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Choosing a Fulfillment House - Fees and Pricing

2004-08-22
 

A right fulfillment house is critical to the success of your business. Besides the fulfillment services and warehouse capacity, you need to fully understand and analyze the fee structures to determine whether a particular fulfillment house fits your business requirements. The type of goods to be delivered, the volumes of orders, contract period, warehouse locations, growth capacity and the dependence of fulfillment activities on other business processes all impact the fulfillment house you will choose.

Set-Up Fees Fulfillment houses charge set-up fees to cover the costs of acquiring businesses and preparing their system for a new account. They may waive and reduce set-up fees for accounts which have a long contract period and high volumes of orders.

Receiving Fees Fulfillment houses charge receiving fees. Fulfillment vendors acquire goods from suppliers and the accuracy of services starts at the receiving.

Inventorying Fulfillment companies charge for inventory management. If inventory is out of stock, you may lose customers. If inventory level is too high, it may increase cost of inventory.

Product Assembly A fulfillment house can assemble or kit your product from components and charge fees for their services.

Warehousing Fees Fulfillment companies charge a monthly fee for warehouse storage. They charge higher fees for secure storage. Some fulfillment houses use warehouse management software to help clients to optimize the storage use. Order Processing Fees They may charge a flat fee for each order, plus a charge for each additional item in the package. Rates vary with the number of orders processed per month.

Shipping and Handling Fees Goods are delivered to customers in various shipping methods, ground, overnight, etc. Customers specify shipping methods when they place their orders and the fulfillment company usually can adjust the shipping methods of the delivery.

Return Processing Fees Fulfillment houses charge fees when a customer returns the merchandise.

Ecommerce Service Fees Fulfillment houses charge extra fees for ecommerce services, such as shopping cart services and credit card transaction fees. You can integrate your own shopping cart with the backend database of the fulfillment house via FTP, e-mail, EDI or XML, or use the fulfillment house's shopping cart software dependent on the pricing of each option. Many fulfillment houses can process credit card transactions for merchants who don't have merchant accounts and charge a percentage of the total transaction amount.



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