All companies involved in shipping goods come into contact with the logistics sector. It’s a specific sector with many pitfalls for those not familiar with it. We keep repeating: focus on your core competencies! This means outsourcing certain tasks to quality partners. There are several tasks you can outsource, including logistics. Not only will you work with a specialized partner that improves your service, but you will also save costs. What costs? Many companies still struggle with mapping internal logistics costs. We can map this for you!
Fixed Costs
Fixed costs are costs independent of sales or production processes. These are costs you incur regardless of how much you sell or produce. In this case, we’re talking only about fixed costs that can be directly attributed to the logistics process. Below are the main fixed costs:
- Purchase or rental of warehouse
- Computers, printers, scanners, and other technology
- Warehouse setup (shelving)
- Energy costs
- Insurance
- Inventory management system
These are all costs necessary for storing inventory and processing orders. What many businesses overlook is that there are also costs related to maintenance and/or renewal. When you add up all the fixed costs, you may face a negative surprise, as logistics fixed costs are often much higher than expected.
Variable Costs
Variable costs are costs that change based on the increase or decrease in inventory and shipments, among other things. In this case, we’re talking only about variable costs that can be directly attributed to the logistics process. These include:
- Packaging materials
- Transport costs
- Warehouse staff
Why Can Fulfillment Be Interesting for Your Logistics?
Internal logistics costs can add up quickly. When costs become too high, you are forced to find a solution to remain profitable. This solution doesn’t always have to be drastic! Partnering with a fulfillment provider can significantly reduce logistics costs. Why? There are several reasons!
- You only pay for the warehouse space your goods actually occupy. If you buy or rent a warehouse yourself, there’s a chance that not all of the space will be used, meaning you’re paying for square meters that are unoccupied.
- You benefit from economies of scale! This is one of the most important advantages of a fulfillment partner. You can benefit from better prices on packaging materials and transport costs because the fulfillment partner buys in larger quantities or can negotiate better rates.
- You don’t need to invest in computers, printers, scanners, or other technologies to make the warehouse run efficiently.
- Since you don’t own a warehouse, you don’t pay energy costs.
- You don’t have to insure the warehouse.
- You don’t need to invest in warehouse setup (shelving).
In short, an attractive list of benefits. Outsourcing logistics can save significant costs. You’ll notice that by outsourcing logistics, some of the fixed costs become variable. This has the advantage that you’ll only pay when you generate actual sales. Additionally, your business will become more professional. A fulfillment partner specializes in packing and shipping orders. The error margin will drop significantly, which will give consumers more trust in your business.
Webship and Logistics!
Are your internal logistics costs getting too high, and are you convinced of the benefits of fulfillment? Contact Webship at hallo@webship.be. Webship is a thoughtful logistics partner. Curious about the cost of fulfillment? Calculate your all-in fulfillment price using our cost calculator.
