Anyone who has been reading my blog for more than a few months will know how important I consider outsourcing. I always say that you should outsource as many of the processes in your business as soon as you can, so that you have more time to spend on important tasks that will actually grow your business!
And that’s what today’s post is all about – outsourcing, and specifically – outsourcing your order fulfilment.
Picking, packing and posting orders is one of the most time consuming aspects of any online business, and while you might be able to handle this yourself when just starting out, as your business grows and your sales volume increases, you’ll be left with only two options – you either need to set up a warehouse and hire people to process orders OR you can outsource this completely to a fulfilment company.
Now I have actually written a few articles about fulfilment companies in the past, so if you’re not entirely sure what they are, please take a look at these posts where I explain everything:
Now you may be wondering – if I’ve already covered this all, then what exactly is today’s post all about?
Well, today I want to really explore just how viable fulfilment companies are!
After all, there’s no point in talking about how great they are, how much time they’ll save you etc. if their charges destroy any decent margins…
And that’s why I’ve set up a little experiment/showdown!
I’ve contacted some UK based fulfilment companies and requested quotes for two eBay businesses, so that we can compare the costs and see just who comes out on top!
In my previous articles on fulfilment companies, where I mainly concentrated on the big two – Amazon and Shipwire – I had a few comments from smaller companies, who were offering more of a custom and personal solution, and that’s why I also decided to include some of them in this “competition”. That way we get more varied options, and it’ll be interesting to see how they stack up against Amazon and Shipwire in terms of pricing.
Here is a full list of the companies we’ll be looking at:
And I requested quotes for two eBay businesses:
- 200 sales per month
- Items sent as RM Large Letter
- Weight 125g
- 100 sales per month
- Items sent as RM Medium Sized Parcel. Parcel size 50cm x 30cm x 15cm
- Weight 2.7kg
One quick point before we get started – for this competition, I’ve decided to concentrate on the actual monthly fulfilment costs – i.e. the storage and order handling fees. There are also inbound fees charged by fulfilment companies when you ship stock to them – but this varies hugely depending on what you need, i.e. are the items pre-packaged? Do you need labelling? What frequency do you order from suppliers? How many different suppliers are there? What’s the number of SKUs? Etc.
There are so many different factors that will affect inbound costs so they’ll be disregarded for the purpose of this competition. Also, from my experience, they are often fairly similar across different fulfilment companies, so there’s not much point in including them in our comparison.
Anyway, let’s get to the results!
Shipwire have a very easy to use calculator on their site, so you simply fill in your details (order volume, storage requirements etc.) and you’ll automatically get a pricing estimate.
Converting to GBP gives roughly £326 per month & £1.63 per order for storage and handling.
Let’s see how they do with the larger product:
Again using the calculator, this time I get a handling estimate of $2.72 per order with a monthly storage cost of $64.95 and a total of $336.95.
Converting to pounds gives a monthly cost of £237 and a per order cost of £2.37.
So overall two very competitive quotes from Shipwire.
Next up is Amazon!
- A pick and pack fee, which is a flat fee per unit.
- Storage fee, charged monthly based on your total storage used.
- A weight handling fee, which is a variable fee per unit.
The weight handling fee is essentially the shipping cost, and as we are only looking at the fulfilment costs in today’s article, we will disregard that.
For business 1, the fees are:
- £1.80 – pick and pack
- £0.90 – storage fee (per month)
That gives a total of £360.09 per month and £1.81 per order.
For business 2, the fees are:
- £4.50 – pick and pack
- £24.00 – storage fee (per month)
That gives a total of £474 per month for handling and storage, which is £4.74 per order.
As you can see, this is significantly more than for the smaller products in Business 1 and this is because Amazon consider this product “oversized” so it falls in to their higher pricing category.
Regardless, £4.74 per item in fulfilment costs is quite high (significantly more than Shipwire) and with a £20 product cost, it will eat in to your margins a fair bit.
So a bit of a mixed result for Amazon, as they did very well with Business 1, but Business 2’s products are classified as oversized, which lead to a high per item quote!
But remember, this is their fulfilment charges for shipping to customers from outside Amazon and their fees are a lot less when selling to Amazon customers, so it might be worth reassessing if you sell a lot on Amazon.
Next up is Dalepak, and they have a handling fee that is made up of Picking, Packing, and Admin (all per order) and then a storage fee per pallet of space required.
- £0.85 – picking
- £0.65 – packing
- £1.00 – admin
- £4.00 – storage (per month)
At 200 orders per month, that gives a total monthly cost of £504, which equals £2.52 per order.
For business 2, the handling fees all remain the same, and it’s only the storage cost that is higher:
- £0.85 – picking
- £0.65 – packing
- £1.00 – admin
- £112.00 – storage (per month)
At 100 orders per month, that gives a total monthly cost of £362, which equals £3.62 per order.
Next up is James and James, and they actually offer different levels of service, from Bronze to Platinum. Having taken a look at what each one offers in relation to the cost, and also because they advertise it as being the “best value”, I’ve decided to use their silver plan in our comparison.
James and James charge a pick fee, a monthly account fee, and a storage fee. Their storage is charged daily, so you only pay for what you are storing then and there (obviously as your stock is depleted you will pay less storage). Let’s take a look at what the figures look like:
- £1.41 – pick fee
- £51.20 – monthly account fee
- £1 – storage fee (ESTIMATE per month)
And that means a monthly total cost of £334, which works out at £1.67 per order.
