Average Cost Per Order From A Fulfillment Company in Australia

by Estore Logistics Australia’s largest third-party logistics provider

There are several factors which you should consider when choosing an order fulfillment provider in Australia, and obviously cost is one of those factors. After all, you’re not in business to lose money or to prop up any specific fulfillment company. However, did you ever stop to think about the ecommerce fulfillment pricing is calculated, or the costs which retailers encounter, and which force them to charge the rates they do to customers? Assuming that fulfillment costs are one of your chief criteria for choosing an order fulfillment company, you’ll be interested to know just how the average fulfillment cost per order is calculated. Read on to be enlightened.

COSTS OF ORDER FULFILLMENT

How much does order fulfillment cost? There are four main costs which order fulfillment companies must bear in order to offer a service to companies which need their goods shipped.

1. The first of these costs is that of inventory receiving, wherein the fulfillment company applies charges for the acceptance and verification of a shipment you send to them. These charges might be a flat rate per shipment, or they might be applied by the box or carton, but in any case they are part of the overall charge which goes into the order fulfillment calculation.

2. The next cost borne by a fulfillment company is the cost of storing inventory, and almost all companies charge for the use of their storage space. This cost can be figured by the pallet of goods, or it might be applied per storage bin, and for low-volume storage, simply by shelf space. The next cost which must be included in the calculation is the cost to a fulfillment company to pick and pack your order.

3. In some cases, these charges are based on the number of items which must be picked and packed, and other companies simply roll this cost into a fulfillment fee. Regardless of how you are charged for this, you will certainly have to pay for it, because it takes time for a human to pick and pack those items, and those workers have to be paid for their services.

4. The last cost which must be included into the overall cost of order fulfillment is the shipping cost, which all fulfillment companies will pass along to the customer. These costs are generally a lot less than you would have to pay if you arranged for your own shipping, because fulfillment companies ship goods in volume, and consequently are entitled to volume discounts from shippers. This is true whether it’s an inbound shipment of your inventory being sent to the fulfillment company, or whether it’s an outbound shipment of your goods being sent to your customers.

So, when asking the question, “How much do fulfillment companies charge?”, keep in mind that the cost will be based on these four factors identified above.

ACTUAL CHARGES IMPOSED BY ORDER FULFILLMENT COMPANIES

In a recent poll of several of the largest order fulfillment companies, the costs described above were identified and a value was associated with them. As you might guess, the rates are different across the range of companies sampled, and this is entirely normal. Remember that the order fulfillment solution which is right for your company may not work at all for another company.

For receiving and verification charges, some companies charged around $300 per inbound shipping, while others charged between $5 and $10 per inbound less than container load pallet depending on the rework requried. For warehouse storage on their premises, all companies sampled charged between $2.50 and $5 per pallet per week, $0.50 to $2 per bin, or $1.25 per pickable location. Picking and packing costs ranged from $1 to $5.50 per pickable item, although some companies included picking and packing costs in their aggregate fulfillment charge.

Inbound and outbound shipping costs is where the biggest differences were encountered, especially with outbound shipping rates, which are often negotiated with customers, based on volume and frequency of shipping requirements.

ADDITIONAL SERVICE FEES

There are in some cases, additional fees charged by order fulfillment companies, when extra services must be provided to clients. These extra services which must be added into the order fulfillment charge, include the cost of order kitting, custom packaging or printed boxes, batch fulfillments, and returns handling. It’s also necessary at times to charge customers extra for items which are unusually heavy or bulky, items which require any kind of assembly, and items which require special storage considerations such as temperature controls or low-humidity storage.

THE BOTTOM LINE ON ORDER FULFILLMENT COSTS

If you’re only talking about a simple, uncomplicated order which needs to be fulfilled, it might only cost $1, whereas a more involved order could cost closer to $10 – before shipping costs are applied. So if you were trying to calculate the average order fulfillment costs for a given company in Australia, probably the closest you could come would be to guess in the neighborhood of $5 per order, prior to adding in shipping costs. However, it’s good to keep in mind that this average cost is one which involves no extra services, and would still need to have the shipping cost applied.

CONCLUSION

Now that you know all the components which go into the quoted cost given to you by an order fulfillment company, you’ll know just where you might be able to save money on your fulfillment costs. All fulfillment costs are made up of receiving, storage, picking and packing, and shipping costs, so if you can somehow reduce these costs for your fulfillment company, your own costs should dip correspondingly. How can you save money for your company by reducing order fulfillment costs to your chosen fulfillment company?

Sources: Fulfillment Company in Australia