What Are Fulfillment Costs? Top Fulfillment Companies You Should Know

Quick Summary: This modern civilization has ushered in a new era of the eCommerce industry, as well as the growth of other support services such as fulfillment. There are numerous fulfillment firms worldwide; nevertheless, many sellers, particularly newbies, are concerned about how to provide the most outstanding quality products to customers while also optimizing fulfillment costs to ensure profits.  To answer this question, you must first understand the various types of fulfillment costs and how they are calculated in this article. Furthermore, Gearment will show you some top fulfillment companies, as well as the benefits of each company, so that you could…

By Trân Nguyễn
February 14, 2022

This modern civilization has ushered in a new era of the eCommerce industry, as well as the growth of other support services such as fulfillment. There are numerous fulfillment firms worldwide; nevertheless, many sellers, particularly newbies, are concerned about how to provide the most outstanding quality products to customers while also optimizing fulfillment costs to ensure profits. 

To answer this question, you must first understand the various types of fulfillment costs and how they are calculated in this article. Furthermore, Gearment will show you some top fulfillment companies, as well as the benefits of each company, so that you could select the best place for yourself.

What are order fulfillment costs?

Order fulfillment costs represent the total expenses and charges involved in the course of handling products from receiving to distribution. The entire fulfillment costs include inventory receiving, storage, order processing, picking, packing, and shipping. The costs vary depending on the supplier, order volume and complexity, the price model, and any other additional services and customizations such as branded packaging.

  • Inventory receiving: Labor costs associated with receiving new inventory, calculated using an hourly rate.
  • Storing and managing inventory: A monthly cost, including the number of pallets, shelves, and bins being used to store items.
  • Order processing, picking, and packing: Labor costs associated with picking and packing items are calculated by the number of items picked over time.
  • Return management and processing: Costs associated with restocking or disposing of returned items.
  • Automated shipping: The fulfillment costs vary based on weight, destination, dimensions, shipping service, and shipping carriers, etc.

What is a fulfillment company?

A fulfillment company is a third-party service provider that handles inventory, processing orders, shipping orders, and returns for other businesses. A fulfillment service provider is responsible for managing the whole supply chain, updating the clients’ inventory, and collecting payment and delivery records for every order. 

Outsourcing order fulfillment operation is an optimal solution for companies to balance business benefits and customer satisfaction as well as flexibly scale up business operations and minimize operation time and cost. Instead of investing capital in the order fulfillment process, using fulfillment service allows you to focus on other aspects of your business and continue to grow.

Top fulfillment companies in the US: 

  1. Amazon FBA

Fulfillment By Amazon or FBA is a service offered by Amazon where it helps sellers take the burden off of fulfillment things, such as storage, packaging, and shipping. If sellers choose FBA, they will be charged with some specific fees that cover all processes.

 

 

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  • Free picking up: If you work with Gearment, we will lighten this heavy load on your shoulders by covering the picking up fee to Amazon.
  • Leverage Amazon’s reputation for your business: One of the biggest perks of FBA is that Amazon is a trusted brand. Your items with an FBA shipping label can gain much more credibility and reputation to customers more than ever.
  • It’s much easier to win Buy Box: Since the Amazon algorithm tends to prefer FBA sellers,  those who use FBA can leverage this to win Buy Box and boost your sales more than ever. 
  • Faster shipping time such as next-day and 2-day shipping: Amazon surely gives your products eligible for Amazon Prime free two-day shipping, free shipping on qualifying orders, and other similar options, which most customers are crazy in love with. 
  • Multi-channel fulfillment: MCF is a program within FBA allowing you to ship your inventory to both your Amazon customers and the ones from other eCommerce platforms while still having Amazon fulfill them. 
  • Amazon’s quality assurance: Once you choose FBA, you will get a reputable product supervisor. Before being stored into Amazon’s warehouse, all products have to go through a stringent quality inspection process examined by Amazon.
  1. FedEx Fulfillment

Fedex fulfillment is a third-party fulfillment provider offering storage and order fulfillment as well as helping small and medium-sized or SMEs businesses fulfill orders from multiple channels and manage inventory for their eCommerce stores.  

  • Distributed inventory: You can cut down shipping cost, speed up delivery time and provide great customer service as UPS has more than 600 facilities in the US and Canada supporting you to take orders later in the day and offer fast delivery anywhere in the Continental US and Canada. 
  • Multi-channel selling: Similar to Amazon, FedEx offers fulfillment service for orders that have been placed from multi-channel while FedEx fulfill them. If you feel limited by FBA fees and requirements, FedEx fulfillment is another option for you. 
  • Amazing cut-off delivery time offering: FedEx will own both the fulfillment and transportation relationships under FedEx Fulfillment. This means FedEx can offer the latest order cut-off times in the fulfillment industry, a huge competitive advantage. 
  • An integrated and end-to-end supply chain offering:

Incorporating several turnkey solutions, FedEx Fulfillment Services are modular and scalable – so you can design and configure the options that fit. Whatever the specifics, FedEx Fulfillment Services gives you a strategic advantage in the highly competitive aftermarket and critical inventory business.

  1. ShipBob fulfillment

ShipBob is a technology-first eCommerce fulfillment provider that offers 2-day delivery and other competitive services for small and medium-sized businesses. Founded in 2014 by Divey Gulati and Dhruv Saxena, ShipBob is a new player in the fulfillment game but making a name for itself. 

 

  • Easy to use: ShipBob has built an ideal platform for budding businesses and enterprises who are looking to expand. Understanding the basics of eCommerce is a difficult concept, but ShipBob makes the platform easy to use even if you are not a high-tech person.
  • Fast delivery: The combination of technology and efficient order fulfillment service allows you to offer 2-day delivery shipping to your customer without expensive overhead.
  • Affordable shipping fee: With many fulfillment centers across the countries, you have the opportunity to store your inventory in the best areas to cut down shipping fees and shipping time. 
  • Complete control over your operations: ShipBob has a web-based software that allows you to manage orders, track delivery, track stock levels on different fulfillment centers, and even get alerts when your inventory is out of stock.
  • Integrate with top eCommerce platforms: ShipBob is a robust system that can power your eCommerce store on multiple channels. ShipBob integrates with some of the most popular eCommerce platforms, such as BigCommerce, Shopify, WooCommerce, Amazon, and eBay in just a few clicks. 

You should have enough information about all of the fulfillment costs by now to compare the costs of managing fulfillment in-house versus outsourcing it to a fulfillment company to determine the most cost-effective option for your business.

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