How Much Does Fulfillment Cost?

Explain : Order Fulfillment Cost

A third-party logistics provider (3PL) offers a broad range of services that can include fulfilling orders. An order fulfillment provider is also sometimes called a fulfillment center and is defined as a company that takes care of tasks associated with picking, packing and shipping of customer orders.



An order fulfillment company can also store goods in their warehouse on behalf of customers. Once orders are received, the fulfillment center picks the items from their warehouse storage space, packs them into a shipping container and prepares the orders processed for shipping.



Order Fulfillment Costs

Ultimately, the cost of sending an order to a customer depends on the size of the order, the number of items and the time required for shipping. The third-party logistics provider charges you for the acceptance and processing of new shipments at their facility.



There are different pricing models that fulfillment centers use:

Value-Add Fulfillment Pricing
-You keep ownership of parts (consignment).
-You cover the cost of doing business, including space, overhead, labor, materials, selling and general/administrative expenses.


Inventory Ownership Fulfillment Pricing
-The 3PL owns the product.
-The 3PL adds a markup to the product cost, which includes material, labor, overhead, selling and general/administrative expenses.

In addition to fulfillment services based on these two pricing models, the following costs can be incurred depending on your specific needs:

-Packaging and assembly services
-Storage fees
-Pick and pack fees
-Number of orders
-Shipping costs
-Receiving fees
-Account management fees