Are you trying to scale your e-commerce business? Outsourcing your order fulfilment is the first step in that direction. This article will help answer one of the most asked questions when businesses are looking for the best order fulfilment for their operation – How much does an order fulfilment house really cost? What are the factors that affect the pricing of order fulfilment services and what are the key considerations that order fulfilment houses take into account when charging for their services?
Not a one-size-fits all pricing
The most honest and straightforward answer to this question is that it really depends. It depends mainly on how long the orders take to get processed, the size and weight of the products, and the location, among other considerations. Some order fulfilment houses even conduct a time and motion study and base the price from there. It is a more productive, effective, and transparent way of quoting and charging for their services.
Order type
However, it also depends on the type of order it is. Some may be quick and easy to pack, others may need more care and attention by using bubble wrap, while some need more personalised and bespoke packaging. For an array of orders, some fulfilment houses look at the best-selling product across the client’s product line and charge their fees based on that.
Time and motion study
We mentioned the time and motion study earlier so let us get into this in more detail. Since the rate depends on the time it takes to complete an order, an additional amount will be provided by the minute if some products need a longer time to finish packing. This is a more accurate and transparent way of pricing since it also factors in the needs and capacity of the business. How big is your product? How much does it weigh? The amount of time and effort it takes for the fulfilment house to pack your orders is commensurate to the price that you have to pay. Simple, straightforward, and transparent.
Storage space fees
The amount of storage space that is taken up in your order fulfilment warehouse also affects the pricing. Most fulfilment houses charge per pallet, per rack, or per shelf per month. Other fulfilment houses give discounts for businesses that opt to take up more storage space. Businesses can save as much as 10 pounds if they choose to use more storage than less of it.
Insurance fees
Any e-commerce business would know the importance of having insurance for their products. Some order fulfilment houses provide basic insurance coverage as part of the storage fee while others are given the option for a premium insurance coverage that the business itself can buy from a list of third-party sources that the fulfilment house recommends.
Shipping fees
Shipping fees and costs depend on the courier service used by the fulfilment house but a majority of the time, the cost is the same as what the courier charges for.
Returns fees
For packages that are sent back, the fees associated with this hugely depends on the amount of administrative work required. Order fulfilment houses will charge for fees depending on the amount of time it took to process the returns. If all the details are in place then another time and motion study will be applied but if the fulfilment house has to investigate what went wrong, who the sender is, where it came from, and what business it belongs to then that would be an additional cost.
Order fulfilment is a process that affects the cost of your order in different ways. At the end of the day, a lot of these factors revolve around what your business is selling and how much time is spent for all your products to be picked, packed, and shipped. To get an accurate quote on pricing, the OFEX team would love to hear from you and help you work ON your business and not IN it!
If you want to learn more about how the OFEX team have helped increase our customers by improving order fulfilment processes, here are some of our customer reviews.
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