When starting an online business, one of the first things you will have to figure out is how to order fulfillment services or the costs of getting your orders into customers’ hands. This order fulfillment process can seem like a confusing task, and there are actually several different ways to execute it, depending on your business and the products you sell. In this guide, we will break down what you need to know about order fulfillment services pricing so that you don’t end up spending more than you need to or making money too slowly because of your choices in this area.
Retailers Choose Where They Sell Online
After choosing where to sell your products, the next step is choosing fulfillment services pricing. Pricing for fulfillment services typically depends on a combination of: order size, order weight, and delivery speed.
Selling On Amazon Vs. 3rd Party Retailers
If you sell on Amazon, Amazon sets your price, handles the order fulfillment, and provides customer service for you. If you sell via 3rd party retailers like Jet or Sears, the retailer sets your price and does their own order fulfillment.
Cost can be a factor if you have thousands of orders to fulfill. It would be more expensive to hire someone on staff than outsource the work to a 3rd party like ShipBob.
FBA vs Merchant Fulfilled
The Amazon FBA fulfillment service is a full-service package that includes: order fulfillment, warehousing and inventory management, customer service, and marketing. You will ship your items to the Amazon fulfillment center and they will handle the entire process. When it comes to pricing, there are no upfront costs with this option (unlike many other 3rd party providers). Instead, you pay a per-item fee plus monthly subscription fees that get higher depending on your level of activity.
Selecting a Product Type
It can be difficult to determine how much fulfillment costs will be. The most important factors that you should consider are the product, the type of shipping, and the logistics required to ship your order. There are a few other things that you might also need to take into account. Depending on your products, there could also be additional labor and storage costs associated with shipping products as well.
Smaller Volume, Bigger Businesses Can Manage Without the Help of an outside Company
If you’re a smaller volume, it’s best to use an online fulfillment company to help you with your business logistics. But if you’ve got a larger company and are looking for help in the fulfillment department, there are a few things you should know.
The Warehouse Space Option
This method works best if you have inventory in your home or office that needs to be moved somewhere, like a storage unit, warehouse, or garage. It can also be the best option for established businesses that want to set up their own fulfillment operation. If the space is rented by the hour or day, and all you need is a place to keep your inventory and shipping materials until it’s time to ship your items out to customers, then renting warehouse space can be a very affordable option for order fulfillment services.
The In-House Option
There are some businesses that choose to take care of order fulfillment themselves. If you have the manpower and the funding for this option, it can be a cheaper option for you in the long run as you won’t need to factor in additional costs for hiring full-time or part-time staff, shipping containers, and services like logistics automation that handle order fulfillment on your behalf.