Fulfillment costs – how are they calculated?

We use the ABC cost calculation method to calculate our fulfillment costs. ABC stands for “Activity-Based Costing”; in other words, costs based on activities: we carry out various activities.

We have identified the following activities:

• Inbound: receipt
• Outbound: results
• Returns: return processing – essentially a “reverse”stock putaway;

Storage (warehousing & inventory management) is a static, support function. It is not an operational activity. The same applies to Shipping (distribution). We do not carry out distribution activities ourselves; we work with partners who handle delivery to business customers or consumers.

We then calculate the fulfillment costs by activity and facility, which provides a clear overview of the total fulfillment costs. We then allocate these costs to one of the cost drivers—primarily “orders”—so you can see exactly what share of the price structure of your products is made up of logistics costs.

Every business case is unique and involves variable factors that ultimately determine fulfillment costs. For this reason, we do not provide indicative rates; instead, we take a customized approach and conduct a tailored analysis for each business case.