Order Fulfilment Pricing Explained

by Simon Bragg on 1st November 2022

Outsourcing your eCommerce order fulfilment can seem like an expensive cost your business can ill afford, especially with increasing costs and reduced consumer confidence. With all the different types of fees and the way that providers break this down it can quickly feel overwhelming and a cost to your business rather than something to make your life easier. In this post, we’ll explore the common fees charged by fulfilment providers, what those fees might look like and how they compare to continuing to fulfil your orders in-house.

 

Fees at different stages

Each part of the fulfilment process has costs attached to it, whether you do this yourself or use a third-party fulfilment provider. Some providers break down the cost for each individual part of the fulfilment process while others will bundle everything together. Let’s take a look at the different charges that a fulfilment provider might charge.

 

Setup fees

Some fulfilment providers will charge a set-up fee. This is a one-off charge designed to help get your business on-boarded onto their systems and your eCommerce platforms integrated into their platform. This cost can range anywhere from £60 to over £800 depending on the size and complexity of your business. The higher set-up fees will often include developing custom integrations for your eCommerce store, especially if you’re using a bespoke or rarely used platform. Set-up fees may also include receiving your first batch of products.

At Whitehouse Solutions, we don’t charge any setup fees so you can join us and get set up at no extra cost to your business.

 

Storage fees

Storage fees are a common charge across the industry and even if your invoice doesn’t break down your fees, you will still be paying for the storage of your products. This cost will depend on the amount of stock you require your fulfilment provider to hold, the space they occupy in the warehouse as well as the number of SKUs you want them to stock.

This cost can fluctuate across the year as you might want to hold more stock in the fulfilment warehouse during your peak periods so you don’t sell out. During quieter periods you might want to reduce the stock you hold to save on storage fees.

This can be a tricky balancing act as you may benefit from cheaper product costs if you order in large volumes but then have to pay more to store these in the warehouse.

 

Receiving fees

Receiving fees are the costs associated with unloading your products from your supplier when they are delivered to the fulfilment warehouse. For example, this could be devanning a container or removing pallets from a lorry, barcoding the products as they enter the warehouse and then stocking these in the warehouse. This is something that all fulfilment companies will charge, even if it’s not listed on your invoice.

This cost will vary depending on the number of SKUs and the total number of products that require stocking.

 

Pick and pack fees

Each time someone places an order with you the order is automatically sent to the fulfilment warehouse. Someone will then find the products within the warehouse and then pack the items ready to be shipped out. This is usually charged by the number of items that need to be picked.

At Whitehouse, we have split our pick and pack fees based on the number of items being picked. Once the first product in the order has been picked we then charge a reduced fee for every other item in the order that needs to be picked. We find this the fairest way of charging pick and pack fees as once someone is out picking the order, the cost of collecting the other products is reduced.

 

Packaging fees

Packaging fees will be similar across most fulfilment providers as this is the cost of the packaging materials used to safely pack your products for postage. As this cost varies due to the size of the product, the packaging required and any custom packaging it’s best to contact your preferred fulfilment provider for an accurate quote. The cost of packaging supplies will be less for a fulfilment provider as they can negotiate discounts and buy in bulk due to the volume required.

 

Shipping fees

The cost of shipping the order to your customer will vary depending on the size, weight and type of shipping chosen. This cost will be similar across the majority of fulfilment providers but if you ship large volumes of orders each month it might be worth getting a quote. Shipping fee’s will typically be less than you would pay due to the large volume of orders that fulfilment providers ship. This is due to the fact that they will be able to negotiate discounts because of the high volume of orders sent each day.

 

Returns fee

The return fee is similar to the pick and pack fee but works in reverse. Once the customer has returned the product there is a small charge to unpack the product, review it against your criteria to determine whether to restock, dispose or return the product to you.

In the Whitehouse order management system, you can offer your customers free return postage, with the cost of the return postage being added to your monthly invoice.

 

Account management fee

Depending on your fulfilment provider, they may add on account management fees. These fees will be for their support team to answer any queries you may have as well as preparing your billing. Some fulfilment providers wrap up these fees in your overall costs, others charge for this separately and others don’t charge for this service.

 

What can you expect to pay?

As we’ve covered, the cost of fulfilling your products is very specific due to:

  • Your monthly order volume
  • The storage area you need
  • Your preferred shipping option

For an accurate quote, we always recommend getting in touch with the fulfilment provider. If you’re looking for a quote get in contact with our team.

 

Is it worth outsourcing your order fulfilment with all of these costs?

Going through all of these costs it can seem like moving to outsourced order fulfilment is just an extra cost to your business. However, when compared to fulfilling orders yourself there is less of a difference than you think. The biggest difference between outsourcing and doing it yourself is the set-up fee and account management fee, if these are charged by your fulfilment provider that is!

The difference is how you pay for this service as you can see below:

Storage fees
You indirectly pay for this when fulfilling your own orders such as increased office space to store your goods or storing these at home in the garage, probably to the annoyance of your partner!

Receiving fees
Rather than paying a provider to unload your goods, you might be paying staff members to do this or taking the time to do it yourself when you could be focussed on running your business and growing sales.

Pick and pack fees
Similar to the receiving fees, you’re either paying with your own time if you’re the one packing orders or you’re paying a staff member to pack these products for you.

Packaging fees
If you’re packing your own products then you’re having to pay for your packaging materials, such as bubble wrap, cardboard boxes and padded envelopes. Due to the amount of packaging used by fulfilment companies on a daily basis, they will have negotiated discounts, with the savings passed onto you.

Returns fees
The biggest cost of returning an item is the postage, so regardless of whether you handle this yourself or outsource this aspect of order fulfilment you won’t be spending much more on this by outsourcing.

 

Time to invest in outsourced order fulfilment?

Over time, the cost of handling your own fulfilment will increase as your business grows. At some point, it makes financial sense to outsource order fulfilment to a provider like us. When you consider the cost of your time and the efficiencies a professional service can bring, you may be surprised at how affordable outsourcing can be.

If you would like to explore this option for your eCommerce business, we’d be happy to provide a free quote. Just contact us and let us know what you need help with. Start seamlessly scaling your eCommerce business with us today!

Packing an order at home ready to ship

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