The term ‘Order Fulfillment’ refers to the process of receiving, storing, packaging, and shipping orders to customers. Third-party order fulfillment companies, on behalf of stores such as online sellers, provide this service to customers. Fulfillment company pricing models vary. Some charge by the pallet, some by cubic foot, and some bill for services by the hour. If you can determine the fulfillment cost per order, you can make meaningful comparisons. And that’s the purpose of this calculator.
One more fee – most fulfillment companies also charge an initial setup fee. This is to cover the expense associated with integrating your business into the workflow of the fulfillment center. The fee is just a one-time fee and typically is in the $100 to $500 range. The exact amount depends on what you need to get started. The biggest expense comes from connecting your online shopping cart to the warehouse. This requires some technical assistance from IT professionals.
Get a More Accurate Order Fulfillment Estimate
Order fulfillment centers allow you to run your business in a smoother capacity. They allow you to focus on your core business, while outsourcing fulfillment. But how much does this service cost? Well, it depends on a lot of factors. And to get an accurate quote you must give fulfillment companies lots of information about your product. How much storage space do you need? Is your product stored on pallets or in bins? Does it require assembly prior to packaging? Etc. Most quality fulfillment companies will be more than happy to offer you a free quote, but it can be time consuming to get even a single quote.
What are the main order fulfillment costs?
Several factors have to be considered when determining the cost of warehousing and fulfillment:
· Account set up fee
This is the fee incurred when establishing service with the fulfillment center. This is almost always a one-time fee and the amount depends on the company you sign up with as well as the complexity of your own business. If you have a large number of products requiring a lot of integration activity, expect to pay close to $1000. But simple stores with a handful of items and standard shopping cart software may pay closer to $200.
· Receiving fee
This fee is incurred when you send products to the warehouse for storage. It is either charged per pallet, per square foot, or even per hour. Expect it to be higher if you have additional requirements such as adding barcodes to the inventory.
· Storage fee
Another factor that adds to the total order fulfillment service cost is the storage costs. As your inventory will take up space in the warehouse as it arrives, you will be charged accordingly. This fee is charged either per pallet, per square foot, per cubic foot, or per storage bin. An excellent way to reduce this fee is to have the best possible logistical system so as to minimize any overstocking of products in the warehouse.
· Picking and packing fee
One more cost adding to the total warehousing expense is the “picking and pack” fee. As a lot of manual labor and/or machinery will be needed to pick the inventory and pack it for shipping, it is understandable that your fee will be directly related to the number of orders you have each month.
· Shipping fee
You will be charged a shipping fee to cover the cost of mailing your products to your customers. However, most companies offer discounts if you use the shipping account already in use by the fulfillment center.
· Other fees
Apart from the costs mentioned above, many other factors can come into play when determining the final service cost. This includes sorting, stretch wrapping, warehouse management system fees, and account management fees.
That’s a lot of fees! The good news is that there are also many discounts to be had. Most warehousing and fulfillment centers will offer discounts for storing a certain number of pallets with them, usually around 250. There’s also a high-volume order discount, shipping discount, and long term contract discount.
· Add it all up
In order to summarize all of the fees and discounts associated with using an order fulfillment service, just use the calculator shown above. It should give you a pretty good estimate of the total costs involved.