1 │ Cold-Brew & Cold Reality
At 6 a.m., founder Jack unlocks his garage-turned-warehouse, armed with a cold-brew and an even colder realisation: orders have doubled overnight. Great news—except he now needs bigger racks, new staff, and a forklift licence. Should he keep fulfilment in-house, or hand the keys to a 3PL? In 2025, the wrong call could burn six figures; the right one could boost EBITDA by double digits. Let’s follow the money.
2 │ Quick Snapshot: Cost Drivers in 2025
| Cost Bucket | In-House | Outsourced (UK 3PL) |
|---|---|---|
| Facility | Rent, rates, utilities | £0 (bundled) |
| Labour | Pickers, leads, HR overhead | Per-order fee |
| Cap-Ex | Racking, scanners, WMS | £0 |
| Systems | WMS licence, API builds | £0–£50 mo. app fee |
| Carrier Rates | Retail or tier-2 | 3PL’s bulk discounts |
| Shrinkage & Damage | Your loss | 3PL liability (up to £x per unit) |
| Scalability Risk | High (fixed) | Low (variable) |
Rule of thumb: in-house flips ~70 % of costs to fixed; outsourcing flips ~80 % to variable.
3 │ True-Cost Model
Step 1 ─ Capture Your Current Inputs
| Metric | Enter Your Data |
|---|---|
| Monthly Orders | __________ |
| Avg Units / Order | __________ |
| Avg Order Value | £__________ |
| Warehouse m² Needed | __________ |
| Pickers @ £12.50/h | __________ |
Step 2 ─ Plug Industry Benchmarks
| Line Item | In-House Benchmark | Outsourced Benchmark |
|---|---|---|
| Rent & Rates (per m²) | £14.20 | — |
| Utilities & Insurance | £1.75/order | Included |
| First Pick Fee | — | £1.15 |
| Extra Pick | — | £0.23 |
| Packaging Material | £0.38 | £0.42 |
| Carrier Label (2 kg, Tracked) | £4.90 | £3.95 |
Step 3 ─ Calculate Break-Even
Break-Even Order Volume =
Fixed In-House Costs
───────────────────────────────
(Outsourced Cost / Order) − (Variable In-House Cost / Order)
Example: If fixed costs = £14 000/mo and outsourced delta = £1.60/order, you must ship 8 750 orders/mo to justify in-house.
4 │ Mini Case Study: GlowSkin Cosmetics
| KPI (2024) | In-House | After 3PL Switch | Δ |
|---|---|---|---|
| Orders / Month | 6 200 | 6 200 | — |
| Fulfilment £ / Order | £4.90 | £4.15 | –15 % |
| On-Time Despatch | 91 % | 99.1 % | +8.1 pp |
| Customer Star Rating | 4.4★ | 4.7★ | +0.3 |
| CFO Comment | “Cap-ex freeze” | “£48 k cash freed” | — |
Takeaway: savings weren’t just per-order—freeing £48 k of working capital funded a TikTok ad burst, doubling top-funnel traffic.
5 │ Hidden Costs & Risks Often Missed
| In-House “Gotcha” | Outsourced “Gotcha” |
|---|---|
| Holiday labour premiums (x1.5) | Peak-season surcharge (£0.15–£0.25/order) |
| Equipment obsolescence (scanners, conveyors) | Long-term storage fees if SKUs stagnate |
| Inventory insurance hike | Account-management retainer at some 3PLs |
| Compliance liability (health & safety, HMRC warehousing) | Minimum order volume clauses |
6 │ Decision Matrix (Score Yourself 1-5)
| Factor | Weight | In-House Score | Outsourced Score |
|---|---|---|---|
| Margin Cushion | 25 % | __ | __ |
| Scale Volatility | 20 % | __ | __ |
| Capital Availability | 20 % | __ | __ |
| Operational Expertise | 15 % | __ | __ |
| Brand Control Needs | 10 % | __ | __ |
| International Plans | 10 % | __ | __ |
| Weighted Total | 100 % | __ | __ |
If Outsourced ≥ In-House + 10 pts → 3PL makes financial sense in 2025.
7 │ Alternatives & Hybrids
-
In-House Pick / 3PL Overflow – keep core SKUs, reroute flash sales to 3PL.
-
Amazon FBA + 3PL FBM – leverage Prime badge yet own customer data.
-
Micro-Fulfilment Pods – city-hub lockers for same-day without nationwide network.
(Courier fees dwarf pick-pack in a same-day model—see exact numbers in our guide Pick and Pack Pricing in the UK: 2025 Cost Breakdown).
8 │ FAQ
Does a 3PL always save money?
No—below ~2 000 orders/month fixed costs may still beat per-order fees.
Will I lose branding control?
Choose a 3PL offering branded packaging & insert workflows; conduct unboxing audits.
How long does migration take?
Typical SKU migration + API integration = 3–6 weeks; plan buffer inventory.
