.
Some 3PLs partner with specific shipping carriers, while other companies have a rotation of transportation services to get the best deals. Either way, 3PL partners are responsible for brokering deals with freight forwarders to bring you the best rates. The courier fleet usually picks items up from your 3PL partner's warehouses.
The order process doesn't always finish once the package is delivered to the customer's door. Specifically, product returns can get complicated if you manage inventory stock levels yourself. When you're working with a 3PL partner, they receive all returned products to be restocked, scrapped, or processed.
To make the return process more manageable, you can ask the 3PL company to provide shipping labels for every package. Customers can fill them out and return their packages if something goes wrong.
It should be clear by now that 3PL partnerships benefit companies, but how do you determine whether yours will? Keep reading to learn the signs that it's time to hire a 3PL.
3PLs are needed when you can't handle order fulfillment by yourself. Unless you're running a small retail business out of your garage with no more than a dozen orders a week, the chances are good that your company could benefit from hiring a 3PL provider. To help you decide, here is an overview of the advantages associated with working with a third-party logistics provider:
Still unsure whether hiring a 3PL provider is the next logical step for your business? Here are some of the top reasons to hire a third-party logistics provider:
There is nothing magical about the number â100â â the point is that your company is receiving more orders than you can efficiently manage in-house. Shipping a large volume of items per month means your team spends more time and effort fulfilling orders than doing core business tasks. Once you've reached over 100 shipments per month, it's a good idea to hire a 3PL company to support your operations.
Any retail company's goal is to have enough orders that it becomes necessary to increase inventory levels. Of course, when this happens, you'll need space to store all of that extra inventory. Rather than dealing with this predicament each time you add a new product to your store, turn over storage logistics to a 3PL.
Suppose you're currently managing your order fulfillment in-house. In that case, you may struggle to make it to the post office even once a day, let alone often enough to give your customers expedited shipping options. With a 3PL handling your order fulfillment logistics, you can suddenly offer one-day, two-day and maybe even same-day delivery.
Working with 3PL providers isn't cheap, but it could save you loads of time and money. Instead of spending a lot to lease storage space and build an in-house logistics division, consider hiring a 3PL so you can spend the savings on building your business. Additionally, 3PL services speed up product deliveries and give you a competitive advantage.
Every good business person is forward-thinking. From the moment you start your business, you should know where you want to go and how you want to get there. Suppose you expand your offerings throughout the country or around the globe. In that case, a 3PL can help you get there with inventory distribution services. For example, some 3PLs can leverage 2-day or overnight shipping to help eCommerce businesses keep up with Amazon and other giants.
Hiring a 3PL provider to manage your supply chain's logistics is smart if any or all of the signs above are coming into play. Before you start shopping around for a 3PL, however, you should take a moment to consider whether doing so is enough. You may want to consider taking things one step further and hiring fourth-party logistics service providers â keep reading to learn more.
First and foremost, you should know that 3PLs and 4PLs are professional, hired services that help businesses like yours plan and execute inventory management and order fulfillment logistics. You get much more flexibility than you would if you managed fulfillment in-house.
As you well know by now, a third-party logistics provider is a company that handles the logistics of your company's supply chain and order fulfillment processes. Depending on how much control you want to hand over to your 3PL, they can do everything from storing and managing your inventory to picking, packing and shipping your orders. They can even handle the returns management process for you.
A fourth-party logistics provider adds another element to the equation, combining various resources and technologies to optimize your supply chain's design and execution. You can still keep your 3PL to manage the day-to-day details of order fulfillment. Still, a 4PL will become the âcontrol towerâ that oversees supply chain management. They will supervise your 3PLs and any other resources or providers you use to ensure your supply chain operates smoothly, efficiently and cost-effectively. For businesses that want total supply chain visibility, a 4PL provider can be a great option.
The critical difference between a 4PL and a 3PL is that many 3PLs are asset-based â they own or lease equipment and warehouses that they use to provide services. As such, a 3PL is concerned with its costs and may not always seek the best deal for you if it means a better deal for them. In contrast, a 4PL's only concern is integrating and optimizing your supply chain operations.
