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.
How Much do Fulfillment Services Cost?
If you have been looking into different fulfillment services, then one of the first questions you are asking is how much do fulfillment services cost. The problem is that there isn’t any easy answer to this question. This is because the actual services provided can vary widely. So the only thing you can do is identify what services you need and then start a comparison from there. Here is a closer look at some of categories that the most popular services fall into.
The first type of service uses a blanket term known as general services. These services the basics that every fulfillment service will provide. Things like shopping cart integration, access to the order fulfillment system, inventory security, etc. In most cases, these services will be set up for free and will require a minimal monthly fee. Normally it will range somewhere between $20 and $50. Although if you need a lot of storage space, then it can get more expensive.
The next group of services are often referred to as pick and pack or the fulfillment fee. This group of services cover the actual product fulfillment. In most cases, this is where you will see the highest variance in how much fulfillment services cost. For example, some services will only have a 24 order fulfillment service, whereas others may offer less expensive solutions such as 3 day or 5 day order fulfillment. The packing supplies which are used can also play a big role in the end costs. Other things that may impact the cost of these types of services include CSV file uploads, packing list customization, and how orders and order confirmations are handled.
The most obvious factor that will affect fulfillment service costs is the shipping. Nearly every fulfillment service will offer discounts on shipping based upon the volume that you do. In most cases, you will need to ship out more than 1000+ units on a monthly basis in order to qualify for the initial discount. There will normally be additional benchmarks that will offer further savings. With some fulfillment services, you will have the option to choose different shipping options which can cut down on the cost, but others will only offer a single option.
The final area that will determine the final fulfillment services cost is additional services. These can vary greatly from one service to the next. This can include a range of things such as how returns are handled, on-premises assembly, product photography, and even additional integration projects. Along with paying attention to how much these additional services are, you should also find out if a particular additional service for one company is a standard service of another.
By focusing on these 4 areas, it should be much easier to compare how much fulfillment services cost. Along with finding out your monthly total, it will also give you a good idea which of these services will be the most cost effective option in the long run as well. Ideally, you are going to expand, which means that you may end up needing to switch services at some point. If you plan ahead, there is a much greater chance that you could avoid the time and money requirement to change from one fulfillment service to another.