Guidelines for Determining and Overseeing Shipping Charges
Streamlining Order Handling Fees in Apparel Businesses
Managing order handling fees is crucial for apparel businesses to maintain profitability while ensuring smooth fulfillment operations. Here are some best practices to help you accurately calculate and manage these fees.
Break down handling fees into key components
Handling fees typically cover picking items, moving them to packing, basic packaging materials, labeling, and sometimes quality control or kitting (assembling product bundles). Extra charges often apply for special handling of bulky, fragile, or heavy items, as well as additional labor required for multi-unit orders or customized packaging.
Choose an appropriate fee structure
Common fee structures include per order (flat fee regardless of items), per unit/item, per SKU (unique product), or tiered pricing that offers discounts based on volume. Hybrid models combining these approaches enable fine-tuning fees to match order complexity and volume. Be careful to watch for minimum order surcharges or fees that penalize low order volumes.
Calculate total fulfillment costs accurately
Add all fulfillment-related expenses such as warehousing storage, picking, packing, shipping, returns processing, and any additional handling fees. Divide by the total number of orders to understand the average fulfillment cost per order. For apparel, these costs can range from $3 to $15 per order depending on business specifics.
Optimize operations to reduce fees
Use kitting/pre-assembled bundles to reduce handling complexity and costs. Control packaging size and weight to avoid dimensional weight surcharges from carriers, which can increase shipping costs significantly. Consider package consolidation for multi-item orders to reduce per-item shipping fees while ensuring packages meet carrier size and weight guidelines.
Plan for seasonal and volume fluctuations
Seasonality can cause storage and handling fees to spike due to increased volume or long-term storage requirements. Discuss with 3PLs or fulfillment partners about peak season rates and surcharges for minimum volume or long-term storage.
Leverage technology and software
Use software tools to calculate and predict shipping and handling costs accurately per product and order. Properly track inventory turnover and average inventory levels to avoid unexpected storage surcharges.
Consider customer experience factors
Offer predictable flat-rate shipping or order handling fees to simplify customer pricing perception. Explore local delivery or in-store pickup options to reduce handling and shipping overhead for nearby customers.
Educate team members
Educate team members about the importance of accurate handling fee management and its impact on the broader business objectives.
Analyze and Reduce Return Rates
Analyze return reasons, such as improving product descriptions, quality control, or customer service, to lower return rates and improve overall efficiency.
Focus on Packaging Efficiency
Use cost-effective, protective materials, standardize box sizes, and minimize waste to reduce costs and environmental impact, while also improving the customer unboxing experience.
Communicate the Value of Handling Fees
Communicate the value of handling fees by explaining what they fund, such as exceptional packaging, fast processing times, or superior customer service. Shift the narrative from cost to value and reinforce the benefits of choosing your brand.
Benchmark handling fees against industry standards
Benchmark handling fees against industry standards to position them competitively, communicating added value or efficiencies that justify any higher costs if necessary.
By applying these practices, apparel businesses can accurately calculate and manage order handling fees, maintaining profitability while ensuring smooth fulfillment operations tailored to their specific product and order profiles.
References:
[1] Red Stag Fulfillment, 3PL Pricing Guide 2025 [2] OpenSend, Fulfillment Cost per Order Statistics for eCommerce, July 2025 [3] Shopify, Cheapest Way to Ship a Package, July 2025 [4] Red Stag Fulfillment, Small Business Order Fulfillment Guide, August 2025
- To maintain profitability and smooth operations in the apparel business, it's essential to leverage technology for accurate predictions of shipping and handling costs associated with technology-driven business operations.
- In the realm of business finance, optimizing order handling fees by choosing an appropriate fee structure, such as hybrid models or tiered pricing, can help match fees to order complexity and volume, thus reducing unnecessary costs.
