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What are fulfillment costs?

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Fulfillment costs consist of the amount of labor, supplies, and warehouse management it takes to process orders and ship them to customers. Costs include retrieving your items from your inventory, assembling products (if necessary), and packaging them with custom materials. Packaging orders for shipping includes using protective boxes and envelopes including bubble wrap, Styrofoam peanuts, and other insulating materials to protect items during transit. Packaged products then go to the shipping department, where shipping logistics personnel find the most efficient carrier method to get your product to your customer in as little time as possible with a high accuracy rating.

Smaller companies traditionally handle their fulfillment processes in-house. However, during the pandemic, many e-commerce companies expanded rapidly to meet the needs of online shoppers. At this point, e-commerce retailers were faced with the choice to lease warehouse space to accommodate their growing inventory, equip it and train staff to fulfill orders, or partner with a third party logistics service provider to outsource their e-commerce fulfillment operations. With consumers demanding faster delivery times, thanks to Amazon, many e-commerce vendors chose to forego investing in their own warehouse facilities, with the time and expense it would take to make it competitive with a dedicated 3PL fulfillment provider.

Over the past dozen years, the fulfillment industry has seen more e-commerce companies outsourcing their fulfillment processes to technology-driven 3PLs, such as Phase V, to streamline their fulfillment processes for faster deliveries. Online retailers have realized that they could also leverage the advanced fulfillment technology 3PLs provide to automate some of these processes, such as printing invoices and shipping labels, in addition to updating inventory numbers and tracking your processed orders so your customer can get more information about the progress of their orders. Technology-driven 3PLs also help you easily manage day-to-day processes, set up low inventory alerts, generate sales reports, and forecast upcoming sales seasons in addition to performing many other administrative activities. E-commerce companies are also attracted to the deep savings 3PLs offer in packing supplies and discounted shipping rates. 3PLs also provide guidance through account management to address any inquiries you may have about the fulfillment process.

Choosing the right 3PL partner, such as Phase V Fulfillment, is important to keep growing your company as we help you reduce fulfillment costs and streamline your fulfillment process, while you continue to increase your bottom line. Call us to get started today!