Logistics

Hidden Costs of Fulfillment for Online Businesses

It can be easy to overlook the true expenses associated with shipping and fulfillment, but there are many other costs you should consider. In this article, we'll discuss these hidden costs so you can save more money on shipping and supplies!

Introduction:

Many people believe shipping costs are the only expense associated with shipping products. This is not true. Shipping and fulfillment can be expensive for online businesses, as there are many hidden costs that need to be considered. In this article, we will discuss these hidden costs so you can save more money on shipping and supplies!

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Packaging Costs Can Be High:

When shipping a product, many think of the price of postage. However, there are other costs associated with the shipping process that you should be aware of before choosing your fulfillment options. Packaging can be a very expensive part of shipping. This can be anything from boxes, to bubble mailers and envelopes.

When you purchase shipping supplies, it can seem like a one-time fee that is not worth thinking much about. However, what most online business owners do not realize is the shipping supply costs add up over time. Many times boxes and envelopes can cut into your margins especially if they are already tight!

The shipping cost per box is often cheaper than the shipping label and therefore is often overlooked but this can easily add anywhere from a few cents to a few dollars to the cost of your shipping.

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Don’t Forget The Dimensional Weight:

When shipping items through the post office or another carrier, you need to be aware of dimensional weight. Dimensional weight is used by shipping companies as a way to charge for space your product takes up in their trucks and planes. This means that if you purchase a box which has high volume but low mass (i.e. large box with only one shirt inside) this can actually cost you more shipping costs. Many shippers are unaware of this until they get the bill.

It is important to understand dimension weight and how to calculate it. This can be a little more complicated for shipping companies depending on the shipping method you use and the carrier, but there are plenty of resources online to help you determine which shipping methods will cost less once dimensional weight is added in.

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Opportunity Cost Of Your Time:

Many people do not realize that self-fulfillment can cost them more in terms of time then what you save in money. It is important to consider the opportunity costs when shipping products, especially if you are shipping product domestically or internationally. The average Joe may be willing to spend their evening packing up shipping supplies and doing some last minute shopping at the post office because they have nothing else going on.

However, if you are running your own business this may not be the case. If shipping costs add up to more than what it would cost for an employee or contractor to fulfill orders, then there is no point in shipping yourself! You can easily outsource shipping fulfillment companies (like Shipmate) who specialize in shipping supplies and packaging. This will save you time since shipping fulfillment companies will take care of all shipping supply costs and shipping logistics so you can focus on your business!

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Surcharges:

Many shipping carriers have a list of surcharges. Many times you are not aware of these or they can be hard to find on the shipping carrier’s website. It is up to you as the shipper to make yourself aware of these very complicated and technical fees.

Some common shipping surcharges include but are not limited to: fuel charges, Saturday delivery, residential delivery fees and more!

It is important to consider all shipping costs when determining shipping fulfillment for your business. Many times surcharges are overlooked by shippers until it is too late and the sale has already been made on your website.

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Storage Costs:

When shipping product domestically or internationally you will need somewhere to store it!

In most cases your home is not an option since storing boxes full of shipping supplies will take over your living room and turn into a shipping warehouse. This can be very expensive especially if the storage unit has climate control, 24 hour video surveillance and other amenities that come along with it.

It is important to note that shipping fulfillment companies do not have this problem! They will take care of shipping supplies storage costs since they are renting space for the supplies in their warehouse anyway, so you don’t need to worry about these hidden costs when shipping product through a shipping fulfillment company like Shipmate.

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Tape, Labels, Equipment, Etc:

We all know about the cost of postage and after this article you are aware of the costs of boxes and mailers, but there are other materials used in shipping. Tape, shipping labels and other items can add up to huge costs for online businesses. Not only do you have to consider the price of the materials themselves, but also the equipment use to pack your packages. Everything from printers, to tape guns, to packing stations, shipping scales and more can add costs.

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Added Software Costs:

If you are shipping product you sold online, chances are you will need some sort of shipping software to help. If your business is small and only ships a few packages each day then a carrier website or the integrated portal within your marketplace may be good enough. However if, you are selling higher volumes you may need to invest in software to increase shipping efficiency.

Some of this third party software although helpful, can cost a lot of money. Depending on the shipping or inventory management software you are using, it can cost thousands of dollars each month to use. This is an important and often overlooked cost that needs to be factored into the costs of your fulfillment.

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Conclusion:

In this article, we covered the hidden costs of shipping and fulfillment. Now that you know about these expenses, it should be much easier to save more money on your next order! The best way to do this is by using a 3PL service like Shipmate Fulfillment to take care of all aspects of supply chain management. If you’re not sure how they work or if Shipmate Fulfillment is right for your business needs, don’t hesitate to contact our team at 267-710-7447 today! We can help answer any questions you might have and we are always happy to provide free consultations.

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