A third-party logistics provider can offer many services, though many focus on specific supply chain solutions. As a business, this might mean hiring multiple 3PLs to fulfill your supply chain's different aspects â this is when hiring a 4PL may come in handy.
Here is a quick overview of the different types of 3PL providers you may come across:
As part of your transportation 3PL search, you need to consider several factors, including the company's location, where your customers are located, delivery timelines, shipping methods, service options and pricing and discounts. This type of 3PL deals with shipping inventory between locations.
The most common type of 3PL is warehouse and distribution-based. These providers handle the storage, shipment and returns of your orders. When considering a warehousing 3PL, you'll need to consider the number of locations and their geographical locations, the pricing model for storage, negotiated shipping rates, delivery insurance, daily cutoffs for order fulfillment and management tools.
Once your company expands beyond the eight or nine-figure mark in annual revenue, you may want to bring a financial 3PL on board to help you optimize your operations for the industry and to evaluate current trends. These 3PLs offer freight auditing, cost accounting, bookkeeping, tracking, tracing and inventory management.
Now that you better understand the different types of 3PL providers, you may wonder how much it costs to hire a 3PL. Third-party logistics pricing depends on the services you require and the scope. Several factors that determine 3PL pricing include:
In addition to considering these individual costs, you should also know that most 3PLs offer three pricing models. Here is a quick overview of their differences:
When choosing a 3PL provider, consider all aspects, including costs. Keep reading to receive some additional tips for selecting a 3PL provider.
If you've decided that hiring a third-party logistics provider is the next logical step in expanding your business, congratulations! Now comes the hard work â choosing the perfect provider to meet your business's current needs while offering room for growth.
Here are some simple tips to keep in mind when choosing a 3PL provider:
Naturally, you want to find the best 3PL provider for your company. Thatâs probably easier said than done, though. There are many pitfalls to avoid when choosing a 3PL company to work with.
Here, weâll cover six mistakes you should be wary of when picking a 3PL company.
One of the goals of outsourcing fulfillment is saving money, but that doesnât mean you should cheap out on a 3PL company. You shouldnât choose a 3PL company just by choosing the one with the lowest upfront costs because it may cost you more in the long run.
Many 3PL companies can offer low upfront costs because they donât use the latest technologies or provide less client support. If your chosen 3PL company isnât doing its best to satisfy your logistics needs, your customer satisfaction may also suffer. Consider spending more upfront to gain long-term benefits instead of short-term savings.
Just like any partnership, you need to be clear about what you expect out of your 3PL partner. Here's what you should do before signing a deal:
Choosing a 3PL company with fulfillment centers close to you means youâll have an easier time surveying your inventory and checking out its operations. But itâs even more important that your 3PLâs fulfillment centers be close to your customer base to reduce shipping time and costs.
3PL companies donât understand your business unless you tell them, so you need to inform them of any changes in seasonal demand. They may have difficulty managing inventory if you donât communicate when your products are most or least in demand. Remember to give your 3PL partner advanced notice of demand spikes to ensure they have enough inventory on hand to meet customer demands.
Communication is key when working with a 3PL partner, and sharing information relevant to your logistics operation is part of it. You need to trust your 3PL partner with essential information about your logistics operations, so they wonât be in the dark and can provide the best services.
Your interview with a prospective 3PL partner generally informs how they run their business. If the representative exhibits a customer-first attitude and goes out of the way to accommodate your needs, that can be a good sign of how theyâll treat your customers. Conversely, if the representative treats you badly, the company may do the same to your customers.
There are dozens of 3PL companies vying for your business, so choosing one is challenging. To help you decide, here are four premiere 3PL company options for your eCommerce and small business:
ShipHero is one of the best third-party logistics services for online retailers providing order fulfillment for more than 4,000 eCommerce businesses. Here are some of the benefits you'll get when partnering up with ShipHero:
ShipHero also integrates with major eCommerce platforms like Shopify Plus, BigCommerce, Shopify, Amazon and WooCommerce.
ShipBob is a third-party logistics company that helps you ship products worldwide. It promises shipping to all areas of the world through fulfillment centers in North America, Australia and Europe.
