Discussion about fulfillment centres

[Ray272]

I am really interested in fulfillment centres. I see a lot of recommendations on this forum but I sometimes wonder why the Info is vague.

I have been with my provider for close to 5 years now. I have had 1 price change of note during that time, it was one I proposed as a means of quashing any future attempts with price increases.

We do business in 2 industries on a B2B basis and do a very small bit of retail through a market place.

We ship a unit out which is metal boxed, so very sturdy packaged product . It's 12.5cm length x 7cm width x 2cm depth and weighs 150 grams.

We ship it 2nd class signed.

Here are my charges:

Order fee - £1.50
Picking fee - £1
Packaging fee - £1.80
Shipping fee - £5.45
Total - £9.75

Does the shipping cost seem excessive?

I know it may seem like high pricing but this costing only causes a few pains with the b2c on 1-2 items, When it is a b2b style it works out pretty well and one b2b channel is half the pick cost of the above pick cost.

So once the shoe is on the other foot a b2b order which is normally picked as a multiple is fairly competitive:

Example

100 units of a product in a master carton.

Order fee £1.50
Pick fee £0.50 that's for 1 pick of 1 box containing 100 units.
Zero packaging fee as it can ship as is.
Not always the case and 70% of time we are charged £1.80 per box.
Shipping cost from FC - 0 we ship ourself.

What would I do differently if I had a fulfillment centre?

We have some real zombie stocks, stock that just does not move from time to time.

If I saw this issue I'd offer to compact the stock and free up efficient space.

I'd likely store it in an out of the way inaccessible location on the proviso that the company agrees the only movement on that stock in future is in it's entire quantity.

Deadstocks sitting in efficient space prevent me from developing the range.

I'd seek a lower storage cost for such products and lower my clients bill whilst allowing them to take another stab at getting new efficient products on the floor.

I must have 6 pallets worth of dead stocks in my 38 pallets of stock, had them well over a year.

I would engage my clients a lot. A fulfillment company in my eyes is like an extension of your own company. They are privvy to most of what you do. I would offer a whole host of individual services.

A year ago a border check on a pallet of goods resulted in the border force insist on a relabel job. We contracted our FC for this and thought the deal was reasonable. We did not know such a service was even offered.

My fulfillment company has never tried to quote me for any shipping besides royal mail small items.

I do get good deals though.
For example
Pallet to Sweden/germany/France/denmark/italy/spain/ 450kg - £149 + VAT.


I would definitely have cctv on the exit and entrance areas for deliveries and collections.

I have often wondered about leaving but then the whole process needs to be done with all things in mind. Goods currently on the water, orders not yet left production. Moving goods from location old to new, ensuring all goods leave old to new and your stock counts and product state are not compromised.

Scares the living daylights out of me and my nearly 5 year relationship would cease and I'd be back to square one with a new fulfillment house.

I have contacted a lot of fulfillment companies just to learn of rates, get a feel for there approach.

It makes me wonder if their could be a parcel2go of fulfillment. A one stop shop showing all costs facilities of the fulfillment centres their capabilities etc.

As you can probably tell, I enjoy discussing fulfillment.

 

[Mr D]

Wow, we paid less than the first figures you give for shipping a bigger and heavier item via royal mail fulfilment. Your order and packing fees appear a little high to me too.

A comparison site for fulfilment may be useful, if can class services together. A parcel2go type may be unsuitable as usually need to send stock in first, unlike the parcel booking site.

 

[JamieM]

We ship a unit out which is metal boxed, so very sturdy packaged product . It's 12.5cm length x 7cm width x 2cm depth and weighs 150 grams.

We ship it 2nd class signed.

Here are my charges:

Order fee - £1.50
Picking fee - £1
Packaging fee - £1.80
Shipping fee - £5.45
Total - £9.75

Does the shipping cost seem excessive?

Yes, it does seem excessive. Surely that is a Large Letter size?

Order fee/picking fee combined seems high too. Also what are you packaging it in?

