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Standard Steve
Steve sells 1,500 units from his website per month. His product sits in the warehouse on a single 32 cubic foot rack. For the first three months he pays $10 per month for storage and $1.50 per order plus $.10 per item or $1.60 per shipment. He ships USPS Priority mail at a cost of $4.80. His total cost is $110 per month plus $6 per order. At Pick Pack Steve pays nothing for using our stock shipping supplies and boxes. If he did it himself he would have to still pay $4.80 per order but he would also have to buy and have on hand boxes and shipping supplies. He would have to have a place to store the merchandise and he or someone he hired would have to pack and ship the boxes. The $1.60 per order to Pick Pack can be passed on to the customer through the shipping and handling fee or as a cost of good sold.
New Start-Up Jane
Jane is a new internet merchant and is not sure how many units she will sell. She also wants to outsource her fulfillment work so she can concentrate on marketing her new site. She decides to ship product to Pick Pack that will take up one 32 cubic foot rack. She pays only $110 per month. She is not yet large enough to integrate her shopping cart with Pick Packs warehouse computer system, so she sends her orders by email. Total cost $110 per month plus $1.60 per item shipped ($1.50 + $.10) plus postage. Eventually she will need more space, but hopes by then to be selling more product.
Big Jim
Jim ships 1000 large, expensive items a month (average cost $200 per item). Because of the size of the product, he will need 4 racks (32 cubic feet each) at $10 per rack. Also he will need to ship his product in a box that is larger than our largest stock box. We procure the necessary box (assume it costs $0.70). His cost is $40 for storage and $1.50 per order plus $0.10 per item plus $0.70 for the larger box plus $0.75 large item charge or $3.05 per order shipped plus postage.
Seasonal Susan
Susan focuses her sales effort around the Christmas holiday season. From January to October she sells about 50 units per month and only needs one rack. During the holidays (November and December) she sells 10,000 units per month and needs 10 racks. From January to October, she pays $100 per month plus $10 for the rack, plus $1.50 + $.10 or $1.60 per order plus postage. For November and December she will pay $100 plus 10 racks at $10 per rack or $100. Her packing and shipping will still cost $1.60 plus postage per order.
Assembly Alex
Alex sells sports equipment, specifically baseballs, bats and gloves. He has decided to also offer a package of 2 balls a bat and a glove. He sells 200 of such kits per month. If he were to keep them separate before shipment, he would be charged $1.50 per order plus two balls ($.10 + $.10) plus one glove ($.10) plus one bat ($.10) or $1.90 per order plus postage. For 200 orders he will pay $480 per month plus postage for each order (not including storage cost). Alex decides instead to create a master SKU. It takes Pick Pack 1 hour to assemble the necessary 200 kits at an assembly rate of $40 per hour. Alex pays $40 per month for the assembly plus $1.50 + $.10 per item. His total cost to ship 200 items is now $420 plus postage (again excluding storage which would not change). |
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