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Who has time for web design, lead generation, manufacturing, financial planning, marketing AND order fulfillment? More importantly, who has time to do all those things well? If you find that you are spending too much time and too much money on storing, packing and shipping orders or, perhaps, more and more of your customers are complaining about the condition of their order on receipt, then it may be time to engage a fulfillment company.

What Is a Fulfillment Company?

Fulfillment companies essentially pick, pack and ship orders for businesses. They can also provide inventory storage solutions. If it involves getting physical inventory to customers, a fulfillment company can do it.

Other services that fulfillment companies provide are quality control, labeling, kitting, and repackaging.

How Much Do Fulfillment Companies Charge?

A fulfillment company will charge based on the volume of product and type of service being provided. There is an initial setup cost that may include account generation, SKU definition and creation of client-specific processes and procedures. Setup costs can range from hundreds to thousands of dollars depending on the size and complexity of the account.

There are also receiving fees that range from $35 to $50 per hour. These fees often include everything that involves intake including unloading, counting, inspecting, recording and stock locating. Some fulfillment companies may charge per item or per order for receiving.

Then, there is the cost of storage. Storage fees are typically charged by how much space is used each month. For example, a fulfillment company may charge monthly for each pallet or bin of storage space or for each square or cubic foot of space.

Lastly, there are costs to actually fulfill a customer order. These costs include pick and pack fees and shipping charges. The cost to pick and pack, or put together an order for shipment, can range from $2 to $10 per order. Sometimes this fee will depend on the type, number and size of packaging materials. Shipping costs are a significant part of the order fulfillment process and depends for the most part on the mode of transportation. However, this cost can sometimes be passed on in part or in whole to the customer.

What Are the Benefits of Using a Fulfillment Company?

With so many fees involved, you may wonder why any business would use a fulfillment company. The simple answer is that fulfillment companies fulfill orders better, faster and cheaper than most businesses can for themselves.

Also, letting a fulfillment company handle the logistics of order fulfillment frees up business owners to focus on other aspects of running their business. Also, there is a scalability factor. Businesses can scale up or down with changes in demand much easier when they use the storage and distribution services of an outside party. If the demand for the latest grill gadget goes up in the spring and down in the winter, businesses do not have to worry about being over warehouse capacity during the warmer months and under capacity during the colder months. A fulfillment company can flex its warm-weather inventory to cold-weather inventory and vice versa when the seasons change.

If you find that your order fulfillment process is not running optimally, then it may be time to consider a third-party fulfillment company.

Posted on Saturday, June 27, 2020 12:04 AM | Back to top

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