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How to Navigate eCommerce Fulfillment Costs.

The shortage of labor in the logistics industry is affecting the business. Companies have no choice except Being an E-Commerce fulfillment provider, we get a lot of queries about the fulfillment costs. More specifically about how to reduce the e-commerce fulfillment costs. In this blog, you will get a closer look at e-commerce fulfillment, its cost, and how 3PL providers can help you save some bucks as compared to handling the fulfillment on your own.

E-Commerce Fulfillment Costs: What’s included in this?

E-Commerce companies need to make their fulfillment infrastructure before the startup phase that includes:

  • A warehouse – This will be the place to store your products. It can be your own, purchased, or leased – or you can get a shared warehouse in which you will get a rented space in a 3PL-provided warehouse apace with other companies. You can also get a contract-based warehouse where 3PL will operate a warehouse solely dedicated to your operations.
  • Warehouse Tools – From transporters to trailer loaders, there is various equipment that is needed for operating a fulfillment warehouse.
  • Workers to perform fulfillment services – fulfillment requires a lot of operations such as picking the products, packing, and shipping. And to perform all these services, knowledgeable and efficient workers are needed.
  • Warehouse Management Software (WMS) – This software manages a lot of important functions i.e., managing inventory, orders management, and ongoing pickup, packing, and delivery processes.
  • Carriers for Shipments – Once the orders are picked, packed, and ready, you will need the carriers to move them out of the warehouse and deliver them to their desired destinations.
  • The cost of all these operations varies depending on various factors like location, the volume of products, etc. But specifics aside, it will surely be a little hefty on your pocket.

How E-Commerce Fulfillment Costs can be reduced with a 3PL?

If you manage the fulfillment operations all alone, then you will have to bear all the costs alone – whether the sales are slow, or the products are flying off the shelves. To reduce the fulfillment costs, you can partner with a 3PL that already has an entire fulfillment infrastructure. You can simply plug the operations into the 3PL’s existing infrastructure and save the costs. Here are a few examples of how cost savings can be done.

  • Choose share warehousing for your e-commerce fulfillment operations.

With shared warehousing, you will be like a tenant, and you will only have to pay for the space, labor, and resources with the other companies. Simply, you will only have to pay for the space and services you’re utilizing – nothing else. If you need more volume because of the large sales, then your costs will increase accordingly. If your needs decrease, then definitely your costs will decrease too. This model is completely opposite to the DIY one where you are in charge of all the entire space, labor, and resources.

  • The costs of the Warehouse Management System (WMS) can be reduced.

Another benefit of having a shared warehouse is that you can save some bucks by utilizing a shared WMS. As there are different tenants in the warehouse and all of them use the management software, the costing is divided between all the tenants. Robust Warehouse Management systems can have at least six-figure price tags, so the savings won’t be that small.

  • The costs of a parcel can be reduced along with the transit times.

By partnering with a 3PL, you can locate your products closer to the customers and reduce the transit times and costs. Also, the 3PL provides you with the most reasonable parcel rates which get very higher if you manage them on your own. This is a reason why people trust 3PLs with their fulfillment operations as they have great negotiating skills.

Amazon Fulfillment – Is it worth it?

Many E-Commerce businesses, especially the new ones are attracted by Amazon’s fulfillment service as it seems easier and cheaper. Amazon has an enormous fulfillment network that guarantees a two-day delivery to the customers. It also provides the most affordable pricing because of its great buying power with the parcel carriers.
However, there are various drawbacks to Amazon’s Fulfillment. Amazon increases its costs significantly in the holiday season and penalizes the companies with some additional charges. Also, it does not allow the packaging customization, business cards, and other key branding components of your customers’ experience.
For many E-Commerce companies, once the actual costs are considered – Amazon becomes a least desirable option than partnering with a 3PL for the fulfillment of orders.
Lean on BLK & GLD Logistics for a reduced eCommerce fulfillment cost!

Being the best supply chain consulting firm, BLK & GLD Logistics helps you with all your logistics needs. With multiple warehouses around the USA, we provide both shared and dedicated warehousing options to our customers. To learn more about our eCommerce fulfillment services, contact us today!

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