ShipBob offers these 3PL services:
ShipBob offers integrations with major eCommerce platforms like Shopify, BigCommerce and Squarespace.
Whitebox offers end-to-end 3PL services to help your products go from the factory floor to the buyers' doorstep. Whitebox even has an in-house advertising agency to help you market your business.
The services offered by Whitebox include:
FedEx Fulfillment is the 3PL subsidiary of FedEx, which offers third-party logistics to small businesses. It boasts excellent customer service and a resource hub to help new business owners learn entrepreneurship.
Here are the services you'll get from FedEx Fulfillment:
Choosing the right 3PL company can help you cut costs and improve efficiency. Follow these tips to pick the right 3PL provider:
Once you've narrowed your list to a few different 3PL options, it's time to start digging deeper to find the best match for your company. Before talking to any 3PL in-depth, ensure they have and sign a non-disclosure agreement to protect your company.
In addition to talking to the 3PL's representatives, you should also ask for references in the industry to determine whether the company has a solid track record and a positive reputation. Over time, it will become clear whether any of the 3PLs on your list are the right fit for your company or not.
Of course, the most important matter when choosing a 3PL partner is the value it offers. Find a 3PL company that caters to your order fulfillment needs at a reasonable price.
Finding the perfect third-party logistics partner that will keep your company's best interests in mind may not be a quick and easy process. Still, it is important that you do it right.
For help finding a 3PL provider, check out our online directory or contact ShipHero directly to learn how we can help you with fulfillment.
A 3PL is different from a fulfillment company in the services it offers. Most fulfillment companies only pack and ship your packages. Meanwhile, a 3PL company takes over your entire logistics operations, from warehousing to shipping. Many 3PLs even offer extra services like returns processing and inventory management.
3PL companies can help small businesses and large businesses alike. The scale of service is the major difference between 3PL for small and large businesses.
For small businesses, a 3PL company may only need to handle a relatively small amount of items with limited variety. Conversely, 3PLs working with large businesses may handle a wide range of products at larger volumes.
That said, the end result is still the same. Partnering with a 3PL increases your logistics efficiency to save money and get products to customers quicker.
Third-party logistics involves handing your logistics operations over to another company. A third-party logistics company usually offers warehousing, shipping and inventory management services.
The main difference between 3PL and 4PL is the number of parties involved. A 3PL company still works under your management to handle your inventory and shipments. In contrast, a 4PL company contracts different 3PL providers to take your products.
The main benefits of working with 3PLs are cost and time savings. You also gain access to their expertise. You don't have to train in-house logistics employees to handle warehousing and shipping.
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While your team is still walking aisles, your competitors are cutting pick times in half with automation. Guess whoâs shipping faster and stealing market share?
Automation isn't the future anymore. It's the present. For growing eCommerce brands or fulfillment centers under pressure to deliver faster, cheaper, and more accurately, automated warehouse picking systems are no longer a luxury. They're a necessity.
In this guide, you'll learn how automated picking systems work, the types available, how to choose the right one, and how ShipHero can help you streamline fulfillment processes with confidence.
Automated warehouse picking systems use software, robotics, and real-time data to locate, retrieve, and prepare items for shipment, without relying solely on human labor. Instead of employees walking long distances and manually selecting items, automated systems bring items to workers or direct them with tools like lights, voice commands, or mobile robots.
For example, in the eCommerce space, brands use Goods-to-Person (GTP) systems to increase operational efficiency and efficiently handle large catalogs of SKUs. In retail, where seasonal order surges can overwhelm manual processes, automated solutions help companies double their picking speed and maintain consistent fulfillment even during peak demand.
The process is surprisingly seamless:
This flow is driven by smart software that integrates with warehouse management systems and supports key warehouse processes, including picking, packing, and tracking real-time inventory.
Want a deeper look at the tech behind it? Read this guide on warehouse automation software.
Thereâs no universal solution for warehouse automation. The best picking system depends on your space, order volume, and the variety of products you offer. Some work better for high-SKU, high-volume operations; others are ideal for smaller, more focused setups. Below, we break down the top systems and which warehouse types theyâre best suited for.
