Managing order fulfillment costs is so important for all eCommerce businesses. However, this can be difficult because you can’t afford to cut any corners.
Studies show that 38% of customers wouldn’t use a business again if they had a bad delivery experience. So, no matter how amazing your product is, it’s essential that you can ship it to your customers in a timely fashion.
Expectations are high because big online retailers can offer next day delivery and even same-day delivery, in some cases. Even standard free shipping usually only takes 2 days. Unless you can offer fast and affordable shipping, your customers will be disappointed.
Unfortunately, managing your own order fulfillment in-house can be incredibly expensive. It’s tough to keep costs under control when you have to pay for shipping supplies, warehouse rental, staff costs, and shipping costs. But third-party logistics (3PL) can solve that problem.
What Is 3PL?
3PL allows eCommerce businesses to outsource their order fulfillment. Working with a third party will help you to save money and free up more time to dedicate to other areas of the business. The 3PL will handle all tasks associated with order fulfillment so you only have to deal with marketing the business and processing orders. However, before deciding whether you should partner with a 3PL or not, you need to consider the costs.
How Are Order Fulfilment Costs Calculated?
Every 3PL will charge different rates and the cost depends on the products that you are selling. However, most standard fees start somewhere around $0.20 per pick.
As well as the basic fees for picking and packing items, you need to consider the rest of the costs involved with order fulfillment. These include:
- Receiving inventory.
- Packaging materials.
- Return management and processing.
- Kitting (if necessary).
3PL Fulfilment Costs
Here you can find examples of some of the basic fulfillment costs when you work with a 3PL.
Receiving inventory is charged at a flat rate and it costs $25 per hour.
Storage costs are charged per bin, shelf, or pallet depending on the product. The cost is $40 per pallet/per month; $10 per shelf/per month; $5 per bin/per month.
Pick and Pack Fees
Pick and pack fees are included in the overall fulfillment cost. The first 5 picks are free and then they are charged at $0.20 per pick after that.
Standard packaging is included with the total overall cost and is completely free.
Kitting fees are charged on a per-project basis, starting at $0.40 per unit or kit.
Shipping costs are passed directly to the client and the price depends entirely on the dimensions of the product, the destination, and the shipping time.
These are the general order fulfillment costs that you can expect to pay. However, there is no one-size-fits-all pricing structure and every business is different. Get in touch with ShipJoy to get a custom price that suits the size and the needs of your business.