This is a continuation of our comprehensive article series on order fulfillment. Part 1, Introduction and Freight is available here.
Order Fulfillment – General Costs Involved
Once your product gets to the fulfillment center to be shipped to your customers, there will be some costs involved. These can vary from company to company–some have a large “onboarding” fee, while others don’t; some have an “all inclusive” pricing structure, while others itemize each expense individually. That said, the basic calculation for the cost of fulfillment is:
Fulfillment (the fee for the labor itself) + packaging materials + postage
There may also be some additional fees you will be responsible for. These can include receiving (unloading your product when it’s delivered and making sure the order is correct and in good shape) and storage (since your inventory will take up warehouse space). A special note about receiving: when you have your product transported via freight from the manufacturer, it will either be shipped on pallets or in “floor-loaded” containers. There are pros and cons to each option. Floor-loading allows you to maximize the use of a sea container, but there is much more labor and time involved with unloading a floor-loaded container (since it must be done by hand in a short window of time). As a result, you should keep in mind that your fulfillment center will likely charge a lot more to receive floor-loaded cartons vs. palletized product. This is another situation where you should gather price estimates for the different options and determine which works best for your project. In either case, it’s important to provide your fulfillment partner with the shipment information as soon as possible and continue to send regular updates, so that they can properly prepare for the delivery. Unexpected deliveries can lead to unexpected fees.
Order Fulfillment – Postage Types
We’re not going to list specific postage rates in this article, since they are variable (typically increasing a bit each year). For accurate, up-to-date postage information pertaining to your project, it’s best to contact your fulfillment company directly.
For shipments within the United States, there are two main types of postage used for fulfillment: parcel, and BPM (bound printed matter). BPM rates are appealing, because they’re lower than regular parcel shipping costs; however, the BPM rate can only be used if a shipment contains only items made of permanently-bound sheets (such as books or catalogs). With this in mind, if you’re shipping a board game or related add-ons, they’re more than likely going to be considered parcels for postage purposes.
For international shipments originating from the United States, there are also two options, though these relate to how duties, taxes, and customs fees are handled: DDU and DDP. DDU (Delivery Duty Unpaid) is the “standard” way of shipping internationally; any duties, taxes, or fees are the buyer’s responsibility, and must be paid before the package is released to them. This is more convenient for the seller, but it generates extra hassle on the buyer’s part, as they have to coordinate with their country’s customs. On the other hand, DDP (Delivery Duty Paid) means that the seller is responsible for all of the duties, taxes, and fees. This can be more work for you, and sometimes more expensive as well, but it makes the process much easier on the part of the customer, creating a “customs friendly” experience. It’s important to note that DDP is only permitted by certain countries, and some fulfillment companies may not offer it as an option; you can ask your fulfillment partner for details and price estimates.
Stay tuned for Part 3, General Fulfillment Process and What’s Next!