When looking into outsourcing your order fulfilment, you’ll find there’s a lot of different 3PL costs to consider. And if you don’t understand these charges and what they’re for, it can be easy to get scared away from committing to a solution.
But that will only leave you exactly where you are, whether that’s picking and packing yourself or dealing with managing a warehouse.
Check out our article ‘fulfilment centre vs warehouse‘ if you need more help deciding between the two.
There are generally several factors involved in an order fulfilment provider’s pricing, all of which individually play a vital role in the process and affecting your margins.
So what exactly are these costs?
Depending on who you choose, the logistics provider may charge you a fee for onboarding.
This charge in the process relates to integrating your business with the fulfilment solutions operations, and generally means connecting your online shopping cart to the warehouse. But it can also relate to setting up accounts and access, updating systems with SKUs, or integration and order testing.
Before any orders can be fulfilled, you first need to get your inventory into the warehouse. You’ll need to find a way to transfer stock from your current location to your new 3PL – which could be another fee, but taking acceptance of goods, more commonly known as ‘receiving’, is something companies will charge for.
The charges will vary for this, such as per hour, by unit, carton, or pallet, and depending on the fulfilment provider. If you’re looking for ways to bring this cost down, often receiving charges will be less when you send it in via a pallet. It’s more consistent and allows the company to simply scan one pallet in, adding the predetermined volume of SKUs inside into the system.
Pick and Pack Costs
Picking and packing refers to what happens after an order is placed. It’s pretty straight forward, but you’ll be charged for each pick from the shelves, and then pack. There may also be additional pick charges if multiple SKUs need to be added to the order. This charge can vary per item, per order, or sometimes both.
Inventory Storage Costs
Most 3PL services charge for the storage space your stock takes up in the warehouse. These charges can range from pallet storage to individual bins or shelf spaces, and can be flexible depending on the length of time your products need to be stored, or how fast your inventory moves in and out of the warehouse.
Order kitting refers to the assembly of individual items into a set or kit. If you offer a promo or special deal for example that requires putting together multiple SKUs, that would have an additional charge. Sometimes referred to additional picks.
A packaging cost may be associated with your specific packaging. If you include inserts, a personal card, or require other packaging requirements, it’s not uncommon to have a charge associated with it.
With any online order, you have to pay for shipping and this is no different when outsourcing your fulfilment. However shipping rates through a 3PL can be far lower than what you would be paying on your own.
Many fulfilment providers partner with parcel carriers since they send orders in such high volumes, giving them the ability to negotiate lower shipping rates. Which can also mean reduced shipping costs for you and your customers!
Every 3PL will have different charges but hopefully now you have a better view of what charges to expect. When choosing a provider, remember it’s not necessarily about finding the cheapest option. You’ll need to consider how the fulfilment partner meets your business’ requirements for branding, delivery options, and support.
To find out more about Fulfilio’s rates, you can get a quote here.