Common 3PL Order Fulfillment Costs Listed

Different 3PL order fulfillment costs are different. When you decide to use 3PL services, you may encounter some expenses and knowledge you need to know before signing the agreement.

3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision
3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision

Startup costs

When you decide to start with 3PL, you may encounter startup costs. This fee is used to run e-commerce services and is a worthy investment project because it helps reduce confusion when using various services.

Inventory receiving costs

A 3PL will first receive your inventory, and then begin processing and fulfilling your online store orders. Inventory receipt means that the specific conditions of inbound and outbound logistics will be taken over by 3PL. Different 3PL own different charging methods, such as per-unit, per-pallet, flat rates, or per hour.

Inventory storage costs

When your goods need to use the 3PL order fulfillment center to store inventory, you will need to pay for storage space. Storage fees range from per SKU or per unit storage to a fixed fee (for each box, shelf, or pallet used).

Order pick and pack costs

Some 3PL models include Order pick and pack costs. After the customer places an order, the fulfillment process starts picking or use the picklist to collect each ordered item from its designated storage location. Many fulfillment providers offer to charge on a per-pick basis, which means you pay for each item included in the order.

Packaging costs

Your product packaging represents your brand image. Some 3PLs will charge for packaging materials as a separate order item, while other 3PLs include them in their fulfillment services.

Kitting costs

Some 3PLs provide kits and assembly services. Kitting refers to any unique way of assembling, arranging, or packaging items before shipping. Common applications for kitting include assembling multiple SKUs during packaging or preparing inventory in a specific way. Because this service is designed for each customer, the supporting fees may vary.

Shipping costs

The last section is e-commerce shipping costs: the amount charged by 3PL to transport orders from its fulfillment center to the customer’s doorstep. Many 3PLs will work with major transportation companies to enable them to provide volume discounts to customers. Transportation costs take into account many factors, including transportation efficiency, transportation area, and product size and weight.

Fifth-Party Logistics (5PL): The Future of Logistics?

Due to the impact of COVID-19, the current global logistics has become more and more complex. However, the importance of logistics in the supply chain has not yet been explained.

Except for those who are extremely proficient in logistics, most people are still unclear on which level of logistics to choose. Company leaders choosing the right logistics service (1PL, 2PL, 3PL, 4PL, 5PL or even 10PL…) can bring great effects to the company’s profitability.

Most people may have heard of 3PL, 4PL, 5PL and other products. However, many people may not know what factors are required for each level of logistics services. At present, 3PL and 4PL are the most common and prominent services. However, the application of 5PL in the supply chain has gradually become more prominent.

What is Fifth-Party Logistics(5PL)?

Fifth Party Logistics, also known as 5PL, is a system in which an organization (client) outsources all its supply chain processes to a logistics service provider. 5PL company is committed to planning, organizing and implementing the client’s logistics solutions.

In these various supply chain processes, 5PL uses both third-party logistics (3PL) and fourth-party logistics (4PL) services and manages all networks in the supply chain. Moreover, 5PL company will set the price, but in some cases, the determined price will be renegotiated.

5PL service providers have implemented their work using the latest technology from implementing logistics solutions to negotiating rates. Like 4PL, 5PL’s business also includes this series of processes and can fully control the operational processes of the supply chain.

Fifth-Party Logistics (5PL): The Future of Logistics?
Fifth-Party Logistics (5PL): The Future of Logistics?

What Is the Key Role of the 5PL Company?

5PL service providers mainly play key roles in the following aspects:

  • Logistics plan planning
  • Organize and implement logistics solutions
  • Meet the needs of 3PL and 4PL

Unlike second-party logistics operators that do not participate in pricing, 5PL companies participate more. Besides, 5PL also includes professional work with other service providers to negotiate fixed prices. For example, 5PL also cooperates with airlines, transporters and carriers. This is the difference between 5PL providers and other logistics companies of different levels.

Why Does 5PL Appear?

Due to the impact of the popularity of e-commerce and globalization, compared with the previous models, 5PL tends to meet the needs of future logistics companies and has an important impact on the development of today’s Internet of Things. Among them, 5PL’s online payment function simplifies the consignee’s transaction, and the convenience of the customer’s direct call centre allows people to directly respond to the quality of the service. 

