Case Study Finding the hidden costs reducing ecommerce profit
Updated: 25 minutes ago
Unlocking Margin Through Fulfilment Optimisation
Written by Abbie Evans, Founder and Principal, Arqet Consulting
Abbie brings more than 25 years of experience across ecommerce, retail leadership, finance, merchandise, operations and building her own online retail business.
A growing ecommerce business was achieving more sales while experiencing increasing pressure on margin. Fulfilment and shipping costs had grown over time, but the business had limited visibility of the true cost to serve different order types.
The Challenge
The 3PL relationship was being assessed through headline charges rather than the combined cost of warehousing, pick and pack, packaging, carrier selection and order behaviour.
Without a complete cost-to-serve view, higher order volume could increase operational activity without producing the expected improvement in profit.
What Arqet reviewed
Analysed warehousing, pick-and-pack, packaging and shipping costs.
Compared fixed and variable components within the 3PL pricing structure.
Reviewed order profiles, units per order, parcel characteristics and carrier mix.
Considered how the fulfilment model aligned with current volume and future growth.
What the evidence showed
The review identified avoidable cost and areas where the operating model no longer matched the commercial needs of the business. The issue was not simply whether the 3PL was expensive; it was how pricing, order behaviour and fulfilment decisions combined.
The strategic output
A clearer cost-to-serve view by relevant order and product characteristics.
Identified negotiation and operating opportunities.
Recommendations covering packaging, carrier mix and fulfilment structure.
A scalable framework for reviewing fulfilment as the business grows.
Commercial outcome
The business gained clear opportunities to reduce fulfilment cost, protect margin and improve the scalability of its operating model without relying on retail price increases.
Next step
If revenue is growing but margin is under pressure, an ecommerce profitability review can help identify where value is being lost.
