eCommerce Fulfillment Charges
This is Chapter 13 of 13 in our eBook on eCommerce Fulfillment for 3PL Warehouses. See the link below to download the full ebook
There are many types of eCommerce fulfillment charges that a warehouse may offer. Many of them are tied to simple order processing fees, including per order charges, per line item charges, qty break charges over a certain # of line items, % of the sales price of each order, or various accessorial charges. An increase to the volume of orders can drive an increase to the cost to the warehouse, therefore it is recommended to have some component of charges tied directly to the number of orders and/or line items fulfilled.
Value-added services are important in 3PL Fulfillment warehouses as they differ within their respective market. These services may be charged separately, including Backorders and Returns Management. Other scenarios that can come up which would warrant their own charge may include kitting, parcel packaging supplies, repackaging services, retailer compliant labels (CSN), customized packing lists, and technology fees for supporting various EDI integrations.
Storage charges can also be handled similarly to non-eCommerce clients in most scenarios. Since products move quickly through an eCommerce warehouse, many clients may opt for shorter storage cycles, such as daily, weekly or bi-weekly storage computations. Other clients may still charge monthly storage, but they may choose to charge the Peak Storage used for the prior month. That way if the warehouse was full at the beginning of the month, and it’s nearly empty at the end of the month, the warehouse can still be compensated a fair amount for the storage space it had to guarantee to their customer for the entire month.
It is not typically recommended to design a storage charge around location utilization (billing by bin) for eCommerce clients. The warehouse needs to be able to organize the locations of inventory in a way that optimizes order fulfillment, and that may mean that products may be split across different areas of the warehouse. The client may then be charged extra for that required efficiency, or they may refuse to pay for additional locations, hus dictating inefficiencies in the warehouse based on their storage contract.
The goal is to find an equitable contract for the services provided that are fair for all parties and captures the true value and effort required to perform fulfillment services.
Feel free to click here to access the download page for the full eBook or check back as we post regularly.