 

[Ray272]

Wow, we paid less than the first figures you give for shipping a bigger and heavier item via royal mail fulfilment. Your order and packing fees appear a little high to me too.

A comparison site for fulfilment may be useful, if can class services together. A parcel2go type may be unsuitable as usually need to send stock in first, unlike the parcel booking site.

P2g is effectively a comparison site for a range of couriers so why not the same type of services for a range of fulfillment centres. The conversion method would not be the same but it could have multiple options besides typical fulfillment

Could also be altered to offer one off services for clients needing a short time delivery point.

Would also act as a safeguard for FC and their customers with pre agreed KPI and exit strategies etc.

I know it's high but it's minimal versus the B2B and cannot justify a new fulfillment house solely for the retail orders.

 

[Ray272]

Yes, it does seem excessive. Surely that is a Large Letter size?

Order fee/picking fee combined seems high too. Also what are you packaging it in?

I pay one cost for packaging irrelevant of size.

So we do a majority of shipments using a 60x40x50cm double layer card board box for £1.80 a box. Ive never enqyired about the envelope but im pretty sure it is a bubble wrap envelope.

 

[Mr D]

P2g is effectively a comparison site for a range of couriers so why not the same type of services for a range of fulfillment centres. The conversion method would not be the same but it could have multiple options besides typical fulfillment

Could also be altered to offer one off services for clients needing a short time delivery point.

Would also act as a safeguard for FC and their customers with pre agreed KPI and exit strategies etc.

I know it's high but it's minimal versus the B2B and cannot justify a new fulfillment house solely for the retail orders.

What options besides typical fulfilment do fulfilment centres typically offer?
Not following why you cannot justify a new fulfilment house - the quotes for low volume are higher?

 

[Ray272]

What options besides typical fulfilment do fulfilment centres typically offer?
Not following why you cannot justify a new fulfilment house - the quotes for low volume are higher?

The bulk of what we do. 95% is b2b and my deal on that is decent. The service over 5 years has been very good. Had a few touch n go moments but nothing remotely major. This small aspect of what we do does not warrant changing it's too minimal. I'm saying it's less than 250 shipments a year and the majority of those shipments are making good returns even with this excessive cost. I could arrange the shipping myself and save £3 A shipment and increase mine and the fulfillment centres workload as a result of providing the labels to them for each order. Maybe I should just do that.

 

[Mr D]

The bulk of what we do. 95% is b2b and my deal on that is decent. The service over 5 years has been very good. Had a few touch n go moments but nothing remotely major. This small aspect of what we do does not warrant changing it's too minimal. I'm saying it's less than 250 shipments a year and the majority of those shipments are making good returns even with this excessive cost. I could arrange the shipping myself and save £3 A shipment and increase mine and the fulfillment centres workload as a result of providing the labels to them for each order. Maybe I should just do that.

I just sent a handful of items to a different company for fulfilment. In my case royal mail for stuff amazon were too expensive for or could not handle. Like cardboard.

 

[AW Swindon]

Hi Ray.
The prices you have quoted are very high. It sounds like a simple pick pack so you should not be paying those sort of prices. The issue maybe that your volumes (250 pa) are too low for many companies, so you may be picking up premiums for these volumes. Every part of the price break down seems high. I would be happy to help and go through the various elements with you as a networking opportunity and give you indications of what you should be paying if it would help, If you would like help please message me and we can swap phone numbers. 5-10 minutes on the phone will save a handful of messages.

 

[Lawson@CBF]

This Is a little late to this conversation. Sorry if this is uncalled for. I run a fulfilment company and all pick prices should be based on knowledgeable labour rates i.e. in depth conversations about the client's goods and how they want them to be backed to arrive to their destination.

This of course is open to interpretation. Speed to pack one order is down to the individual testing or having prior knowledge.

Most simple picks take 1-2 minutes to print off the paperwork and pack the order into the outer carrier packaging. This is a volume game and we make money by processing 'expensive little items'. Generally no larger than a shoe box or cases of alcohol. But 30-80p picks are manageable daily.

