E-commerce is soaring–but so are fees. Here are just a few of the fee hikes that have hit online retailers in 2022:
- Fulfillment by Amazon (FBA) hit sellers hard with fee hikes, including an:
- 8% increase in FBA fulfillment fees.
- 100% increase in removal and disposal fees.
- USPS, FedEx, UPS and other major carriers raised their rates across the board:
- 7.4% increase in First Class Package Service.
- 6.4% increase in FedEx ground delivery.
- $1 increase in UPS handling fees per package.
- Warehousing, labor costs and fuel prices skyrocketed as well:
- Warehousing costs increased by 25% in 2022.
- Labor costs already accounted for 50% of e-commerce fulfillment costs, and labor costs increased by 6% in 2022.
Frustrations from soaring costs have been exacerbated by increasing consumer demand for free and fast shipping, leaving online retailers in a tough spot.
Fortunately, an e-commerce fulfillment partner can help streamline operations, expedite shipping times and reduce costs. But not all fulfillment partners are the same, so it’s important for online retailers to be well-versed in e-commerce fulfillment fees.
Here’s what to expect and what you need to know about e-commerce fulfillment fees, as well as tips to help get the most bang for your fulfillment buck.
1. Admin Fees
A legitimate fulfillment partner–or any business for that matter–should not charge for customer service.
Unfortunately, some fulfillment vendors nickel and dime for everything, including support. These fees can be recurring depending on how many times you have questions or need support.
Tip: If a fulfillment center charges for customer service, consider another fulfillment partner.
2. Set Up Fees
Charged on a one-time basis, set up fees cover the integration of your e-commerce platform with a fulfillment partner’s inventory management platform. Set up fees are standard as integrations can be complex and may require additional resources. However, integrating the two systems is critical in order to have full oversight of orders, returns, inventory and more.
Tip: Look for a fulfillment partner with fully customizable inventory management software and in-house developers that can build custom features to meet your business needs. If they charge for these additional requests or reports, consider a different fulfillment partner. A customer-centric fulfillment partner will see the value in these requests and roll them out to all customers.
3. Receiving Fees
Receiving fees cover all services once the inventory arrives at the fulfillment partner’s warehouse, including:
- Counting the products.
- Labeling the products.
- Placing the products on shelves.
- Entering the products into your integrated systems.
You’ll pay these fees on an ongoing basis since the fulfillment partner is constantly receiving products on your behalf.
Tip: Make sure receiving fees are clear and transparent. Be sure to evaluate whether an hourly or per-unit fee is best for your business.
4. Storage Fees
Storage fees cover the warehousing and movement of products at a fulfillment partner’s facility. This includes the people and space needed for:
- Processing orders.
- Picking products from shelves.
- Packing products into the proper packaging, along with promotional materials.
- Shipping orders.
Fulfillment partners typically charge storage fees based on the number of pallets or bins your inventory occupies.
Tip: Look for a fulfillment partner that only charges for pallets, not bins.
5. Fulfillment Fees
If you’re relying on a partner to pick and pack your products, then you can expect fulfillment fees, too. Fees will vary, but you will most likely be charged an hourly rate per number of employees needed to fulfill your products. The more employees, the higher your rate. Some partners offer bulk rates depending on the number of products.
Tip: Look for a fulfillment partner that starts with a flat fee, then scales pricing as your business grows. Talk about projected growth with the fulfillment partner you’re considering to ensure they have the space and labor as order volumes fluctuate.
6. Shipping Fees
Once the order is fulfilled, it needs to be shipped. This makes up one of the largest components of fulfillment costs since the size and weight of the package–as well as the shipping method–determines the final price. Depending on the distance between your fulfillment partner’s location and the customer’s final destination, shipping fees may flex up or down.
Tip: Look for a fulfillment partner with access to a global distribution network, so they can create custom shipping solutions that expedite delivery times and reduce costs. Ask about how many warehouse locations they have, and consider where they’re in relation to the majority of your customers.
What to Look for in an E-Commerce Fulfillment Partner
Ready to eliminate the headaches and high costs of fulfillment? Then you’re ready for an e-commerce fulfillment partner. As mentioned earlier, not all fulfillment partners are created equal, so in addition to closely examining fees, use the checklist below to thoroughly vet any potential fulfillment partners as some are better positioned than others to support your business.
Does the fulfillment partner have…
- Sufficient warehousing for your merchandise?
- Comprehensive and modern inventory management capabilities?
- An extensive network of carriers and a global distribution network?
- Provide a variety of shipping solutions, such as international shipping?
- Offer flexible and customizable solutions?
- The ability to scale with your business?
E-Commerce Fulfillment Made Easy with GLF
With 20 years of experience in e-commerce fulfillment, GLF takes pride in offering transparent pricing, unmatched reliability and personalized services.
While we deliver fast, we always take the time to learn the unique needs of your business so that we can proactively support your goals and create personalized solutions that sync with your existing processes.
Contact our team of experts today to learn how GLF can create the perfect fulfillment solution for your business.
Editor’s Note: This blog was originally published June 1, 2021 and has been updated to include current information, statistics and content.