Your e-commerce business is off and running, and you’ve decided to engage the services of a 3PL fulfillment provider. You know what they offer and you’ve researched the benefits they can provide to your brand. Now there’s just one thing you need to think about: how much exactly are the fulfillment fees going to cost me?
Let’s assume you’re primarily interested in warehousing and fulfillment services, as is typical of e-commerce brands. At a minimum, you want a 3PL that will store your inventory in its fulfillment center and pick, pack, and ship orders as they come in.
Transparency in Fulfillment Fees
Some fulfillment providers are straight-forward in their pricing policies, while others have policies that are complicated and inscrutable. Look for a company that lays out the costs ahead of time so you’ll have a good idea what you’ll be paying. Although your changing needs—as well as outside influences such as fuel costs—will cause prices to fluctuate over time, a reputable fulfillment company can lay out most costs up front to minimize surprises.
Let’s examine the various fees you can expect to pay when engaging the services of an order fulfillment company.
Onboarding and Startup Fees
When first signing on with a 3PL/order fulfillment company, you will spend a period of time in onboarding. During this time, your 3PL will help you learn the ropes, including how to send them inventory, how to use their software, and more. They’ll set up your account and integrate your online store with their platform. Some 3PLs will charge you onboarding and set-up fees, which cover the services provided during this period. Good news—Simple Global doesn’t charge onboarding fees!
Once you start shipping inventory to the 3PL’s fulfillment center, your shipments will have to go through receiving. Depending on how many cartons/pallets you send, this could be a time-consuming and costly process. Receiving fees can be a flat amount, charged by the hour, or charged by the unit (cartons, pallets, containers, etc). Costs might range from $0 to $35 for a few pallets to several hundred dollars for a large shipping container.
Your 3PL will most likely charge you a fee for storing inventory in their warehouse. Storage fees are usually charged by the square foot or by the storage unit (e.g., pallet) or location (shelf, bin, etc). Typical storage fees range from around $0.20 per square foot to $15.00-$30.00 per pallet.
When orders come in, warehouse employees at your 3PL will pick the ordered products from the shelves and pack them securely for shipping. Some fulfillment providers will charge a certain amount per order and an additional amount per item picked (for example, $1.80 per order and $0.40 per item). Others drop the fee per order and only charge per item. If you’re shopping around, you’ll have to do a little math to see which plan works out best for you. You’ll need to estimate your number of orders per month and how many items are in each order. Then a simple calculation will tell you where you’ll get the best deal.
Once an order has been picked and packed, it’s time to ship it to your customer. You’ll typically be able to choose from multiple shipping options (ground or air; standard, priority, or express) from a handful of carriers (UPS, DHL, FedEx, USPS). Because they ship in bulk, 3PLs are able to negotiate with these carriers for much lower rates than you could get yourself. Most 3PLs will pass these savings on to their clients. Even so, shipping isn’t cheap, and shipping fees are likely to make up the lion’s share of your fulfillment costs.
Other services provided by your 3PL are beyond the scope of standard fulfillment and are charged accordingly. These services could include kitting (i.e., packing separate products together to assemble a gift set or subscription box), bulk shipping, barcoding, auditing, or adding inserts. These type of requests are often classified as work orders. Work orders are typically billed at an hourly rate established in your service agreement. Your 3PL will be able to give you an estimate of the total cost when you request a work order.
When it comes to fulfillment costs, we know you don’t want any surprises. That’s why at Simple Global we make all our fees as transparent as possible. Our sales team is ready to put together a proposal just for you, based on your specific situation and your brand’s needs. Contact us today for a fulfillment quote!