Understanding Ecommerce Fulfillment Costs

Ecommerce fulfillment costs include setup, receiving and intake, picking and packing, storage, shipping, and management fees. Fulfillment costs can vary per order and depend on the type of item, order complexity, product size and weight, delivery speed, and sales volume. 

Credible fulfillment centers are transparent in setting model pricing of their services and charging merchants based on the activities involved. We will shed light on fulfillment costs and discuss all the aspects that you need to know in order to fully comprehend the total costs. 

Ecommerce fulfillment costs breakdown 

Whether you decide to manage your own fulfillment activities or outsource it to a third-party company, there are some main fees that constitute the total ecommerce fulfillment cost. Let’s get down to details.

Setup fees

Setup fees are based on the volume of products you anticipate to fulfill. Usually, companies charge a flat rate. The initial setup fee starts from $100 and can be as high as $500. 

Receiving and intake fees

Receiving and intake fees typically cover the process of receiving a new inventory from your supplier and sorting it at the warehouse. These fees can be charged in two ways:

• Per hour (rates between $15 and $45 per hour)
• Per-unit basis (rates between $5 to $20 per pallet, $25-$55 per order, $.05-$.20 per piece, $1 per box.

Storage fees

Storage fees are related to the space needed to keep your items safe in the warehouse. The price model may vary based on the fulfillment company and your product. 

• Per pallet pricing model is the cost-efficient solution with rates between $5 and $20 monthly.
• Per cubic foot of space model is applied when you need to evade ‘empty space’ and ranges from $.30 to $.60 monthly.
• Per bin is used for fast fulfillment and ranges from $1 to $2.50 monthly.

Keep in mind that in some cases fulfillment centers can charge extra money for temperature control or fragile materials. 

Pick and pack fees

Pick and pack fees cover product storage, transportation, and shipment packaging. Typically, these fees are a combination of per order fee and per item fee. For instance, a 3PL’s fulfillment center can charge you $2.50 per order and $.20 per item. If a customer orders five items from your ecommerce store, it will cost $3.50 in total. 

The majority of companies add the cost of packaging to this price. Some of them may charge packing material fees. Store owners could also pay more if the order goes over the weight limits.

Shipping fees

Shipping fees are the costs of sending an item to the customer. To pay for shipping, ecommerce companies can either have their own carrier account or use the fulfillment center’s carrier account.

Shipping fees are quite challenging to calculate as they depend on the product’s size, shipping location, product weight, and speed of delivery. 

Kitting fees

Kitting fees include the costs of assembling products before shipping. Kitting fees are based on a rate per hour and range between $25 and $55. If it takes two minutes to assemble a product at a $25 hourly rate, it will result in a $1 per product kitting fee.

Account management fees

A number of fulfillment centers also include a fee that is related to management services required for your order fulfillment. The account management fees cover administrative costs such as additional changes to the inventory, service calls, or other operations that exceed the daily operations needed to complete the order.

Account management fees can be charged at a flat rate. In this case, be ready to pay between $80 and $275 monthly. Other fulfillment centers charge between $30 and $50 an hour for management services.

Return fees

Return fees cover the costs related to checking the product for defects. If an item has defects or does not function properly, the fulfillment center deals with damaged products. These fees are charged at approximately the same cost as fulfillment fees or a little bit higher if additional check-ups are needed.

Ecommerce fulfillment cost with a 3PL 

Here is an example of a 3PL (third party logistics) pricing model:

If you want to find out the cost to build an ecommerce website, check out our blog post on ecommerce website development costs.