Getting Down to Brass Tacks! What Does Outsourcing Your Fulfilment Cost?

Posted: 30 May 2023 in FAQS

How Much Does It Cost a Small Business to Outsource Ecommerce Fulfilment in the UK?

We recognise that this is the BIG question! It’s often the first thing a company, particularly one taking its first steps into outsourced fulfilment, will ask. And rightly so. If you have been doing it all yourself thus far, someone else doing your fulfilment is going to represent all new costs.

In a previous post we discussed the benefits of taking the leap to working with an outsourced fulfilment partner (frees up your time to work ON your business not IN it, ensures customer orders are not falling through the cracks, frees up your garage/kitchen table/headspace etc!).

But, let’s stop prevaricating, what is the lowdown on cost?

What exactly are you paying a fulfilment centre partner for? Want to know what makes up the cost of outsourced fulfilment? Here are the key elements you are coughing up for and why:

Storage/Warehousing: The cost of warehousing typically includes expenses such as rent or lease of the warehouse space, utilities, maintenance, security, and insurance. The size of the warehouse and its location can also impact the cost.

Labour: Labour costs include wages and benefits for the fulfilment centre staff involved in receiving, picking, packing, and shipping orders. The number of employees required depends on the order volume and complexity of fulfilment tasks.

Inventory Management: This includes costs associated with inventory storage, tracking, and management. It may involve fees for storage space, inventory tracking software, barcode labels, and cycle counting to ensure accurate inventory levels.

Order Processing: Order processing costs encompass activities like order entry, order verification, order picking, packing materials, packaging labour, and quality control checks. Additional services such as kitting, custom packaging, or gift wrapping may incur extra charges.

Shipping and Logistics: This involves the cost of shipping carriers, transportation services, packaging materials, shipping labels, and any applicable surcharges or fees. Shipping costs can vary based on the weight, dimensions, destination, shipping speed, and negotiated rates with carriers.

Technology and Software: Fulfilment companies may charge fees for the use of their order management systems, inventory tracking software, integration with ecommerce platforms, and other technological solutions that facilitate efficient operations and data synchronization.

Returns Management: Handling returns can add to the overall cost. This includes labour for processing returned items, restocking inventory, managing exchanges or refunds, and any associated shipping or disposal fees.