GTP systems deliver inventory directly to a stationary picker, eliminating walking marathons. This setup enhances inventory management, reduces physical strain on workers, and improves worker safety.
It also optimizes order accuracy by minimizing human error. By minimizing walking time and keeping pickers in one place, GTP systems significantly boost pick rates while also cutting down on labor fatigue.
Pick-to-Light is an automated solution that uses LED light bars to guide workers to the right location for picking items, enhancing accuracy, speed, and efficiency while reducing errors.
When paired with Pack-to-Light and Receive-to-Light, your entire workflow is streamlined. Pack-to-Light ensures precise packing, while Receive-to-Light optimizes inventory storage and retrieval. Together, these technologies simplify inventory management, reduce labor costs, and accelerate fulfillment.
At ShipHero, we offer all three solutions, Pick-to-Light, Pack-to-Light, and Receive-to-Light, under one roof, seamlessly integrating with your existing systems to optimize warehouse operations. The combination can help boost efficiency by 20% while also cutting costs by up to 30% for batches of 10 to 30 orders.
Pickers wear headsets and follow voice commands to locate items, like a GPS for your warehouse. This hands-free approach automates repetitive tasks, shortens training time, and reduces picking errors, even in noisy environments. It also improves accuracy, even in noisy environments where traditional methods might fall short.
AMRs, or autonomous mobile robots, navigate the warehouse floor independently, delivering items or bins to human workers or packing stations.
Unlike fixed systems, AMRs offer greater flexibility and adapt to varying warehouse sizes, support scalable operations, and offer the flexibility to grow without major infrastructure changes. Theyâre also highly scalable, which makes them a smart choice for warehouses looking to grow or adjust operations without major infrastructure changes.
These are high-tech racking systems equipped with robotic cranes or shuttles that automatically store and retrieve inventory. Theyâre especially well-suited for large warehouses with high inventory turnover, where speed and space efficiency are critical.
Businesses that need to maximize vertical storage find these systems invaluable, and industries such as pharmaceuticals, automotive, and electronics often benefit the most from their precision and scalability.
Still not convinced? The real-world benefits speak for themselves. Automation significantly reduces human error, particularly in fast-paced warehouse environments where accuracy is crucial. It also speeds up fulfillment, often cutting pick times in half or more.
By streamlining operations, businesses can lower labor costs by either reducing headcount or reassigning team members to more valuable tasks.
By transitioning to automation, companies often see dramatic improvements in efficiency and cost savings. For example, automation can reduce warehouse labor costs by up to 60%, allowing businesses to reallocate resources and scale more effectively.
Itâs not always smooth sailing when implementing automated picking systems. One of the biggest hurdles is the high initial investment, as hardware, software, and integration can come with a steep upfront cost.
Staff training is another challenge, as teams need time to learn how to use the new technology effectively. There can also be short-term disruption; installation and onboarding may temporarily slow down operations. But the long-term gains are often worth it.
For example, James Enterprise struggled with paper-based picking and processing delays before switching to ShipHeroâs Warehouse Management System.
The transition required workflow changes and staff training, but with proper planning, such as going paperless, reorganizing their layout, and utilizing smart pick paths, they boosted productivity by 38%. New hires cut their pick time from 55 to 34 seconds in just five days, proving that smart automation pays off.
Finding the right automated picking system starts with understanding your specific needs. Warehouse size plays a big role, as larger spaces often benefit most from solutions like AMRs or AS/RS that can cover more ground efficiently. If your business manages a high variety of SKUs, systems like GTP or voice picking can offer the flexibility and accuracy you need.
For those working with tighter budgets, starting with light-based or voice-guided systems can provide a solid foundation without breaking the bank. Regardless of your starting point, scalability is crucial; your system should be able to grow in tandem with your business. Partnering with ShipHero ensures you get expert, customized guidance and future-proof solutions designed specifically for your operation.
Implementing warehouse picking automation isnât just about installing new tech; itâs about doing it strategically. To get the most out of your investment and avoid common pitfalls, follow these proven best practices:
âBest Practices for Successful Warehouse Picking Automation
For example, Black Wolf Nation and its 3PL arm, ONE23 Fulfillment, partnered with ShipHero to scale their operations. By adopting ShipHero's warehouse management software, they increased their order volume from 10,000 to over 25,000 per month in less than a year. This strategic implementation allowed them to efficiently manage growth and expand into the 3PL space.
