eBay fulfillment costs can add up, especially when offering customers free shipping. That’s why merchants must be able to calculate the cost of their eBay fulfillment, in order to protect profit margins while remaining competitive.
This article will cover how to predict fulfillment costs for eBay, and different tactics to reduce those costs while maximizing shipping speeds.
The importance of calculating the cost of eBay fulfillment
Knowing how to calculate your eBay fulfillment costs is vital for four key reasons: pricing, achieving eBay Fast ‘N Free, staying competitive, and choosing the right fulfillment option.
1) Product pricing
Knowing the cost of fulfillment for eBay orders allows you to set product prices attractive to customers while generating enough profit margin for your business.
2) Fast ‘N Free
Calculating the costs of 2-day fulfillment for eBay enables you to find the best fulfillment company or shipping carrier for meeting eBay Fast ‘N Free eligibility requirements.
3) Competition
Having accurate shipping fees on eBay keeps your shipping services and costs competitive compared to other eBay sellers. When you offer fast and free delivery, it also gives you a competitive edge over competitors who don’t.
4) eBay fulfillment services
Calculating the cost of different eBay fulfillment services enables you to find the best eBay fulfillment option for your business. This can be in-house, or an outsourced fulfillment option like Deliverr.
How to calculate the cost of eBay fulfillment
There are a few major costs involved in fulfillment for eBay; storage, staffing, packaging, and shipping.
1. Storage costs
Calculating eBay storage costs
To calculate your eBay storage cost, add together all the fees of storing your eBay inventory.
If you practice in-house fulfillment, these costs include warehouse rent, product insurance, security fees, and heating and cooling bills.
Outsourced fulfillment services usually include this cost, and measure it based on how much space you take up in their warehouses.
Reducing eBay storage costs
You can reduce your eBay storage costs by:
- Using an outsourced fulfillment company: move from in-house to outsourced fulfillment to benefit from scalable pricing and pay only for the storage space you need.
- Practicing good inventory efficiency: optimize the amount of stock you hold vs. how quickly it sells to reduce the time inventory sits in your warehouse, allowing you to use smaller premises.
- Checking the terms and conditions of your fulfillment service: watch out for long-term storage fees and any hidden fees associated with storage.
Tip: Avoid reducing warehouse space or locations just to reduce costs. It’s important to have inventory distributed across the country to help achieve nationwide coverage for fast delivery speeds.
3. Fulfillment staffing costs
Calculating fulfillment staffing costs
To calculate your staffing costs, grab the total of all fees involved in employing permanent or temporary fulfillment staff.
For in-house fulfillment, this covers the daily rate, and any paid benefits of your fulfillment team, or the cost of your time spent fulfilling orders. You may have dedicated warehouse employees or a team member in charge of warehouse coordination.
If you outsource fulfillment, your provider typically takes care of staffing. For some 3PL models, there’s a chance you’ll pay staffing surcharges for busy seasons or overnight deliveries.
Reducing fulfillment staff costs
Staffing costs are expensive because you get what you pay for with employees; however, you can reduce the costs involved by:
- Using all-inclusive outsourced fulfillment: use an all-inclusive fulfillment service that includes staffing costs in their overall fee, such as Deliverr.
- Hiring temporary labor: supplement a skeleton workforce with temporary labor during peak periods to avoid paying for staff you don’t need during quieter seasons.
- Calculating your time: record how much time you spend fulfilling orders and figuring whether it’s more cost-effective to spend this time growing your business by outsourcing these tasks to employees or a fulfillment company.
3. Packaging costs
Calculating eBay packaging costs
To work out your eBay packaging costs, sum up the total cost of all the materials used to package your orders.
This fee is typically part of an outsourced fulfillment fee, but for in-house fulfillment, it covers boxes, envelopes, tape, inserts, and label printing.
Reducing eBay packaging costs
You can reduce eBay packaging costs without compromising the sturdiness of your packaging, using tactics such as:
- Unbranded boxes: use plain boxes for packaging your orders and reducing packaging costs while enhancing fulfillment efficiencies.
- Economies of scale: work with an outsourced eBay fulfillment service who has buying power that enables them to purchase bulk packaging at a lower price.
- Environmentally friendly practices: adopt a ‘less is more’ approach, using just enough packaging to deliver orders undamaged, but no more than necessary.
Tip: Deliverr’s all-inclusive fulfillment fee involves order management, packaging, shipping, and everything in between. We stick to standard unbranded packaging to increase speed and efficiency, helping us fulfill your orders in 2 days or less.
4. Shipping costs
Calculating eBay shipping costs
To price your eBay shipping costs, use a shipping calculator to input delivery information and get an accurate shipping estimate.
eBay has its own shipping calculator, or you can use the Deliverr fulfillment cost calculator to compare the costs of fulfilling eBay orders with different fulfillment providers.
Reducing eBay shipping costs
eBay shipping costs can quickly become your business’s highest cost, especially when aiming for eBay Fast ‘N Free inclusion. To meet these speeds in the most cost-effective way possible, try:
- Distributing stock: use a warehouse network to distribute inventory across the country, highlighting locations closer to your end customers. This will reduce the distance orders have to travel and allow you to use cheaper shipping methods.
- Minimizing packaging: package orders in boxes suited to your items, so you don’t pay for dimensional weight you’re not using.
- Following shipping label best practices: conduct shipping label best practices to reduce undelivered items, repackaged boxes, and other errors that cause extra fees and delays.
- Price-comparing outsourced fulfillment: investigate whether an outsourced fulfillment service can meet 2-day and next-day shipping speeds cheaper than your in-house processes.
eBay Fast ‘N Free is great for conversions, helping to boost your bottom line and drive more revenue. Although it requires fast and free delivery, you’ll see the benefits of more order volume. You can pair those benefits with a seamless order fulfillment service like Deliverr to get:
- An all-inclusive fulfillment fee that unlocks Fast ‘N Free tags for shoppers nationwide
- Higher conversion rate and visibility on eBay with fast and free delivery
- Simple fulfillment and storage pricing that allows you to predict your net revenue and price accurately
- Reliable fulfillment that helps you achieve high seller ratings and overall listing performance
Knowing how to calculate the cost of fulfillment for eBay orders isn’t just good business planning; it gives you all the information you need to find the best fulfillment service for your business and the most cost-effective way to increase your delivery speeds.