All in all, the emergence of 5PL has adapted to the progress of the times, and its more scientific and technical processes will make the operation of the supply chain more efficient.

ChinaDivision’s Smarter 3PL improves ecommerce fulfillment

Retail has never been more competitive and complex. Ecommerce needs to be viewed in concert with all your retail strategies: brick and mortar, third party marketplaces like Amazon, and your own online store. ChinaDivision’s experience as an omni-channel provider means we understand the entire retail landscape, making us uniquely qualified to help you manage the challenges of selling across all retail platforms. ChinaDivision helps you navigate the complexities that are unique to ecommerce. Let our experienced team help design a Direct-to-Consumer solution that is right for your brand.

Our distribution centers are integrated with customized warehouse management systems, radio frequency handheld scanning, and labor management systems that allow us to manage all warehouse operations in the most efficient and cost-effective manner possible.

We seamlessly integrate order processing, inventory and shipping data with all ecommerce platforms, ensuring fulfillment speed and data accuracy. Timely access to all your data with powerful, customized reporting tools ensures you receive business intelligence that informs strategy and decision making.

What is Transportation-Based 3PL

Specialize in the transportation between locations. For example, they might transport inventory between your factory and warehouse or you and your retail buyer. Consider the following when weighing a parcel transportation provider:

1. Origin location

2. Destination location

3. Timeframes

4. Shipping methods

5. Service levels

6. Pricing and discounts


Remember to consider import/export taxes and duties if you transport freight globally.

Traditional parcel transportation providers include DHL, FedEx, UPS, and the USPS. Same-day delivery is normally handled by local couriers like Postmates and UberRush. Transportation marketplaces like Flexport, Freightos, and GrandJunction connect buyers and sellers.

What is the Biggest Advantages of 3PL

Working with a third party logistics provider offers many advantages. Let’s take a closer look at the benefits of using a 3PL.

Gain expertise and knowledge
Supply chain logistics can be complex; fulfillment, warehousing, and shipping all come with major challenges. When it comes to supply chain logistics, 3PL organizations are experts and can impart clients with their experience and connections to quickly streamline processes.

Additionally, 3PLs can give insight into issues that can come up when shipping internationally. Such issues include documentation, customs, duties, and differing shipping regulations. Working with a third party logistics organization can also relieve the stress of trying to comply with international shipping protocols.

Save time and money
Using a 3PL can potentially eliminate the need to invest in warehouse space, technology, transportation, and employees to carry out logistics processes, allowing for more focus on your core competencies.

Additionally, 3PLs can make organizations proactively aware of supply chain mistakes that could be costly and risky. By providing industry forecasting, 3PLs also help optimize inventory levels and save on inventory holding costs.

When working with a 3PL, organizations can also save time by receiving the expertise needed to carry out supply chain logistics efficiently.

Scale operations and be more flexible
When a company uses a 3PL, they are able to scale space, labor, and transportation according to current inventory. Additionally, 3PLs are often able to ease the transition between seasonal periods and industry fluctuation.

When growing into new markets, a 3PL aids growth in new regions. Typically, 3PLs are always looking for ways to improve aspects of supply chains and therefore have the tools and technologies necessary to make adjustments. Management software can analyze and monitor supply chain procedures to eliminate inefficiencies. Engaging 3PL services are likely to result in continuous improve

Good Advise for e-Commerce Importers

1: Be organized.
This doesn’t just pertain to paperwork, but all of your importing issues. It is important that you schedule deliveries with enough time to be able to not only receive your inventory, but also get it out of the way for the next delivery. Truckers will typically give you 2 hours or even less to unload, but then you must pay for the additional hours. If you organize deliveries from the port properly, then you won’t have truckers charging you time for them to wait.

2: Dimension and weight accuracy.
Be very accurate on your dimensions and weight when importing products, especially if you ship LCL (Less than Container Load). International Freight Forwarders plan their loading of the containers based on these numbers. If you misquote, or “guesstimate”, you are likely to throw off the numbers for the carrier, causing them undue strain. As most things are floor loaded (meaning no pallets) when shipped overseas, every measurable square inch is used. If your numbers are incorrect by more than a percentage or two, you could find your shipment delayed until the forwarder decides to ship another container that will accommodate your shipment.