Most companies see a return on investment within 12 to 24 months, depending on the system and order volume.
Yes. Many automated systems are designed to be scalable and cost-effective, which makes them ideal for small warehouses. Solutions like Pick-to-Light and voice picking can start small and expand as your operation grows.
Yes. Advanced systems feature adjustable grippers, sensors, and packaging logic to safely handle delicate or irregularly shaped products.
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Warehouse management systems make daily warehouse operations efficient. And wave planning is at the heart of it.
As part of the supply chain industry where efficiency is of utmost importance, the fast-paced environment of warehouse management requires every aspect of operations to work on schedule. This is where wave planning comes into play and brings efficiency to the table.
It integrates with warehouse management systems and streamlines end-to-end warehouse operations to meet customer expectations of fast shipping and real-time updates.
Wave planning batches orders for optimized picking routes, shipping, and priority. It supports operational workflows and integrates with warehouse wave picking strategies to maximize productivity, reduce errors, and improve overall daily warehouse output.
This turns warehouse operations into an organized process of handling and systematizing hundreds of orders a day.
Applying the best practices for wave management allows for maximum efficiency in managing daily warehouse operations. Start with these:
Not all orders need to be shipped at the same time. Some can wait, others canât. Strategic planning means prioritizing orders based on shipping deadlines to ensure they are shipped out and delivered on time. This increases customer satisfaction and overall operational efficiency. To better understand the core workflows that make this strategy effective, explore how we have explained the six key warehouse processes.
Accessing real-time data allows you to monitor every wave thatâs happening, from orders getting picked up to those that are delayed. This lets you take action accordingly, especially when spotting issues as they are happening.
Downtimes are red flags in wave management. They are equal to unproductivity and possible shipment delays, both affecting operations to meet quotas and customer satisfaction.
Reduce idle time in operations with these methods:
High-demand periods like holidays, promotions, and occasional spikes can cause chaos, especially if you donât have a plan in place. That chaos can overwhelm your normal operations and lead to delays and unsatisfied customers.
Avoid this by ensuring scalability for peak periods with effective wave planning:
If youâre preparing your warehouse for high-volume fulfillment, it may be worth exploring how automated warehouse picking systems can make wave execution more efficient and adaptable.
Warehouses have different zones to which pickers are assigned.
Having specific picking zones gives structure to the picking process, making it easier to execute even through high-volume orders.Having defined picking zones helps:
Wave management gives you the flexibility to adapt quickly when an unexpected change occurs during operations.
A common issue often faced in wave management is the sudden changes in order volume. This disrupts the flow of current waves and may have an avalanche effect on the whole operation if not solved immediately.
Hereâs how wave management adjusts operations to meet demand fluctuations:
A warehouse management system creates an overall plan that controls the flow of a warehouse's production. Using tools and automation, a WMS simplifies and streamlines wave management to execute warehouse operations from fulfillment to packing and delivery.
The main difference between wave planning and wave management is that the former is where the strategizing happens, while the latter is the execution and overseeing that the plan takes place.
Wave planning is the strategic part of grouping what orders should be fulfilled together, setting the time for wave releases, and adjusting them based on warehouse capacity and labor availability.
Wave management is the main operational part where the production happens. It tracks the real-time progress of wave execution to ensure things are running smoothly according to plan.
The main difference between digital and wholesale waves lies in their order size, wave planning, and operational goal. Due to their differences, each wave type requires different planning and strategy.
Digital waves service the B2C channel, are high in volume, and often have small, single-item orders that require urgent or same-day deliveries. The wave strategy used is frequent and short for flexibility. For this wave type, warehouse managers use WMS-integrated mobile devices for tech support
Meanwhile, wholesale waves are for bulk orders, often for retail distribution, resellers, or B2B supply chains. Wholesale waves have a lower order volume with large shipments and more flexible timelines.
