Unlike many other business service providers, order fulfillment pricing companies structure their pricing proposals in a multitude of different ways. In particular, order fulfillment fees are packaged differently, making it complicated to compare competing quotes. So if you find it exhausting to review various offers from order fulfillment providers, then take a look at some of the tips we’ve listed below. These will help you decipher the code to fulfillment fees, and hopefully in the process make it easier to choose the best fulfillment firm for your company.
Most Order Fulfillment Pricing Falls into One of Two Main Categories
Thankfully, most logistics companies structure their order fulfillment fees in one of two ways. We’ve detailed the two main options below so that you can more easily understand how they work.
Option 1 – Average Order Fulfillment Fee
Under the average order fulfillment fee option, outsourced providers utilize one “average” fulfillment or handling fee to be charged for every order, despite its size. In this case, you’ll incur the same fee per transaction whether there was one item on the order or eight. Companies that use this structure base the order fulfillment fee on an average sized order, knowing that there will be some outliers, both below and above the average order size. This type of structure is used to keep things simple.
Option 2 – Order Fulfillment Fee plus Item Fee
Under the “order fulfillment fee plus item fee”, logistics providers charge a flat order fee for every order shipped plus an item fee for every item picked on the order. So, if one order has 3 items, then you would incur an order fee plus 3 item fees. Companies that utilize this structure believe that it more accurately conveys the time and effort needed to pick and pack an order, regardless of the size of the order. It can be a little more complicated, but it tends to provide a way of accurately charging orders of various sizes.
Be Aware of Other Fees
Sometimes, warehousing providers provide extremely low order fulfillment fees and then charge high fees in other areas, so as to camouflage the higher costs and attract new business. They do this because order fulfillment fees are one of the most important fees that businesses assess when choosing a provider. When you compare pricing, make sure to view the entire pricing proposal in relation to other providers so you don’t get caught with this trick.
Who Pays for Boxes and Packaging Fees
Typically, fulfillment firms don’t include the cost of the carton or packaging into the order fulfillment fees. Therefore, be careful to measure the impact of additional packaging in relationship to the overall pricing.
Shipping can be Another Sizeable Component of Fulfillment Fees
Finally, make sure to get a good handle on the shipping fees charged. These are a very sizeable component of all order fulfillment fees, and they should be weighed carefully when making a decision. Usually the best way to do this is to provide a couple of mock shipments for quoting purposes. Then have the competing fulfillment firms offer a shipping rate for comparison.