Video – How much does it cost to outsource fulfilment?

Learn how outsourced ecommerce fulfilment costs are calculated, including storage, picking and packing, packaging and delivery charges.

Transcript

One of the questions we are asked most frequently is how much outsourced ecommerce fulfilment costs. Outsourced logistics can be more cost-effective than many businesses expect.

The first step is to compare outsourcing with the cost of operating your own warehouse. An internal operation requires premises, staff, storage racking and the wider infrastructure needed to process orders efficiently.

Outsourced fulfilment provides economies of scale because the warehouse, technology and operational infrastructure support goods belonging to multiple customers. Their combined order volumes also allow the operation to scale more efficiently.

Fulfilment charges are generally divided into several elements. Customers pay for the storage space they use, followed by a fee for picking and packing each order.

Customers can provide their own packaging or ask the fulfilment provider to supply it. The final element is the dispatch cost, which depends on the delivery service and the required delivery speed. At the time of recording, some dispatch services started from approximately £2.30.

The type and value of the goods can also affect the cost. The chosen carrier and service must be appropriate for the product. For example, a particularly valuable item should not be sent using an untracked delivery service.

The overall price is therefore determined by:

• The amount of storage space required
• The picking and packing process
• Whether standard or bespoke packaging is needed
• The chosen carrier and delivery service
• The nature and value of the products
• The delivery experience expected by the customer

The fulfilment and delivery setup should ultimately support the customer experience promised throughout the online purchasing journey.

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