|Need Advice - Fullfillment Charge Increases|
I have had a local fulfillment center doing all of my shipping for the past 18 months here in the Denver area. I have been happy with their services, however they have just informed me that they would like to increase my fulfillment charges around 10%. I am already paying $3.00 for 2 items or less, and then $4.00 for 3-4 items, and they now want 10% more (rates for 5+ items are unchanged). They also want to start charging me for the time involved in receiving inventory (they never charged for it before, and told me they wouldn't when I signed with them). It just seems like too much. I am already dealing with increased operating costs of running my business.
It is a hassle though changing providers, so I would prefer not to change centers. I was thinking about accepting the increase, however asking them not to charge me for receiving. What do you guys think? am I paying way too much. The items I sell are not large or extremely delicate. In addition to the fulfillment charge I also pay the shipping cost, and I buy all of the packing materials (boxes, bubble wrap). Any ideas you guys could provide would be great!
That's a large jump. As unpleasant as the thought may be - sounds like it's time to get your rep in a room and negotiate a deal. You may not be able to stop the increase in total but you you may be able to get them to agree to gradual increases over a year so that it doesn't sink your business.
The biggest question is, how big of a customer are you to this fulfillment company? If you're shipping only a few items a week you're probably not in much of a position to negotiate a whole lot better, although just asking would normally yield some results. Assuming they at least know who Maximus1000's company is though...
1) The best thing you can do is get competing rates from another fulfillment company (it's best to get a local rate, but Amazon publishes their rates transparently). My fulfillment company tried raising rates last year to what I thought was an unfair level. I got a competing rate from another company and we ultimately negotiated workable rate for everyone.
2)Re-iterating the above, you really need to determine what a fair market rate is. There's a lot beyond the pick and pack rate. Most companies tend to charge per sku, per cubic foot of space, and many a freight receiving charge. If the company isn't charging you a storage fee or a per sku fee and all they want to do is raise your pick rate 10% then I would think you have it fairly decent.
3) I can't imagine how any company cannot charge to receive inventory (if 3 staff are destuffing a 40' container for 3 hours they have to charge for this!). It's possible they've always charged for larger customers in the past but you've now gotten to a size where they have to charge you.
Feel free to PM me if you want to discuss/share experiences.
4) If you haven't already, you might want to consider looking at Fulfillment By Amazon. They have a pretty competitive program and needless to say, a very professional and smooth running program.
I ship around 350 to 500 orders per month. I do also pay a storage fee, and I pay for all of my shipping supplies (boxes, bubble wrap). Even though I dont like it, I may be willing to meet them with their increase for the pick/pack fees, but I really dont want to pay for receiving. If they have a slow worker who knows how much they will charge me. With my pick/pack fees being as high as they are I feel that they should not charge me for the cost of the receiving.
I am going to try talking with them and seeing if I can make that work. I am also going to let them know that I cannot afford higher pick/pack fees so this should hopefully be the only price increase for the time being.
If you're doing that volume I can't imagine you'll have a huge issue negotiating something.
Question- is your UPS account being used or theirs? If theirs is being used, are you getting the maximum discount available? Our fulfillment center was skimming off the discount which gave one more area for negotiation.