Order Fulfillment Pricing: Why Details Matter

In today’s fiercely competitive e-commerce landscape, understanding the intricate details of order fulfillment pricing is paramount for e-retailers. Quick quotes may seem enticing but often result in unforeseen expenses. Falcon Fulfillment, dedicated to offering top-tier fulfillment services, is here to guide you through the process.

Order fulfillment pricing

Order Fulfillment Pricing Basics

Understanding order fulfillment pricing requires a deep dive into its key cost components:
1. Setup Charges: These one-time fees are essential for seamless integration between your systems and the fulfillment provider’s systems, ensuring uninterrupted operations.
2. Receiving Charges: Costs associated with the intake of your products, including tasks like counting, inspection, and labeling. It’s the initial step in the fulfillment process and sets the stage for smooth operations.
3. Storage Charges: Monthly fees for housing your goods within the fulfillment center. These charges are influenced by various factors, including the duration of storage, size of items, and any special storage requirements. For instance, temperature-controlled storage may come at a premium. Furthermore, storage charges can vary greatly based on the location of the fulfillment center. Storing products in or near major metropolitan areas often comes at a higher cost, but it can lead to lower shipping costs due to proximity to customers.
4. Pick and Pack Fees: These costs are exactly as the name implies – they cover the labor and resources needed to pick and pack your products, making them ready for shipment. This stage typically incurs the most significant labor costs. However, the exact costs can vary based on the complexity of your processes. Do you have unique packout requirements? Are there a high volume of returns that need processing? These variables can significantly impact your pick and pack expenses.

Beware the Instant Quote for Fulfillment Services

Quick quotes for fulfillment services might seem convenient, but they often fall short in terms of accuracy. While they can provide you with a rough estimate, they rarely encompass all the details required for precise pricing.
The allure of a quick quote is akin to fast food. It’s a convenient option that saves you time in the short run. However, is it truly the best solution for your long-term needs? The short answer is no.
Fulfillment pricing based on high-level data may require re-pricing once the provider starts operating and realizes that many of the assumptions made for the initial price quote were inaccurate. Unfortunately, most re-pricing exercises don’t result in a price decrease.
Imagine being four months into an outsourcing partnership and having to explain to your superiors why the order fulfillment budget needs a significant increase. It’s not an ideal scenario and can harm your reputation.
This is why it’s crucial to be cautious of fulfillment service providers that don’t push for as much detail as possible. While they might seem easy to work with in the short term, the path to cost-efficiency and successful e-commerce operations begins with a meticulous evaluation that delves beyond the surface-level appeal of instant quotes.
To ensure accurate cost estimates and avoid unforeseen expenses, it’s imperative to delve into the specifics of order fulfillment pricing. In the next section, we explore the critical details that can significantly influence your order fulfillment pricing, emphasizing that more detail is not only the key to accuracy but also to cost savings.

Order fulfillment pricing

Details You Can Provide a 3PL for Accurate Pricing

As the saying goes, “pay now or pay later.” It’s best to do your homework before seeking e-commerce fulfillment services. Here are some of the details that the best and most trustworthy fulfillment partners will want from you:

1. A Full Description of Your Products:

One of the fundamental pieces of information required for optimal 3PL order fulfillment pricing is a comprehensive description of your products. This includes details such as the total quantity, dimensions, and SKUs per case. Understanding your products enables your 3PL to determine storage and picking space requirements. It helps them decide whether your inventory can be stored vertically or horizontally, the strength of racking needed, and the size of the pick front required.

2. Fragile or Hazardous Products:

If any of your SKUs are fragile or hazardous, it’s vital to communicate this information to your partner. These products often require special storage and handling, which can significantly impact 3PL order fulfillment services pricing.

3. Palletized vs. Floor-Loaded Shipments:

Providing insights into the ratio of palletized vs. floor-loaded shipments is crucial. It helps your 3PL forecast the labor, time, and space required to receive shipments accurately, reducing the risk of bottlenecks during the receiving phase.

