What does fulfilment cost?

Why nobody can quote a price without knowing you

Fulfilment is not a product with a list price but a service whose effort is almost entirely driven by your items and your orders. A parcel holding three small parts from a shelf rack takes a different effort from a pallet of long goods that has to be moved by forklift.

Anyone quoting a per-parcel price without asking questions either has a very narrow standard offer – or will renegotiate later. Both show the same signs: no question about the number of items, none about order structure, none about seasonality.

The six items in almost every quotation

Whatever the provider, a fulfilment quotation is built from the same blocks. To compare offers you have to lay those blocks side by side individually – the total on its own says little.

Goods-in

Receiving, checking and putting away your delivery. Usually charged per pallet, per carton or by time. The effort depends on how the goods arrive: sorted on pallets, or mixed in a container.

Storage

The running rent for the space your goods occupy – per pallet position, per shelf position or per square metre and month. What decides here is not quantity alone but turnover: goods that sit for a long time cost for a long time.

Order picking

Assembling the order. A basic charge per order plus an amount per additional line is common. That is why the average number of lines per order is one of the most important figures of all.

Packing

Carton, filling material, tape, label – and the working time for it. Special requests such as gift wrapping, inserts or customer-supplied cartons are shown separately.

Shipping

The postage charged by the parcel or freight carrier. Whether you use your provider’s rates or bring your own is a matter for negotiation and makes the biggest difference at high volumes.

Returns

Receiving, inspecting, refurbishing and putting away. Usually charged per return, sometimes staggered by inspection effort. In sectors with a high return rate this is not a minor item.

What you need to supply for a solid quotation

The more precise these figures, the less room there is for later additional charges. If you do not yet know a figure, an honest estimate beats leaving it out.

• Number of items (SKUs) and how many of them move regularly
• Dimensions and weight – at least of the largest and the smallest items
• Orders per month and average number of lines per order
• Seasonality: how does the strongest month compare with the weakest?
• Return rate, if you sell to end customers
• Special requirements: dangerous goods, shelf life, serial numbers, batches
• Which systems are in use and what interfaces exist

Three cost traps worth settling in advance

The real surprises rarely come from the six items above. They come from the edges.

Minimum volume

Many contracts contain a monthly minimum quantity or minimum turnover. In a weak month you then pay for a service you did not draw on. Ask about it before you sign.

Cost of moving out

What happens if you leave the provider again? Some contracts set rates for outbound transfer that are well above the goods-in rates. That is permissible, but should be known.

Integration cost

Setting up an interface to your shop or ERP system is project work. Whether it is included, charged as a lump sum or by effort belongs in the quotation.