Fulfillment Costs
Phoenix AZ 85027
Telephone: +1 (520) 251-8469
E-mail: orders@hcfulfillment.com
Phoenix Arizona Fulfillment Service Operations News
What should I expect to pay for fulfillment services
That is a great question and one that everyone is interested in understanding. Short of simply selecting the "lowest price" and learning later that it may not be the best criteria with which to evaluate a company, there are standards within the Direct to Consumer industry by which you can compare your costs with companies that do their own fulfillment as well as with companies that pay to outsource their fulfillment.
The formula goes like this:
Industry Standard Fulfillment Formula for Fulfillment Services
This formula will help you to determine what you should pay for these services and to manage your business according to these standards. This percentage should typically be between 10% and 15% of your average transaction.
| COSTS | EXAMPLE |
|---|---|
| Take the total average cost per order of fulfillment, which includes everything from the packaging itself to the packing peanuts, the labor, the invoice/other paperwork enclosed in each package, as well as the cost of warehousing/storing the product, the account management, the inbound phone charges, etc. (ask us for details) | $1.00 to $5.00 |
| Add the cost of shipping (e.g. actual UPS, Fed Ex or USPS fees) | $ 5.50 |
| This totals the cost to get a product to your customer | $10.50 |
| Subtract the shipping and handling fees collected from your customer | $ 4.95 |
| This will give you your total net cost | $ 5.55 |
| Divide this by the average sale price of an order | $50.00 |
| This will give you the percentage cost of your fulfillment | 11.0% |
Remember that it is always possible to find a "low cost provider," but - as is commonly the case - you get what you pay for. It is easy for a fulfillment provider to cut services in order to arrive at a cheap price, but as a result, your business may suffer. We strongly encourage you to concentrate on the services you will receive, and not just on the cost. Give us a Call HC Fulfillment for your Fulfillment Service
Tips for Evaluating Fulfillment Service Provider |
|---|
For most people entering the Ecommerce business, ecommerce fulfillment is a new concept and one with which they may not have any experience. Selecting a fulfillment company to support your business' activities can be a daunting task.
Once you select and enter into a relationship with a fulfillment company, the service you receive will be critically important to the success of your company and to your customer's perception of your business. In fact, if your customers perceive that your service is not up to their standards, they will not think highly of your business and the "lifetime value" of your customer will diminish dramatically.
Short of price, what should you ask of the prospective company and how should you evaluate them on their performance? Of course the cost of the service is always important, but there are a number of other critical factors, as well. Here are some important questions to ask during the interview or visiting stage to fully evaluate their capabilities and performance.
What is your accuracy rate for correctly fulfilling orders?
What is your commitment to shipping my orders within a specified time frame?
If I decide to make changes in my business, what happens?
What should I expect to pay for fulfillment services?
What references do you have on your fulfillment company?
May I speak with some of your current fulfillment company clients?
Your fulfillment corporation should always be receptive to providing you with references. For HC Fulfillment, you'll find several client comments, but we will also gladly provide you with additional companies to speak with after our initial discussions.