4. SKU Makeup of Inbound Shipments:

Your 3PL needs to know the average number of SKUs per shipment and the number of pallets or cases created from each inbound shipment. They also need to understand the percentage of cartons or pallets that contain mixed SKUs vs. a single SKU. Detailed data in these areas helps prevent unexpected dock delays and charges.

5. Special Receiving Requirements:

If your inbound receiving process requires more than a basic general inspection, this should be communicated. Tasks like barcoding, labeling, or quality audits can impact dock-to-stock time and costs.

6. Special Storage, Stock Rotation, or Handling:

Products that require special storage conditions, stock rotation, or specific handling instructions must be highlighted. Whether it’s temperature-controlled space or specific shipping requirements like FIFO (First-In, First-Out) or FEFO (First-Expired, First-Out), these details can significantly impact storage and operational costs.

7. Average Weight of Pallets or Cartons:

Knowing the average weight of your standard pallets or cartons is essential. It helps determine whether your pallets can be stacked and how many can be stacked, allowing your 3PL to find the most effective configuration and racking choice to control your storage charges.

8. Number of Unique SKUs in Storage:

The count of unique SKUs in storage directly affects fulfillment center pricing. Each SKU requires its own slot or bin in the fulfillment center, so the more SKUs you have, the more space and expense are needed. Providing precise data in this regard ensures accurate 3PL order fulfillment pricing.

9. B2C vs. B2B Order Ratio:

Clearly defining the ratio of B2C (Business-to-Consumer) vs. B2B (Business-to-Business) orders is critical for calculating a realistic cost per order. Sharing details from your existing service level agreements helps your 3PL understand your multi-channel fulfillment operation.

10. Special or Value-Added Services:

If your orders require special or value-added services like kitting, on-the-fly kit assembly, or custom labeling, it’s vital to inform your 3PL. These services impact the scope of work and need to be accurately defined for pricing purposes.

11. Special Release Days or Promotional Spikes:

Any information related to your sales trends, special release days, or promotional spikes should be shared. This data helps your 3PL design the most efficient labor plan.

12. Packout Process for Orders:

The packout stage is where most fulfillment expenses occur. Providing detailed information about your packout process is crucial for accurate pick and pack pricing.

13. Packaging and Dunnage Materials:

Details about the types of packaging and dunnage materials you use can have a significant impact on both warehouse operations and shipping costs.

14. Returns Processing Standards:

If your company has specific standards for processing returns, these must be communicated. Returns are typically more work-intensive than order fulfillment and need accurate estimates of space and staffing.

15. Monthly Velocity of Each SKU:

Understanding the velocity of each SKU is crucial for designing an efficient storage configuration and pick line, which can have huge cost implications.

16. Order Flow Integration with 3PL’s Systems:

Seamless order flow is essential for a successful partnership with your 3PL. Details about how orders will be placed and the systems integration and data flow requirements between your systems and your 3PL’s systems must be discussed.

It’s imperative to understand that accurate and lower order fulfillment pricing hinges on the details you provide to your 3PL. The more comprehensive the information, the more precise the 3PL order fulfillment pricing, and the greater the potential for cost savings.

Order Fulfillment Pricing and Tax Accounting: More Alike Than You Think

The parallels between order fulfillment pricing and tax accounting are striking. Just as you wouldn’t entrust your taxes to an accountant who promises to complete them in an hour without gathering all the necessary information, quick quotes for fulfillment services often lead to inaccurate pricing.

The best fulfillment operators are the ones who ask plenty of questions. Our advice: indulge their appetite for details. They can use those details to create the most cost-efficient operation possible and provide a fulfillment price quote that you can confidently use for budget projections without the fear of undergoing a re-pricing exercise after the start-up.

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For expert guidance on fulfillment pricing and optimizing your order fulfillment process, reach out to Falcon Fulfillment, your dedicated partner in streamlining e-commerce operations.

Remember, controlling order fulfillment costs is pivotal in staying competitive in e-commerce. Falcon Fulfillment has the experience, technology, and expertise to guide your business toward success.

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