Fees Charged by 3PL Companies
The prices and fees charges by ecommerce fulfillment companies can vary significantly from one company to the next, although the fee structure usually remains the same. Here is an overview of order fulfillment fees, with typical ranges, from setup fees to shipping discounts, if applicable. Please note that all examples pertain to small to medium-sized items that fit in small to medium boxes; fees will vary depending on your exact situation.
Receiving Fees – This is the fee charges by the order fulfillment company to physically receive your good and enter them in inventory. This is normally a per-hour charge of $35 to $45 an hour.
Setup Charges – Ecommerce fulfillment companies normally charge a one-time initial setup fee, which covers everything from training to shopping cart integration. This fee can range anywhere from $100 to $1,000 or more, depending on account-specific parameters. In parallel, a per-SKU one-time setup charge is usually required, which can go from $0.25 to $0.75 per SKU. This is only charged when the SKU is created, not at each re-stocking.
Pick and Pack – 3PL companies make their money by charging you to pick and pack your orders. The per-order fee can range from $3 to $7, to which is normally added a per-item fee of $0.50 to $1. Some companies charge per-order, while others do so under the guise of a monthly plan. It comes down to the same thing; just make sure to read the fine print.
Account Management – This fee can range from $50 to $200 a month or more, depending on the nature of the products you sell; the account management fee covers all the necessary paperwork related to working your account, as well as the packing materials, labels, etc., used in shipping your orders.
Inventory Management / Storage – Just as the account management fee pertains to the paperwork related to your account, the inventory management fees covers the expenses related to storing and maintaining your physical inventory. This can be charged per pallet, or per square or cubic foot. Typical charges from $0.25 to $0.50 per cubic foot. This fee is adjusted on a regular basis so you never pay more than you have to.
Return Fees – As any ecommerce retailer knows, returns happen. 3PL companies are happy to deal with your returns, and re-enter the items into inventory after inspection. Fees for returns are similar to pick and pack fees, from $3 to $7 per order returned, with a $0.50 to $1 per item.
Shipping Fees – Shipping fees are normally the biggest budgetary post of ecommerce order fulfillment, and lower shipping fees are also the main advantage of third party order fulfillment, so shopping is important. Most 3PL will offer you a discount up to 25% off published UPS or FedEx rates, but some simply will offer zero discounts. Stay clear of those. Please note that there is rarely, if ever, a discount for shipping with Canada Post; this is normal.
These are the typical fees charged by 3PLs and Canadian ecommerce fulfillment companies for the tasks related to picking, packing and shipping your order. Different companies may also offer additional services, such as the following:
- Product photography
- Call center services
- Light assembly (also called ‘kitting’)
Furthermore, other fees can be charged for cancelled orders, extra copies of invoices or packing slips, or on-demand, unscheduled inventory control.
The bottom line is to always read the contract and service proposal carefully, addind up every possible fee and expense, and compare them to the cost of your own, in-house order fulfillment, including salaries, storage, power, insurance and everything else.
Are Ecommerce Fulfillment fees negotiable?
Almost every aspect of outsourced order fulfillment fees is negotiable, from setup to receiving, to monthly management fees and more. That being said, you must bring something to the negotiations, and in all cases, that’s volume. If you ship a lot of orders every day and every week, then you can expect to be able to negotiate your fees very advantageously indeed.