The larger the fulfilment warehouse the more clout with the packaging supplier and carriers so they should be buying some lines in more bulk and passing that to their clients. But remember their overheads are greater.

Being in control of the overheads is hard from my perspective as I always could do with more staff but the balance of getting the job done over not over stressing our workflow machine is a juggle. Happy to share more if you need some honest advice.

 

[Guy Incognito]

Those prices seem very high to me. I ship quite high volumes of large / heavy / oversize items which naturally are more expensive (and also much harder to find 3pl companies who want to do it, harder to find couriers to reliably ship them next day in high numbers). I get my items packaged at my factory to keep costs down.

Our items will often be strapped together to minimise shipping costs

To give you a comparison, my costs in brackets

Order fee - £1.50 (£0.82)
Picking fee - £1 (£1.60 first item, £0.85 additional items)
Packaging fee - £1.80 (N/A)
Shipping fee - £5.45 (Depends on weight / number of items but averages out at £17)
Total - £9.75

Your order fee seems very high indeed.

What is your account management monthly cost?

Shipping small / light items should not cost £9.75.

 

[Lawson@CBF]

Those prices seem very high to me. I ship quite high volumes of large / heavy / oversize items which naturally are more expensive (and also much harder to find 3pl companies who want to do it, harder to find couriers to reliably ship them next day in high numbers). I get my items packaged at my factory to keep costs down.

Our items will often be strapped together to minimise shipping costs

To give you a comparison, my costs in brackets

Order fee - £1.50 (£0.82)
Picking fee - £1 (£1.60 first item, £0.85 additional items)
Packaging fee - £1.80 (N/A)
Shipping fee - £5.45 (Depends on weight / number of items but averages out at £17)
Total - £9.75

Your order fee seems very high indeed.

What is your account management monthly cost?

Shipping small / light items should not cost £9.75.

Hi Guy & anyone reading,

I think you are all paying to much. I have never seen an 'Order Fee' other than Amazon margining your sale. The picking fee is the variable that we can all work on and happy to talk about.

The packaging is usually pretty standard depending on the type of bag/box/envelope you're using.

As for the shipping, Guy is right with the weight/volumetric size and numbers of orders. But everything is based around economies of scale.

I have pairs of glasses leaving us with a 30p pick fee and on a tracked 48hr RM rate of under £3. Anything is possible...

 

[Import Expert]

Fulfilment has certainly moved on in recent years. We have gone from a traditional freight forwarder, involved in shipping companies goods from overseas to their fulfilment centres, to doing the fulfilment ourselves. This service has grown hugely during this time and we now deal with customers from start ups to well known brands. Just shows I guess that there are more options than you might expect. We have also been recognised by Amazon as a recommended partner, often storing stock in bulk ourselves before moving batches of stock into FBA sites to save on the higher storage costs.

IT systems also play a huge part in this. With many of our fulfilment customers selling through their own portals it is imperative that orders can be processed quickly and they have fill visibility.

This does obviously involve a significant amount of investment. Our warehouse management system allows us to receive orders quickly and easily. The first human interaction is the order being picked from our warehouse.

An example of the effectiveness of this process is with a well known cosmetic business. From the minute the consumer places the order on the client website, we have received, picked, packed and had the tracking number send back to the consumer advising them the order is on its way is done in an average time of 4.5 minutes during the normal working day.

Along with the Woodland OMS API which allows our client to connect direct to our system. We are connected to the following 3rd party shopping carts.

It will be interesting to see how things evolve in the coming years, and how the B&M retailers act going forward to ensure they have a workable business model to compete with online sales.

 

[AW Swindon]

Hi Roada.
Plus the Order Fee, whatever that is, did we ever find out exactly what the £1.50 is for?
I know this thread is dragging on a bit, but I hope Ray272 has had a look around and found better options.
It would be a dream customer if we could charge £1.50+£1.00, so £2.50 to receive an order and pick it.

 

[Roada UK]

Definitely would be a dream customer...we could do half the business and get twice the profit lol! Sadly there are so many hidden charges in our industry. Make things simple for pricing.