Do Fulfillment Services Companies Offer Price Discounts at Increasing Order Volume Levels?
For those companies searching for fulfillment pricing and
costs, oftentimes a question that arises is whether or not fulfillment
companies offer volume discounts for order fulfillment fees. In other words,
does the order fulfillment price per order decrease at different volume levels,
and if so, at what levels does this increase take place? This is a great
question worth exploring so that costs can be calculated as sales levels
How Many Fulfillment Companies Provide Volume Discounts?
While it’s tough to say exactly how many companies provide
volume discounts, it’s safe to say that the vast majority do provide them. In
its most recent fulfilment
costs and pricing survey, FulfillmentCompanies.net
found that 74.36% of the respondents offered discounted pick and pack (order
fulfillment) fees based upon volume of orders. Furthermore, the study found
that the average discount was applied at a level of 1,800 orders per month
(largely ranging from 1,000 to 2,000 orders per month), with the greatest
frequency of responses providing breaks at 1,000, 2,000 and 5,000 orders per
month. Finally, they found that the average discounts ranged from 3-10%. It’s
important to note that the average fulfillment cost for a single item B2C order
in their survey was $2.64, and the average fulfillment cost for a B2B order was
At Fulfyld.com, our pricing is extremely competitive versus
an average fulfillment center. We provide pricing that is all inclusive of most storage, receiving, shipping, pick/pack and dedicated account management.
Why Do Fulfillment Centers Provide Discounted Order
Warehousing and fulfillment is an interesting industry.
While Amazon and robots and drones have made the industry seem like some sort
of hip and technologically savvy field, the reality is that it is and has always
been a historically low margin, high volume oriented business. In order for
fulfillment services to survive, they have to ship a lot of orders, since they
usually make a very small amount off of each individual order.
But as order volume increases, warehouses have an increasing
ability to negotiate better rates with suppliers themselves, such as better
shipping rates, carton rates, etc. Furthermore, as volumes increase, oftentimes
fulfillment centers can further streamline their processes and make them more
efficient, not to mention that they have additional profits with which to
invest in technological solutions that can further decrease their “per unit
costs” of processing and shipping orders.
Therefore, as volumes increase, they can typically operate at a slightly
better level, providing them with an opportunity to offer a slightly better
rate for customers.
Will Fulfillment Houses Require Anything in Return for
Another important consideration is whether or not the
fulfilment house will offer anything else in return for being given better
rates. Oftentimes, at a minimum, the fulfilment house will require that they
volume levels are achieved in order to receive the rate. Sometimes, they will
provide a “ramp up” period, where the order volume doesn’t have to meet the
level. But in the least, they will most likely require that the levels are
achieved before granting any discounts.
Additionally, many fulfillment centers will require some
sort of a “contract,” or length of agreement to secure the discounted rates.
Oftentimes, companies will require either a year-long or multi-year agreement.
It’s important to read the fine print of the contract to determine any and all
requirements. At www.Fulfyld.com, we don’t require contract lengths, and allow you
to cancel at any time. This is significantly different than the norm!
What About Other Fees?
Fulfillment companies usually charge a fee for every service
they perform for you. Typically, you’ll find the warehouses charge a receiving
fee, storage fee, order fulfillment fee, shipping fee, returns fee, kitting
fee, account management fee, as well as other potential charges. It’s important
to look at any quote in its entirety to make sure that it is fully competitive.
One of the best ways to ensure an accurate quote is to ask the fulfillment
center to take a month’s worth of data and provide you a sample invoice. This
will give you a very good idea of what the total charges will be if you use
Again, in the case of our company, we deviate from the norm. Rather than charging all of these other fees,
our “per order”fees cover everything needed to run a successful eCommerce
business. We believe that you should
have the ability to grow without having restraint on how your orders are
fulfilled and with a comfortable feeling of your cost of goods sold (COGS). It’s
important to note that there are additional charges for additional items on an order,
and in the case where order volume is less than 1,500 orders per month, there
is an additional charge of $.10 per order for same day shipping. But other than
that, our pricing is very simple, straightforward and easy to understand – not
to mention that you’ll find it to be lower than the competition!