The “cost of fulfillment” is often an excuse we hear for why small businesses don’t outsource their warehousing and inventory management. But we think that the cost of fulfillment is actually the reason you should outsource fulfillment. And we’re going to tell you why.
In the modern eCommerce arena, sustained success comes from maintaining profitable margins by maximizing resource allocation. In order to be profitable in the crowded consumer goods market, you have to optimize your business model!
One proven way to accomplish these goals is through outsourcing fulfillment. Thousands of eCommerce companies effectively use this approach to cut costs and better serve their customers.
By gaining a better understanding of the cost of fulfillment services, you can determine whether it might be the right solution for your business.
What is Fulfillment?
Generally speaking, eCommerce fulfillment refers to the process of packing and shipping a customer’s order. There are two main approaches that you can use when it comes to fulfilling orders for your company. Typically, small companies will fulfill orders in-house to minimize overhead.
As demand increases and larger inventories are being sent out, this approach will no longer be practical. That is why businesses often begin outsourcing fulfillment responsibilities.
Benefits of Outsourcing Fulfillment
As your business grows, the fulfillment process will become much more complex. In order to effectively manage orders and ship products, you will need a cohesive team of people on your side.
When you outsource fulfillment, a third-party company provides the packing and shipping experts that you need so that you can focus on managing your business. There are substantial cost savings of fulfillment outsourcing, as well as many other benefits.
When you partner with a fulfillment service provider, they handle every aspect of order management. They receive and ship eCommerce orders; they can even handle product returns and customer data management.
Warehousing and Inventory Management
Managing large amounts of inventory is one of the hardest hurdles you will encounter as a small business owner. You need to purchase adequate inventory to fulfill orders quickly, but you must also store this inventory where it will be readily accessible. Yet, purchasing warehouse space can be expensive!
The better approach is to partner with a fulfillment service provider. They have the space necessary to store and manage your inventory. All you have to do is ship your products to them and they will take it from there.
Shipping and Handling
Since the fulfillment service provider is managing all of your orders and product inventory, they can handle shipping, too. When they receive an order, they pack the products and get it on the way to consumers in no time. This is much more practical than attempting to handle large shipping orders or product releases in-house.
Cost Savings of Fulfillment
As noted above, outsourcing fulfillment can bring in tremendous cost savings. You will not need to purchase or rent a warehouse for product management. Instead, you can simply send it to the service provider. You can also avoid hiring extra staff to ship big orders or handle returns. The provider will handle all of these vital aspects of eCommerce fulfillment.
The Cost of Outsourcing Fulfillment
After hearing about the many benefits of outsourcing fulfillment, you are probably asking yourself, “How much does it cost to outsource fulfillment?” Well, there is no short answer to that question, as it depends on your business size and the type of product you sell.
When you’re weighing the potential cost of fulfillment services, you should keep in mind that there are some fees and discounts that are common across all industries. These are standard costs that you will encounter regardless of the products that you sell.
Fulfillment Fees and Discounts
In order to determine the cost of fulfillment services, the provider will use a complex equation based on the products that will be managed. Smaller products often incur reduced fulfillment fees as shipping and storage costs are not as high. On the other hand, if you ship large products, fulfillment costs per item will likely be much higher.
The following are some of the most common fees that you will encounter when you partner with a fulfillment service provider.
One-Time Setup Fees
A setup fee is designed to offset the cost of configuring a storage facility to accommodate your product. The total cost of the fee will vary depending on how complex your business is and how much the storage facility has to be adjusted. These fees typically range from $100-$1,000, but they will vary from company to company.
The intake or receiving fee is what the fulfillment provider charges every time they take in a shipment of your product. The center may charge by the hour, by the pallet, or by the piece.
For example, they may bill you an hourly rate of $20-$50 to cover the labor costs of unloading your product. Alternatively, they may charge $5 or more per pallet. Usually, smaller businesses are charged per item or per pallet, as they are not shipping as much inventory to the fulfillment center.
The fulfillment center will charge monthly storage fees based on the amount of space that your products consume. They will either charge by the pallet, by the cubic foot, or by the bin. Storage bins are only used if you have small items that need to be accessed quickly.
You can expect to pay approximately $10 per month per pallet or about $0.30 per cubic foot per month. Storage bin fees range from $1 to as much as about $3, depending on size and the provider.
When you’re shipping items, you can use the fulfillment center’s carrier or your own. Using your own carrier gives you more control over the process. However, the fulfillment provider may have access to better pricing due to the volume of products that they ship.
Most fulfillment providers offer discounts if you store a large volume of product in their warehouses. While you may not be ready to invest in that much product just yet, it is a good thing to keep in mind as your business grows. Typically, these discounts come into play at the 250 pallet mark.
You may also be eligible for discounts when your monthly fulfillment surpasses 1,000 orders or more. This can free up more revenue for other tasks that can further grow your business.
Get a Free Quote for Fulfillment Services
If you would like a definitive answer to the question “How much does fulfillment cost,” then it is time to contact Print Bind Ship. We can provide a free quote on our full-service fulfillment options.
We handle every aspect of the eCommerce order fulfillment process. Our services are scalable to accommodate the needs of businesses of any size. We take care of order management, inventory, and shipping!
Ways Fulfillment Services Can Save You Money
Once our team compiles your quote, you can compare the cost of fulfillment services to the expenses of in-house fulfillment. You will undoubtedly see that partnering with Print Bind Ship is the more economical option. We offer exceptional rates that can help you to improve your margins.
Print Bind Ship Fulfillment Services Cut Costs for Small to Medium eCommerce Businesses
The Print Bind Ship team has over 60 years of experience in the fulfillment service provider market. Our proven approach has reduced the cost of fulfillment services, allowing us to pass those savings on to you. We will also expedite the fulfillment process, saving you time and getting your products in the hands of customers fast. Reach out to see what we can do for you today!