Yes, it can be used if they have large volumes of orders per day, orders with time-blocked pickups, or group orders with shipping deadlines.
Yes. eCommerce and retail, grocery and food distribution, healthcare and pharmaceutical, industrial supply, and consumer packaged goods industries are industries that benefit from wave planning. These are industries with high order volume, delivery sensitivity, and high operational complexity.
Yes, wave management is designed to make warehouse operations, including same-day shipping, possible. Wave management creates a structure that speeds up the order fulfillment, speeding up the process for all warehouse operations, such as same-day shipping.
Your warehouse isnât slow because your team isnât working hard. Itâs slow because theyâre working inefficiently. When every picker is chasing orders in random directions, you lose time, increase errors, and risk customer satisfaction.
Wave picking fixes that by turning chaos into coordination. By grouping orders for optimized picking routes and releasing them in scheduled âwaves,â you can streamline picking, reduce walking time, and enhance picking speed, especially in high-volume eCommerce environments.
In this guide, weâll explain what wave picking is, how it works, and how to use it to run a faster, leaner, and more accurate warehouse.
Wave picking is a warehouse picking strategy where orders are grouped and released in scheduled âwavesâ throughout the day. Each wave organizes orders based on factors like delivery time, product type, or warehouse zone, to help your team pick faster, move smarter, and stay organized. When paired with automated warehouse picking systems, wave picking becomes even more powerful, and minimizes manual effort while maximizing speed and accuracy.
For example, a warehouse might group all orders that need same-day shipping into a morning wave, while standard shipping orders are picked in the afternoon. This keeps the flow structured and reduces chaos on the floor.
Brands using wave picking have seen measurable results. A study published in Acta Logistica found that accurately batching and releasing orders in structured waves reduced cycle times by more than 13% compared to unplanned methods, proving how it standardizes warehouse processes and improves resource utilization. This demonstrates how even modest changes in picking structure can lead to significant gains in warehouse efficiency.
Wave picking operates through a structured, three-phase process: pre-wave, wave, and post-wave.
Each stage plays a critical role in coordinating order fulfillment, from organizing batches of orders to guiding pickers efficiently through the warehouse and ensuring fast, accurate packing and shipping. Understanding how each phase works is key to unlocking the full efficiency potential of wave picking.
Before picking begins, the warehouse management system (WMS) organizes inventory for efficiency by grouping orders into waves based on factors like shipping deadlines, SKU type, or zone. It then generates batch pick lists, allocates resources, and ensures that equipment and carts are ready, laying the groundwork for a smooth picking process using proven picking strategies.
Good Company, a 3PL provider, exemplified this by leveraging ShipHero's multi-item batch feature. This streamlined their pre-wave setup, enabling them to group multiple orders with shared items into single picking runs. This drastically reduced picker travel, and as they scaled from 500-600 to 6,000-10,000 units daily within 18 months, allowed them to halve their pick time. This demonstrates the immense power of an optimized pre-wave process.
Once a wave begins, pickers follow optimized routes through the warehouse to collect items. The goal is to reduce backtracking and congestion by assigning pickers to specific zones or paths.
E-Commerce Xpress, an eCommerce fulfillment provider, has significantly streamlined its picking process by adopting ShipHero's Warehouse Management System (WMS). Their previous manual methods caused inefficiencies and excessive picker travel. By using ShipHero's multi-batch order feature, they transformed their picking phase. This technology groups multiple orders into single runs, creating highly optimized routes and eliminating unnecessary trips. The result was profound: E-Commerce Xpress could fulfill 200 orders in just 2 hours with one person, a task that previously required four staff members 4-5 hours. This showcases how wave picking handles peak operational loads and supports multi-order fulfillment with ease.
After items are picked, they move to packing and shipping. This phase includes labeling, verifying accuracy, and dispatching the final product. A well-organized post-wave process ensures orders are completed on time and without mistakes.Consider Vareya, a 3PL and fulfillment company, which dramatically improved its post-wave efficiency and client satisfaction by adopting ShipHero's Warehouse Management System (WMS). Previously, Vareya struggled with disconnected systems, resulting in significant errors and excessive paperwork. By migrating to ShipHero, they automated workflows and shipping labels, ensuring efficiency and accuracy in packing and dispatch. This allowed them to triple business volume and meet customer service levels consistently.