3: Incorporate all costs when comparing prices.
If you have three people working to make sure shipments are coming in, and you are comparing the rates of companies who provide shipping against those who provide shipping and logistical services, analyze if outsourcing will alleviate your in-house costs, ultimately increasing productivity. While the provider of both services may have a higher quote than the others, ask yourself if the value added is going to help your business with importing products in the long run.

4: Check the availability of your freight service providers.
Are you able to get in touch with your freight forwarder when things go wrong? Will your freight forwarder contact you before you find out from your client? How does your freight forwarder stay in touch with the truckers to find out current situations? These are questions to ask prior to signing on with any freight forwarder. You don’t want to have to hunt them down if a shipment is delayed. The same goes for customs brokers. Most will contact you straight away if the proper documents are not filed, but did they divulge all the necessary documents that you will need?

5: Make sure to be very clear about your product.
Origin, material and destination are important pieces of information when it comes to clearing customs. When deciding on the proper service provider(s), make sure they understand everything about your product, any tests that have been conducted to appease other government entities (FDA, CPSC, EPA, etc) and all documentation that will be required. If you have been vague about importing products that require specific knowledge, you are likely to encounter unexpected fees from your broker/freight forwarder.

6: Obtain a “Customs ruling”
If you have a new product that you sourced in another country, and you are unsure which tariff it falls under, you can typically send it to a customs broker who will get you a ruling number. Then, each time you file, you can use that same ruling number for that specific product.

7: Know the product you are importing.
Know how the country you’re shipping to classifies your product. For example, a bed for dogs can be considered a pet accessory in one country and a bed in another. Different countries have different rules and fees, so find out what they are before you begin importing products.

8: Speak to a customs attorney.
If you are new to importing products, you can avoid a lot of hassles by speaking to a customs attorney prior to starting your importing business. Make sure what you have sourced is from a reputable manufacturer and find out all necessary implications of your product. Also, check to make sure if it is subject to the various consumer entities. Getting everything in order will help the process go that much smoother.

Why You Need a 3PL Fulfillment Service

Imagine that you run a small business selling customized iPhone cases to customers. It’s a small business — you’re the sole proprietor — and you spend a good deal of time reaching out to prospective customers, podcasts, guest bloggers, and other means to drum up business. You also spend time dealing with product improvements and customer support.

Your excellent work has led to a tremendous spike in orders… except now you have to somehow process 10–20 orders per day in addition to doing all the other things you were doing.

You have three options:

  1. You can fulfill the orders yourself and spend the extra few hours a day handling this fulfillment… time that will come out of efforts to grow and sustain your company.
  2. You can hire someone internally to fulfill these orders and pay them to store and process inventory, pick and reconcile order forms, and then either arrange a carrier pickup (e.g. FedEx) or take them to a distribution center for shipment.
  3. You can outsource fulfillment with a 3PL, and they will do all of this for you.

Obviously, option #1 isn’t particularly great, because it involves compromising your company’s growth at a pivotal time.

Option #2 isn’t bad… but it is usually quite costly.

Option #3 — using a 3PL Fulfillment center — is a fabulous option in many cases, because it will be cheaper than hiring an associate in terms of absolute-capital outlay, but you’ll also very likely benefit from shipping costs due to a fulfillment center being able to operate with economies of scale (excellent ones ship millions of packages a year and thus have access to the very best shipping rates).

The services a 3PL Fulfillment center will vary based on the place, but over at ChinaDivision, we offer the following services (this list is not exhaustive):

  • Warehousing: your product has to sit somewhere. Sheds, storage units, and living rooms are options for some… but a fulfillment center has extensive warehouse space and can warehouse your products for you.
  • Inventory/Order Management: When an order comes in from a customer, a great fulfillment center will automatically adjust the available inventory and reconcile the order against current inventory levels.
  • Integration: Fulfillment centers should be able to integrate their software with your shopping carts across every channel. So it doesn’t matter if your customer came to you through Amazon, your Shopify site, or your eBay store — all stores should be integrated with your account through the fulfillment center.
  • Shipping and Handling: Printing out shipping labels, affixing them to boxes, building the boxes themselves, and then taking all of the units to be shipped… this takes time, money, and effort. Fulfillment companies can handle this easily and turn a 2 hour job into a 15 minute one.
  • Special Kitting: Do you have a subscription box that requires assembly? Are you trying to prep your packages for FBA? An exemplary fulfillment center will be able to accommodate any and all of these requests.