The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied the best of ourselves to the task at hand -Vince Lombardi
As a young entrepreneur I learned that the hard work needed to build success wasn’t as easy as it seemed and that it involved adapting to the ever-changing world of sales. Everyone said that if you could find a niche, you’d make it rich but that wasn’t necessarily the case when you’re learning and doing everything yourself.
Many online retailers often start with visions of grandeur, they think that by simply building a pretty website that is packed full of SEO keywords and amazing content that the world will beat a path to their virtual door. Unfortunately, that’s not exactly how things work in the ecommerce world. This world is ever evolving and changing. Everyone wants to be on page one of google and be the top or second listed website. The tasks and hours needed to achieve those results is enormous. It literally takes the single staffed entrepreneur away from doing the things they need to do in order to market, cultivate and nurture their new business. Don’t loose hope as I can assure you that it is possible to flourish in your newly found status as an online retailer.
As you learn and grow you will inevitably begin to scale your store and before you realize its happening you will no longer be capable of doing everything that is needed to continue to grow your business. The order fulfillment by itself will become an enormous endeavor that will eat up a lot of your time. The good news is that in today’s online marketplace there are several options you have in outsourcing your ecommerce fulfillment which in turn will free up the necessary hours in your schedule to concentrate and focus on your growing business
What is a 3PL eCommerce Fulfillment Center?
Imagine that your next-door neighbor is the one holding your inventory and fulfilling your online orders. That is exactly what ecommerce 3PL fulfillment centers do for you. Not only do they warehouse your product(s) they will also prepare, assemble, package and ship your orders for you through their network of carriers like USPS, UPS FedEx or DHL, while you focus on the other necessary aspects of your business.
The Benefits of outsourcing your Fulfillment
There are many advantages to outsourcing your order fulfillment to a 3PL provider, the most important being their size offers leverage and thus they will often receive large discounts on shipping rates, shipping material costs and are able to help your business grow into new markets around the world.
Many eCommerce fulfillment centers guarantee same day service and with hundreds of hands fulfilling their daily order volume it’s easy to understand how they can make that guarantee. Besides their discounted shipping rates and same day guarantees often these fulfillment centers will deal with all the aspects of your logistics supply chain. They will handle the mountain of international customs forms, freight, air, and land shipments as well as handling the delivery schedule for your shipments to their facility.
Nothing is Free
Just because you offer free shipping in your storefront doesn’t mean that it’s FREE, inevitably someone will be paying that cost ie: YOU. That is why it’s important to calculate the cost of postage as well as the cost of fulfillment from your 3PL fulfillment center into your margins. The cost to outsource fulfillment can and often does vary from center to center. However, I can promise you that although one number might be smaller and another larger when they’re all added together every fulfillment center is around the same cost. Yes there are a few exceptions to this rule but realize if a center is giving you cut rate prices ask yourself where the hidden costs are being built in so they remain profitable. I will provide a few examples of what to ask and what to look for when negotiating a deal.
- Price per stored pallet/bin
- Pick/Pack fee per Order
- Receiving Fee (what it costs to accept delivery to them of your product)
- Pick/pack Fee per Additional units shipped
- Wholesale shipment cost
- Freight shipping pallet prep fees
- Monthly minimum fees ( total number of units needed to ship or you pay the difference)
Will the fulfillment fees work for your current business?
As previously mentioned, everything has a cost associated with it. You will need to ask yourself if you’re in a strong enough financial position to use an online eCommerce fulfillment center or not. Once you have a plan and know what your total fees will be per order, per month you will be able to add these numbers to your product cost and come to a decision that you are both happy and comfortable with.
While this may seem like an arduous task, I promise that it will be worth it in the long run. Use the chart below to fill in the blanks and get the actual cost per order fulfilled.
|FULFILLMENT COSTS||PROJECTIONS OF SALES|
|Number of stored pallets each month|
|Number of orders per month|
|Number of units per order|
|Number of units received each month|
|FULFILLMENT SERVICE QUOTE||FULFILLMENT FEES|
|Storage fee per pallet|
|Pick/pack fee per order|
|Pick/pack fee per unit|
|Receiving fee per unit|
|MONTHLY SERVICE||TOTAL MONTHLY FEE|
|Total storage fee|
|Total pick/pack fee|
|Total receiving fee|
|Total monthly fee|
|TOTAL FEE PER ORDER|
Moving Forward with Outsourcing to a 3PL
Now that you have a greater understanding of the associated costs of using a 3PL eCommerce fulfillment center solution, you’ll be better able to analyze, discuss and weigh in on the best choice for your business. If you realize it may be too soon to outsource your fulfillment or that your order volume isn’t high enough then none the less you at least now have the knowledge and will have the ability to perhaps hire an extra set of hands to help you along as your business continues to grow. Give our sales team a call or send us a comment Below. We'd love to hear from you...