That’s a very competitive rate, especially considering a fair portion of the cost is from the monthly account fee, so at higher volumes it will work out even less.
BUT, very importantly, as you can see from the above screenshot, they do charge an account set-up fee, which in this case is £303.42. Now initially that seems a lot, especially compared to companies that don’t charge anything at all, but if you divide it over 6 months, it’s £50.57 per month. Over 12 months and it works out at £25.29 per month…
When you look at it like that, and in conjunction with their very low pick fee, it seems a lot more reasonable.
Let’s see if their quote for Business 2 is as competitive.
- £1.47 – pick fee
- £51.20 – monthly account fee
- £60 – storage fee (ESTIMATE per month)
The above figures give a monthly total of £258.20, which equals a per order cost of £2.58
Once again though there is the £303.42 account set up fee to take in to account.
But as before, even if you split that cost into the first 6 months, the quote from James and James is still very competitive and one of our front runners so far!
Next up is UK Fulfilment, and they have probably the simplest order processing charges possible. They charge a set per item pick fee and a storage fee based on the number of pallet locations needed.
For Business 1 these work out at:
- £1.02 – pick fee
- £10.74 – storage (per month)
At 200 orders per month that gives a total cost of £214.74 and a per order cost of £1.07, which is by far the lowest quote yet!
Though in the interest of fairness I do want to point out that the pick fee is per item, so if your order had multiple items the pick fee would rise in direct correlation with the number of items. As our business is being calculated on single item orders, that gives a slight advantage to UK Fulfilment, compared to other companies that offer reduced pick fees on additional items.
Anyway, on to Business 2!
- £1.14 – pick fee
- £32.22 – storage fee (per month)
At 100 orders a month, that gives a total cost of £146.22 in fulfilment fees, which works out at £1.46 per order.
Once again that is an amazingly competitive quote from UK Fulfilment and is by far the cheapest so far!
All things considered – that is an amazing final result and it means that we have to award UK FULFILMENT the WINNER of this competition!
And funnily enough, UK Fulfilment was actually the company that we were most impressed with from the beginning. After sending an initial email (I contacted all of these companies with an actual 60 Day Blueprint customer of mine) a reply was received from them within 5 minutes!
And that is not an exaggeration, I mean literally 5 minutes:
Amazing! That is quality of service that is hard to match – and coupled with their pricing – makes UK Fulfilment a worthy winner!
And that actually brings me to something that I want to talk a little bit about.
Although this was meant to strictly be a price comparison, I do think I need to mention a few things to bear in mind when looking at fulfilment companies for yourself:
PRICE ISN’T EVERYTHING!
There are countless aspects of a fulfilment company that you have to take in to account when trying to choose one that is right for your business:
- Customer Support
- Level of Service
- Shipping Options
- Dispatch Time
- Charges for Additional Services
And it’s in these areas that these smaller companies really come out on top vs Shipwire and Amazon.
We saw from our comparison that Amazon don’t offer amazing pricing, so really the main reason to use them is for the boost in sales from offering “Fulfilment by Amazon” for your products, and that only really applies when you’re selling on Amazon itself.
But what about Shipwire? On the face of it they had the 2nd best pricing, only beaten by UK Fulfilment…
But that doesn’t really tell the full story! There are a lot of negative reviews about Shipwire online, and although I personally haven’t had any problems when using them in the past (several years ago), I am not hugely impressed by the service they offer at the moment.
- They are very US based and their service is tailored towards there.
- It’s hard to contact them – no UK telephone number and their contact form routinely glitches out.
- Hidden charges – there are a lot of reports of hidden and unexpected charges.
- Lack of a tailored solution and excessive charges for out of service requests.
I could go on but I think you get the point!
As I said, this isn’t really the main point of today’s article, which is all about PRICE, but I still wanted to address it nonetheless.
And speaking of which, another thing that I’d like to point out is that I’ve only compared the fulfilment (storage and handling fees) and not the actual shipping cost.
The main reason for this is we’re trying to look at how much it’ll cost you to outsource your order fulfilment vs doing it yourself, and that’s why I wanted to keep that separate vs combining it all with actual shipping fees charged by Royal Mail and couriers.
One thing I can say is that you will almost certainly get better shipping rates via a fulfilment company than by posting everything yourself.
After all, it makes sense that with the volumes they send they’ll get much better discounts and rates, and those savings are passed on to you!
Just for some examples to illustrate this:
- James and James offer next day delivery via DPD for £5.37, up to 30kg.
- UK Fulfilment offer next day delivery via DPD for £6.25 and this includes full tracking, signature on delivery, and insurance of up to £100.
These rates are very hard to beat… you’d be looking at £10.50+ using Parcel2Go and that’s without the additional advantages of using DPD and £0 included compensation.
So all in all I am very pleased with the results of our little experiment.
It proves that it is viable to use a fulfilment company, even if you’re only selling 100-200 items per month.
And just think about all the time and hassle you will save vs doing this all yourself!
That pretty much brings us to the end of today’s post. I hope you have found it useful and can see the opportunities for using a fulfilment company for your own business – after all, it is supposed to be a business, not a warehouse job! 🙂
I recommend you contact these companies yourself and compare what quotes you get as they will obviously differ depending on the item size and sale volumes.
But for now, congratulations to UK Fulfilment!
Until next time!
All the best,
*Please note that this “competition” is based on one-off quotes received from these companies and the chosen winner is based purely on my own opinion. I have no affiliation with any of the companies featured in this post.