Cost Breakdown: What to Expect When Choosing a 3PL Fulfilment Provider

For eCommerce brands, partnering with a third-party logistics (3PL) provider can offer numerous benefits, from streamlined operations to scalable fulfilment solutions.

However, understanding the associated costs is essential to ensuring it’s the right move for your business. By breaking down these costs, eCommerce founders and fulfilment decision-makers can budget effectively and avoid unexpected fees.

This blog post will guide you through the typical cost components you’ll encounter when partnering with a 3PL provider, helping you make informed decisions and get the most value from your investment.

1. Onboarding and Setup Fees

When you first partner with a 3PL provider, there are often initial setup fees to cover the integration of your business systems with the 3PL’s software. This ensures a seamless data flow between your eCommerce platform and the 3PL’s warehouse management system, allowing for real-time inventory tracking, order updates, and reporting.

What’s Included:

• System Integration: Connecting your sales channels (e.g., Shopify, WooCommerce) with the 3PL’s software.
• Inventory Setup: Logging all SKUs, tagging products, and setting up storage locations.
• Training and Support: Initial training for your team on how to use the 3PL’s dashboard and support resources.

Average Cost: Onboarding fees vary widely depending on the 3PL provider, generally ranging from £300 to £1,000.

2. Receiving Fees

Receiving fees cover the costs associated with the arrival, unloading, and inspection of your inventory. When products are sent to a 3PL’s warehouse, the team must verify item counts, check for damages, and log each SKU in the inventory system.

What’s Included:

• Unloading and Inspection: Verifying quantities and checking items for damage.
• Labelling and Barcoding: Tagging products to ensure smooth tracking within the warehouse.
• Inventory Logging: Recording SKUs and quantities in the 3PL’s warehouse management system.

Average Cost: Typically, receiving fees are charged by the hour or per pallet, with rates around £25 to £50 per hour or £10 to £30 per pallet.

3. Storage Fees

Storage fees are one of the main components of fulfilment costs, as they cover the warehousing space needed to store your inventory. These fees are usually calculated based on the amount of space your products occupy, such as per pallet, per bin, or per cubic foot.

Storage Fee Structures:

• Per Pallet: Suitable for larger, bulkier items stored on pallets, costing around £10 to £30 per pallet per month.
• Per Bin or Shelf: Ideal for smaller items that can fit on shelves or bins, costing between £1 to £5 per bin per month.
• Per Cubic Foot: Commonly used for inventory with varying shapes and sizes, costing approximately £0.30 to £1 per cubic foot per month.

Average Cost: Storage costs will depend on the size and quantity of your inventory as well as the specific storage requirements (e.g., climate control).

4. Pick and Pack Fees

Pick and pack fees cover the cost of selecting items from inventory and packaging them for shipment. These fees are generally calculated per order or per item, so brands with high order volumes should carefully consider these costs.

Pick and Pack Cost Structure:

• Per-Order Fee: A flat rate per order, typically ranging from £1 to £3.
• Per-Item Fee: Additional fees per item included in the order, usually £0.10 to £1.50 depending on complexity.
• Special Packing Fees: For items that require custom packaging, kitting, or bundling, an additional fee is applied.

Average Cost: For a standard single-item order, pick and pack fees can range between £1.50 to £5.

5. Packaging Material Costs

While some 3PLs include basic packaging materials (e.g., standard boxes and mailers) in their pick and pack fees, others charge separately for packaging. If your brand requires custom packaging for a premium unboxing experience, additional costs may apply.

Types of Packaging Costs:

• Basic Packaging: Standard boxes, bubble wrap, and packing paper, costing around £0.10 to £0.50 per package.
• Custom Packaging: Branded boxes, eco-friendly materials, or custom inserts, which can range from £0.50 to £5 per package.
• Additional Protective Materials: For fragile items requiring extra padding, materials like air pillows and foam inserts can add an extra £0.20 to £1 per package.

Average Cost: Packaging costs vary based on your brand’s requirements, with eco-friendly or branded materials costing more.

