What about contracts and risks?
Let's be direct: no one likes surprises in the small print. Yet too many ecommerce businesses sign fulfilment contracts without examining the details, only to discover hidden fees months later. By then, you're locked in, frustrated, and watching your margins shrink.
Before you outsource, ask tough questions about contracts and costs. Transparency isn't just nice—it's essential.
The True Cost of Fulfilment
Most providers will tell you the basics: storage fees, pick & pack charges, and shipping costs. But that's rarely the whole story.
Watch for these common hidden extras:
- Minimum order volumes. Some providers require a set number of orders each month—even if you don't reach it. For growing or seasonal businesses, this hurts.
- Peak surcharges. Extra fees during busy periods like Black Friday or Christmas.
- Storage penalties. If your stock stays longer than expected, you may face long-term storage charges.
- Packaging add-ons. Standard boxes may be included, but branded packaging or inserts often cost extra.
- Account management fees. Some partners charge for a dedicated support contact.
None of these are necessarily bad—but they must be clear upfront.
Contract Clauses to Look Out For
- Length of contract. Are you locked in for a year, or can you exit with 30–90 days' notice? Flexibility matters when your growth path changes.
- Fee escalation. How often do they review prices? Are increases tied to inflation and carrier rates, or discretionary?
- Liability for errors. If they mis-pick an order, who pays for the replacement and shipping?
- Shrinkage allowance. Many warehouses include a percentage of "acceptable" stock loss. Check that number—you don't want to fund their mistakes.
- Service level guarantees. If they promise 99% accuracy or next-day dispatch, what happens when they miss it?
The Cost of Not Asking
We have seen too many businesses blindsided by hidden fees. One fashion brand thought they'd found a cheap fulfilment provider. Three months in, they realised they were paying:
- Peak surcharges in November and December.
- Minimum monthly order charges during quiet months.
- Extra fees for branded packaging.
Their actual costs were 35% higher than expected—and they were locked into a 12-month contract. It took a year to exit and move to a more transparent partner.
The Better Way
We have also seen providers who build trust by being completely transparent. They share the full rate card, explain how and when prices may change, and give you flexibility to scale up or down. Those are the partners worth keeping.
Questions to Ask Your Provider
- What are your minimum order requirements?
- Do you charge extra during peak season?
- How often do your fees increase, and why?
- Are there costs for branded packaging or inserts?
- What's your policy on errors, shrinkage, or lost stock?
- How long is the contract, and what's the exit notice?
Final Thought
Contracts and fees shouldn't feel like a trap. A transparent partner makes costs easy to understand, explains where extras apply, and gives you confidence that surprises won't eat your margins.
Before you sign anything, scrutinise the small print. In fulfilment, true partnership is built not on promises—but on trust, transparency, and honest contracts.
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