There are many great fulfillment centers. Shipbob seems perfect to a business owner who is shopping 3PLs for the first time. They’ve got energetic sales reps, a flashy website, and their rates seem almost too good to be true. I mean free pick & pack? That’s awesome! However, like most things that seem too good to be true - Shipbob’s pricing and service is not what it seems.
In this example, if the company used another 3PL, OTW Shipping, they would have saved $3,863 on 300 orders. Shipbob costs $2.82 more per domestic order and $32.99 more per international order. That's an average savings of $12.88 per order with OTW.
Want to understand where your costs are coming from and how Shipbob compares?
Let’s break down all the costs of Shipbob’s service and see how it stands up to OTW Shipping. For this scenario, let’s use John Smith’s phone case company, “Screen-Saver”:
Average Monthly Order Quantity: 300 (200 to the US, 100 to the UK)
Average Units Per Order: 1
Product Dimensions: 6”x3”x1” (18 cubic inches)
Product Weight: 3 ounces with packaging
# of SKUs: 3
Storage Needs: 9 cubic ft (3 ft per SKU), 900 units
Fulfillment Costs: Shipbob vs OTW Shipping
Usually these are fixed charges for the time spent to integrate your stores with a 3PL’s software. These fees can hurt a small business that doesn’t need expenses before they ever ship a package.
Shipbob: Varies up to $1,000
OTW Shipping: $0
Also known as maintenance fees, account fees are ongoing fees for the cost of keeping your account active and maintained on the 3PL’s software. You will not see many 3PLs charging for this, although many will roll it up into customer service fees.
OTW Shipping: $0
Receiving fees involve verifying inventory counts and conditions as well as properly processing and storing the goods. Receiving fees are crucial to a smooth operation. Faulty receiving can result in miscounts, shrinkage (lost inventory), and damaged goods which means higher costs and bad reviews. Hourly rates are concerning because this gives the 3PL the freedom to spend all day doing something that should take a few hours. You need a 3PL you can trust with your product. OTW Shipping uses only transparent per unit rates so there’s no guesswork or leaps of faith.
Shipbob: $25 for the first 2 hours. $35/man/hr after that. This sounds like a good deal, but hear what customers have to say about it: “they charge over $700 to receive inventory“.
+ 900 units at 100 units per hour: $270
OTW Shipping: $0.10/unit.
+ 900 units at 100 units per hour: $90
Storage fees matter - especially if you have slow-moving inventory. Some 3PLs will charge you long-term storage rates if they aren’t out quickly. A good 3PL won’t. These rates are monthly charges and are usually averaged throughout the month. It’s important to note that SKUs must be separated. Our flexible storage sizing makes sure you don’t get charged for empty space.
Shipbob: $40/pallet (60cubic ft), $10/shelf (7.1cubic ft), $5/bin (.77 cubic ft)
+ 3 shelves (1 shelf per SKU) at $10 per shelf: $30
OTW Shipping: $0.50/cubic ft
+ 9 ft (3ft per SKU) at $0.50 per cubic ft: $4.50
Pick & Pack Fees
This is where Shipbob really tries to pull you in. Free pick & pack sounds amazing. What’s important to know, is that the costs you are saving in pick & pack fees are rolled up elsewhere. In Shipbob’s case, this shows up in their shipping costs which they are reluctant to give. Most 3PLs pick & pack is volume based. OTW Shipping’s fees get lower as your volume increases, rewarding you for shipping more.
Shipbob: $0 for the first 5 picks. $0.20 per additional unit after that.
+ 1 item order at 300 orders per month: $0
OTW Shipping: $1.00-$2.25 for the first pick. $0.10-$0.50 per additional unit after that.
+ 1 item order at 300 orders per month: $675
You have two options with packaging fees. They are either wrapped into other fees, or they are charged separately. It is much easier to mark up packaging if the cost is wrapped into another charge.
Shipbob: $0 for standard packaging which includes limited box sizes that can result in larger, more expensive packaging than you need. See what has happened to others before: “We would randomly pay 30$ for an expected shipment for a small item“.
+ 300 orders per month: $0
OTW Shipping: Varies. Can be custom ordered to fit your products at no extra cost. Usually between $0.10-$0.50 per order.
+ 300 orders per month @ $0.10 per order: $30
Remember that free pick & pack from before? You were probably wondering how they could offer that. Once you see what you get charged for shipping with Shipbob you’ll understand. However, Shipbob includes all their fees in one price to hide their huge margins, so for now let's ignore those.
Shipbob: Shipping fees included in final fulfillment cost.
+ 200 to the US at $2.78 per order: $556
+ 100 to the UK at $4.39 per order: $439
Customer Service Fees
When you’re using a fulfillment center, there are a lot of little things that may come up. You’ll be on the phone with your 3PL partner a lot, especially in the beginning. If you have an emergency, you don’t want to wait hours for a response. While Shipbob claims to have great responsiveness with their account managers, many have complained about response times in various Shipbob reviews. They often get pushed to the help center with no dedicated number to call where their cases get caught in limbo. OTW Shipping has a dedicated account manager who is accessible via a private social dashboard so you can get quicker responses and stay on top of your business.
OTW Shipping: $0
Obviously, minimizing returns is ideal, but what you do with returns is equally as important. Some 3PLs will simply throw away your items or charge you for this. Shipbob and OTW Shipping both charge $3.00 per order which involves the receipt, inspection, and either returning the item to their inventory, the supplier, or the garbage.
Shipbob: $3 per order
OTW Shipping: $3 per order
If you want to add marketing material such as a promo slip in to your package, expect a charge from most 3PLs as it adds another step that is different from general fulfillment.
Shipbob: Considered a unit, free for up to 5 units, $0.20 per unit after
OTW Shipping: $0.10 per order
Anytime you have product(s) that need to be assembled before being sent, this is referred to as kitting. This is common with subscription box fulfillment and many online sellers who combine items for package deals. Since kitting can vary, you'll likely need to get a custom quote from your 3PL. To estimate, time how long it takes to assemble your kit. Then, use an industry standard $30-50 per hour to calculate the cost per kit.
Shipbob: $0.40 per unit
OTW Shipping: Custom pricing based on kit.
Total Cost Per Order
While Shipbob specifies their prices individually, they are presented as one total fulfillment cost per order including shipping costs. Let's break down the total cost per order with every fee and see the difference.
To note, Shipbob does offer slightly cheaper, but much slower fulfillment options (does not include storage or receiving costs):
+ $5.48 for 4-7 day domestic shipping ($0.25 more per order)
+ $11.00 for 7-30 day international shipping ($4.16 more per order)
However, 87% of customers rate shipping speed as important when deciding to purchase a product online. John Smith's phone case is under 1 pound so First Class will deliver in 1-3 days and no one wants to wait 30 days for a shipment, so we went with those two rates.
As you can see, although Shipbob's fulfillment pricing looks great at first, shipping rates come back to bite you.
Using OTW Shipping would save you:
+ $2.82 per domestic order
+ $32.99 per international order
If John Smith used OTW Shipping, he would have SAVED $3,863 on only 300 ORDERS. That's an average savings of $12.88 PER ORDER.
So, if you're looking for order fulfillment services and you were previously considering Shipbob, please make sure to do your research and read reviews. You need a fulfillment partner you can trust to do a great job and be transparent with your rates. That's where OTW Shipping comes in.
If you're wondering how much OTW Shipping can save you, click here to see your rates!