6. Shipping Fees

Shipping fees are one of the largest cost components of fulfilment. These fees are typically based on factors such as package size, weight, delivery speed, and destination. Many 3PLs have partnerships with carriers, allowing them to offer discounted shipping rates.

What Influences Shipping Costs:

• Carrier Partnerships: Some 3PLs offer competitive rates through their agreements with major carriers.
• Shipping Speed: Faster delivery options (e.g., next-day or two-day shipping) come at a premium compared to standard shipping.
• Destination and Delivery Type: Domestic, international, or remote area deliveries have different pricing structures.

Average Cost: Shipping costs vary widely; most 3PLs provide rate calculators to estimate shipping costs based on order volume and package specifications.

7. Returns Management Fees

Returns management fees cover the process of receiving, inspecting, and restocking returned products. A streamlined returns process is essential for customer satisfaction, especially for eCommerce brands with high return rates.

Returns Management Process:

• Receiving and Inspection: Assessing the condition of returned items, costing around £1 to £3 per return.
• Restocking Fee: Fees for re-shelving the item and updating inventory, often between £0.50 and £2 per item.
• Refurbishment or Disposal: Additional fees may apply for refurbishing or disposing of items that can’t be restocked, costing £2 to £10 per item.

Average Cost: Returns management fees typically range between £1 and £5 per returned item, depending on the complexity of the process.

8. Account Management and Customer Support

Some 3PL providers offer dedicated account managers and customer support for an additional fee. This service is valuable for eCommerce brands that require frequent support or personalised assistance with fulfilment issues.

Services Included:

• Dedicated Account Manager: A single point of contact who understands your brand’s fulfilment needs, typically costing £50 to £200 per month.
• Customer Support Access: Some 3PLs provide tiered support plans for quick responses to inquiries.

Average Cost: Account management fees vary, with most providers offering flexible pricing based on the level of support required.

9. Additional Value-Added Services

3PLs often offer a range of value-added services to help brands differentiate their customer experience. These services can include kitting and assembly, custom inserts, quality control inspections, and more.

Popular Value-Added Services:

• Kitting and Assembly: For products sold as kits or bundles, costing around £0.50 to £2 per kit.
• Quality Control: Inspection services to ensure order accuracy and product quality, typically costing £0.20 to £1 per item.
• Custom Inserts: Including branded inserts, thank-you notes, or promotional materials, usually adding £0.20 to £1 per order.

Average Cost: These services are charged on a per-item or per-order basis and can range significantly depending on the complexity.

10. Minimum Monthly Fees

Some 3PL providers charge a minimum monthly fee, which ensures they cover their costs even if your sales volume fluctuates. This fee can be a consideration for smaller eCommerce brands or those with seasonal order spikes.

Considerations:

• Minimum Order Volume: Some 3PLs have minimum order volume requirements, typically 100-500 orders per month.
• Monthly Fee: The minimum monthly fee generally ranges from £500 to £1,000.

Key Takeaway: For growing brands, it’s essential to factor in minimum fees when choosing a 3PL, especially if your order volume fluctuates seasonally.

How to Choose the Right 3PL Based on Costs

When selecting a 3PL partner, it’s crucial to evaluate the costs alongside the quality of services provided. Here are a few steps to help you make an informed choice:

• Compare Quotes from Multiple Providers: Request a cost breakdown from different 3PLs to understand the true value of each service.
• Evaluate Your Brand’s Needs: Identify which services you need most and prioritise those in your cost analysis.
• Consider Long-Term Scalability: Choose a 3PL that offers transparent pricing and scalable services to support your brand’s growth.

Conclusion

Understanding the full cost structure of a fulfilment provider helps you budget effectively and make an informed decision.

While costs like receiving fees, storage, and shipping are standard, each 3PL offers different pricing models and value-added services, so it’s essential to find a provider whose offerings align with your brand’s goals.

At E-PickPack, we pride ourselves on offering transparent, flexible pricing with no hidden fees. We do not charge setup fees or minimum monthly fees.

Our fulfilment solutions are designed to scale with your business, ensuring you only pay for the services you need. Contact us today to get a customised quote and learn more about how we can support your brand’s growth.