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How Much Does Fulfillment Cost?

How much does fulfillment cost?

A third-party logistics provider (3PL) offers a broad range of services that can include fulfilling orders. An order fulfillment provider is also sometimes called a fulfillment center and is defined as a company that takes care of tasks associated with picking, packing and shipping of customer orders.


An order fulfillment company can also store goods in their warehouse on behalf of customers. Once orders are received, the fulfillment center picks the items from their warehouse storage space, packs them into a shipping container and prepares the orders processed for shipping. 


Order Fulfillment Costs 


Ultimately, the cost of sending an order to a customer depends on the size of the order, the number of items and the time required for shipping. The third-party logistics provider charges you for the acceptance and processing of new shipments at their facility. 


There are different pricing models that fulfillment centers use:


  • Value-Add Fulfillment Pricing 
    • You keep ownership of parts (consignment).
    • You cover the cost of doing business, including space, overhead, labor, materials, selling and general/administrative expenses.


  • Inventory Ownership Fulfillment Pricing 
    • The 3PL owns the product.
    • The 3PL adds a markup to the product cost, which includes material, labor, overhead, selling and general/administrative expenses. 


In addition to fulfillment services based on these two pricing models, the following costs can be incurred depending on your specific needs:


  • Packaging and assembly services
  • Storage fees
  • Pick and pack fees
  • Number of orders
  • Shipping costs
  • Receiving fees
  • Account management fees


There are also a number of fees that you can expect related to the cost of packing and assembling your orders, many of which can vary greatly depending on the situation. For example, inventory storage fees are based on the length of time your goods remain unsold at the facility. 


When looking for a 3PL provider and assessing the charges associated with outsourced fulfillment, these costs should be taken into account, as should the quality of the fulfillment. Choosing an outsourced fulfillment solution with experience, flexibility and value-added services will ensure that your customers get their products on time. In addition to happy customers, a good fulfillment provider can help you keep your fulfillment costs under budget

If you have any questions about the order fulfillment process or would like a fulfillment cost quote, contact NewStream Enterprises, LLC by email or call 800.533.3112.

Tagged: fulfillment

Sep 16, 2020 8:30:00 AM