There are a lot of things to consider when looking for product fulfillment services and each one of them can have a major impact on your business. First and foremost, you need to decide on which country you want to ship from. Typically, you choose an order fulfillment warehouse that is in the same country as most of your customers. Often times, that is the USA where companies like iShipUSA, ShipBob, RedStag and others are located. That tends to be the easy part with regards to figuring out your product fulfillment strategy.
Next, you get to the most important part – understanding order fulfillment fees and the various cost structures. Unfortunately, most product fulfillment services don’t offer very clear or straight forward pricing. In many cases, this is done as a marketing ploy where customers are presented with an attractive figure upfront then hit with a slew of conditions and fees that dramatically change their final cost. In some rare cases, its simply because the order fulfillment service has a complex structure.
One thing you’ll hear over and again from iShipUSA is that our cost structure is very straight forward and our order fulfillment fee is exponentially lower than that of our competitors. But let’s take a moment to examine some of the different fees which you’ll find in our comparison chart above (which includes ShipBob, Red Stag and FedEx Services – all of which are regarded as leading USA warehousing and order fulfillment services.
Perhaps the most attention grabbing cost that a business owner will encounter when examining a fulfillment company is the product order fulfillment fee. Also known as the pick and pack fee. This is the cost that a fulfillment company charges you in order to prepare your product for shipping. That means locating the product(s) which require fulfillment within the warehouse, then placing them in their packaging in preparation for shipping. With iShipUSA this fee also includes printing off a label for the package as well but many other companies charge an extra fee for the label or only provide it at no cost if you are hitting a monthly minimum. This fulfillment fee or pick and pack service does not include the cost of shipping, it is simply the cost required to perform the fulfillment services noted here. As you’ll see in our pricing chart which contains Red Stag, ShipBob and FedEx Services - most companies charge an average minimum of approximately $2.20 then go from there depending on your needs. At iShipUSA, we pride ourselves on having low cost fulfillment solutions and our average is $0.99. Using this example, you can see how fast costs can add up when choosing a more expensive fulfillment services.
Another cost incurred is receiving fees. At iShipUSA we receive your products at no cost and process them into our warehouse accordingly. Recognizing that these products are intended to be shipped out in a reasonable timeframe, we view receiving your product as the first step in a mutually beneficial relationship where both parties benefit. With many leading fulfillment solutions, you can see – as per our chart, that receiving your products into the fulfillment warehouse is not free. Some express their fees based on an hourly rate, which can include minimums. While others express costs based on the amount of inventory you send, such as a cost per pallet. You can see some of the fees charged by ShipBob, Red Stag and FedEx in the chart above
Last but certainly not least is the volume minimums that order fulfillment warehouses and services apply. This is where a lot of businesses get dinged. At iShipUSA there are no minimums. You can fulfill and ship 10 packages per week or 10,000 packages per week. We have a pricing structure in place and that’s sufficient. With other order fulfillment services, that’s not the case. If you don’t hit your weekly or monthly minimum, you’ll be charged regardless. Let’s take for example the 100 orders per week minimum which is very popular. With these companies, you may have a fulfillment rate of $2.20 or so (apx industry average). If you were to ship 100 packages, your costs would be $220 in order fulfillment fees alone. However, the minimum means that even if you don’t ship a single package, for whatever reason, you still owe $220 in order fulfillment fees. That’s in addition to all of the other fees that you’ll pay even while your business isn’t doing anything
EXAMPLE SCENARIO: Let’s say that you sell iPhone cases and that you ship approximately 2 pallets worth per month. Assume that means 1,000 iPhone cases each month. What would the costs be?
iShipUSA Cost: $990
Competition Cost: $2,326.50
Here’s how it breaks down. The competition would charge you order fulfillment service fees along these lines: $26.50 for receiving your products. Then $2.30 per package. At 1,000 packages per month, that totals $2,326.50 in costs just for receiving and performing your fulfillment services. Of course, you will still need to pay for shipping but that varies depending on where you’re shipping and how fast you want to ship. We’ll keep this as a direct apples-to-apples comparison.
At iShipUSA, there would be no fee associated with receiving your 2 pallets. Your order fulfillment fee would be $0.99 per package multiplied by your 1,000 orders to give us $990.
Clearly, there’s a big difference between different order fulfillment services and solutions. While a lot of companies spend big dollars to market themselves and put forward convincing messages that attract customers, its critical that business owners perform their own research to figure out what is best for their bottom line and company. At iShipUSA, we’re happy to have an open and honest discussion with you about your needs and deliver a straight forward solution without all of the hidden fees you may find elsewhere.