To get the full benefits of wave picking, itâs essential to follow proven best practices that align your people, tools, and workflows. From using the right technology to organizing pick paths and handling carts efficiently, these core strategiesâlike those in our warehouse picking strategies guideâwill help you maximize speed, accuracy, and productivity in every wave.
A powerful WMS like ShipHero automates wave creation, drives real-time decision-making, and optimizes paths. It ensures every wave is precisely executed and synced with inventory.
Calculating optimal picking routes is one of the most effective ways to reduce travel time on the warehouse floor, a major contributor to inefficiency. By using route optimization software, pickers follow the shortest and most logical paths through the facility, thereby avoiding unnecessary backtracking and congestion. This not only speeds up fulfillment but also reduces fatigue and boosts overall productivity, especially in high-volume environments where every second counts.
Efficient cart handling is key to successful wave picking. Organizing carts by order, zone, or SKU reduces sorting time and speeds up packing. This keeps the workflow smooth, reduces errors, and enhances overall fulfillment efficiency.
Wave picking comes in different forms, each suited to specific warehouse needs. Whether youâre handling large SKU volumes, urgent orders, or multiple zones, choosing the right strategy can boost speed, accuracy, and efficiency.
Organizing wave picking by product type allows warehouses to group similar SKUs into the same wave. This reduces picker travel time, as items are often stored near each other, and enables faster, more efficient picking by creating consistent, repeatable paths through the warehouse. Itâs especially useful for high-assortment operations where grouping like products streamlines the process.
Wave picking by order priority ensures that urgent orders, such as express shipments or VIP customers, are grouped and processed first. By releasing these high-priority orders in the earliest waves, warehouses can ensure faster turnaround times and meet strict delivery deadlines, thereby maintaining high customer satisfaction and consistent service levels.
Dividing the warehouse into picking zones allows each wave to focus on a specific area, reducing unnecessary movement and streamlining the picking process. Assigning pickers to dedicated zones allows waves to run simultaneously in different zones, reducing congestion and enabling scalability in operations.
Wave picking is a fulfillment strategy designed to group orders into scheduled "waves" based on factors like shipping deadlines, product locations, or customer types.
This method is especially valuable in high-volume or time-sensitive operations where precision and speed are critical. Below are four key benefits of using wave picking in your warehouse:
Wave picking keeps operations structured, which allows you to process more orders per shift without expanding your physical footprint.
By reducing idle time and unnecessary movement, wave picking streamlines the entire fulfillment process. After adopting ShipHeroâs WMS, American Tall saw a 275% increase in picking efficiency and cut fulfillment errors by 50%, allowing them to scale operations by 400%âclear proof of how structured picking methods lead to faster, more reliable order delivery.
With batch pick lists, scanning, and real-time tracking, wave picking drastically reduces errors in item selection and order completion.
Fewer errors, faster picks, and optimized labor use = lower costs. Wave picking helps you do more with fewer resources.
The main difference between wave picking and batch picking lies in their timing and level of structure. Wave picking organizes and releases orders at scheduled times throughout the day, which is ideal for high-volume warehouses where precise timing and a smooth workflow are essential. This method offers a structured approach that reduces errors and supports scalability, but it requires more upfront planning and a reliable warehouse management system.
In contrast, batch picking allows warehouse staff to pick multiple orders in a single trip without being tied to a specific schedule. Itâs a simpler, more flexible method thatâs well-suited for smaller operations with lower order complexity.
While batch picking is easy to implement and has a lower barrier to entry, it becomes less efficient when dealing with large volumes or time-sensitive orders. Choosing the right approach depends on your warehouse size, order volume, and fulfillment goals.
Yes. Wave picking can scale down for smaller operations to help them improve organization, reduce picker confusion, and streamline fulfillment.
No. Only certain WMS platforms, such as ShipHero, offer full wave picking functionality, including automated order grouping, routing, and inventory syncing.
Absolutely. Wave picking was designed for fast-paced, high-volume environments where timing, accuracy, and scalability are critical.
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