There four main costs
1. Management Fee – typically £200 per month
2. Storage fees – based on the number of pallets (£35 per pallet per month) and shelves used
3. Pick and pack fees – around £2 per SKU to pick and package an item for shipping
4. Shipping fees – dependant on where you are sending – but assume around £10 for up to 5Kg in the UK
Are you considering outsourcing your merchandising and print fulfilment and warehousing needs? It's often challenging to find clear pricing on many service websites, primarily due to the complexity involved. Here we try to unravel some of those complexities, offering insights into the various cost factors to help you make informed decisions.
1. The Management Fee
When looking at fulfilment services, most companies, including ours at PDI, charge a management fee. Typically, this fee is around £200-£500 per month, covering customer service, stock systems, and general stock management.
There is an underlying fixed cost for the fulfilment company in maintaining stock and doing regular stock checks. Most warehousing and fulfilment companies want to avoid becoming a mere long term storage facility with stock which simply never moves. This principle can works to your advantage to reduce storage costs. If you are seeking long term storage better to seek out an archiving company.
2. Storage and Receiving
Storage is usually another significant cost. You can expect rates around £30- £35 per pallet. Some companies charge a fee for stock counting and integration upon arrival. In the promotional goods and printed merchandise sector, we at PDI generally don't charge for this when we source the items. That is because we are supplier of branded merchandise. However, if fees apply, estimate about £30 per hour for staff to manage counting and examination.
As well as pallet fees some companies will charge for shelf space. A higher cost (20-25%) than the equivalent volume stored by pallet but reflects the need for access to smaller items needed to be easily accessible. In promotional products think of pens, lanyards and badges where the volume of an individual SKU is small.
3. Picking, Packing, and Shipping
On the outbound side, we charge a £5 order fee to pick, pack, and ship items. Additional costs involve £1.98 for each line item processed. A line item refers to different product types; for instance, if you order notebooks and bottles, that counts as two line items. Be cautious of services charging fees per individual item, which could quickly escalate costs. This system is a common practice with fulfilment houses that do not specialise in marketing fulfilment but cater for the Amazon and Shopify client – see below
4. Shipping costs
This one is impossible to answer in a blog because it depends on the weight of the items being shipped and of course where they are being shipped. There is a minimum of £10 per shipment for up to 10kg UK mainland but shipping costs really do depend - these need to be quoted on a case by case basis.
If large volume is being moved to and from an exhibition then it may be appropriate to use a dedicated vehicle. This is particularly true for exhibitions when access to site may be complex and the usual carriers (DHL, DPD etc) simply will not expend the effort to deliver to the appropriate location.
So what drives costs in warehousing and fulfilment?
1. Volume
How do we measure against the competition? As a specialist in marketing and collateral fulfilment services, we position ourselves as mid-range in terms of pricing. Should cost savings be a priority, consider large-scale fulfilment houses focused on platforms like Shopify or Amazon, though they often demand higher minimum spending levels of £1,000 per month.
The large fulfilment house are highly automated hence reduced costs, however for the specialist area of printed collateral and promotional goods we offer not only technology but a more personal service – our staff will get to understand your business and thus reduce picking errors. Stories abound of clients ordering for example, what they thought was 100 leaflets only to receive 100 boxes of leaflets! – an electronic system is all very well until it goes wrong
2. Systems
Included in the standard £200 monthly fee is access to our PDI web system, allowing catalogue access, ordering, and dispatch tracking.
3. Numbers of warehouses
Given the issues since Brexit it may be appropriate to store merchandise and events materials in the EU as well. This requires two stock systems and integration between them. PDI uses a satellite warehouse in the Netherlands. Whilst this may add to the fixed costs it can significantly reduce the timescales and customs issues of cross border shipments. This is particularly relevant for events with no flexibility on the delivery date.
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For clients in the promotional goods market, we offer an enhanced system specifically designed for its unique needs. This advanced system enables real-time stock tracking, order restrictions, automated reorder triggers, and order approval workflows. Additionally, it supports event-specific logistics, providing options for returns and special pickups.
Setting up this robust system involves a one-time cost of approximately £1,500, with ongoing management fees increasing to around £500 monthly. We recommend a demonstration to fully appreciate its benefits.
We hope this breakdown provides clarity on fulfilment costs. If you still find this information overwhelming, don't worry. We’d be happy to offer personalized guidance. Simply reach out to us at enquiries@pdi.co.uk for a detailed, pressure-free quote. Let's have a conversation to better understand your needs and tailor our services to suit them.
Thank you for considering us in your fulfilment journey!
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AUTHOR
DAVID PLATT – BA, BSC, MBA Dip M – David has run a promotional products business for over 25 years and has seen up close the successful and not so successful merchandise campaigns, storage and fulfilment. Experience and academic research gives an insight into the way the industry can provide value.