How 3PLs Can Stay Competitive in the Age of Amazon Supply Chain Services

Amazon Supply Chain Services (ASCS) has changed the competitive reality for 3PLs almost overnight. Amazon spent decades building one of the most automated fulfillment networks in the world. Now it’s selling that advantage to the same customers 3PLs are trying to keep.

Large brands, including Procter & Gamble, 3M, Lands’ End, and American Eagle Outfitters, have already adopted ASCS, drawn by the promise of lower cost and faster fulfillment.

No 3PL can realistically match Amazon’s level of automation investment or compete with its fulfillment economics head-to-head. Instead, they need a strategy to meet higher customer expectations and build capabilities around Amazon’s weaknesses.

In this article, we’ll break down how 3PLs can stay competitive and win business against ASCS:

• Narrowing the automation divide between them and Amazon
• Focusing on operational environments that require specialized handling
• Partnering with brands wary of sharing operational data with Amazon

3PLs Must Invest in Automation Before the Gap Widens Further

For years, 3PLs delayed large-scale automation because traditional systems were too rigid for their multi-client operations. A system optimized for one customer can quickly become expensive and complex to reconfigure for the next. 

That’s why historically they relied on legacy solutions like rigid conveyors, shuttle systems, and mobile shelving. They were less efficient, but they were easier to adapt. 

But waiting is becoming its own risk. 

Amazon has pushed fulfillment costs lower and operational expectations higher, making 3PLs’ labor-heavy models harder to defend. Customers expect faster, more predictable execution as the baseline. 

To remain competitive in the market Amazon is shaping, 3PLs need to reach a level of automation maturity that allows them to improve throughput and labor efficiency. 

Specialized Fulfillment Models Create an Advantage

Large-scale fulfillment networks like Amazon’s are too uniform to work for every operational environment.

Many fulfillment models are difficult to standardize because they require extra handling to preserve compliance with industry-specific regulations and maintain brand identity.

Healthcare logistics is one example. Operations may require serialized inventory handling, lot traceability, chain-of-custody controls, temperature-controlled storage and transport, and other specialized handling procedures. In these environments, small execution failures can affect compliance, product viability, or patient safety.

Retail can create different kinds of exceptions. Luxury and specialty brands may require tighter traceability, brand-specific returns handling, custom packaging, or regulated delivery processes to protect product quality, prevent counterfeits, and ensure a strong customer experience.

Amazon’s highly fixed, homogenous network can’t give that level of control, customization, and operational nuance these verticals need. But 3PLs could.

Neutral Infrastructure Is Becoming More Valuable to Brands

Not every brand wants its supply chain tied to Amazon.

ASCS offers clear operational advantages, but some companies may still hesitate to place inventory data, demand patterns, marketplace activity, and customer fulfillment operations inside Amazon’s ecosystem.

Part of that concern comes from Amazon’s dual role as both a logistics provider and a marketplace operator.

Over the years, Amazon has faced accusations of introducing competing private-label products based on successful products sold by third-party sellers on its marketplace.

As a result, some companies may still prefer logistics partners that operate independently from major retail or marketplace platforms.

That creates another opening for 3PLs: positioning themselves as operational partners whose business model does not compete directly with their customers.

The Big Picture: ASCS Is Exposing the Limits of Existing 3PL Systems

The complexity of multi-client fulfillment has historically forced 3PLs to choose between two imperfect options: labor-intensive but adaptable operations or flexible technology with throughput limitations.

Neither model will withstand the new market ASCS is shaping. That’s why we’re seeing 3PLs increasingly search for automation that can deliver high throughput but still have flexibility to evolve with the changing operational needs.

Robotic AS/RS, in particular, are gaining traction because they can increase fulfillment capacity and adapt to changing needs by simply extending storage or adding more robots.

Want to see what systems like that look like in practice?