Have you ever reconciled a bank statement and could not get it to balance just because of a few dollars being off? Frustrating to say the least. Even worse, have you ever spent hours reviewing a vendor's invoice that was higher than expected and could not figure out why because it was overly complicated and lengthy? Infuriating and a waste of time!
Well if you have, then you understand why Pet Industry Warehouse (PIW) created the industry's only flat fee model. It's simple and you know what to expect. No more surprises or wasted time trying to figure out invoices.....just easy.
The warehouse and logistics industry (3PL) is plum full of companies and all of them utilize what is coined as a "pay per touch" pricing model. Sounds kind of good at first right? You only pay for exactly those services and supplies actually performed or used. And, most clients of a 3PL have a natural inclination to think that A) providers error on the side of clients' benefit when invoicing and B) clients can keep a tight lid on the process resulting in great savings! Now interestingly, on the other side of that equation, the warehouse provider is usually thinking they have a million fantastic little opportunities to invoice and invoice and invoice their clients.
If this sounds like competing goals....you would be correct. Right from the start, this pay per touch pricing model sets up the provider and the client as adversaries. At Pet Industry Warehouse we insist on starting out as a partner, a resource to help our clients. You work hard and when your business grows and more sales flow in, the last thing that should immediately mean is receiving a message from your warehouse provider saying "pay me more!"
Most of our clients, upon learning of our S1ngle pricing, quickly react by saying our model sounds great but then ask if they may sometimes be overpaying? Depending on your perspective, the answer is either no.....or no. Compared to self-warehousing the savings is tremendous. Compared to other 3PL's pricing our savings is good but our overall value is huge. Below is a typical list of "pay per touch" items that other 3PL's charge:
Monthly per pallet storage (most 3PL's unrealistically cap the height at 56" then charge a premium).
Per pallet receiving fee (and/or per package receiving fee) for anything that crosses their dock.
Receiving labor charges when pallets are mixed SKUs or do not arrive with obvious contents.
Trailer or container unloading fees.
Outbound per pallet fee.
Base fee per order (often called a "first item picked" fee).
Each additional line item picking fee per line per order.
Returns fee.
Cost of the physical pallet for orders built (usually a fee versus actual cost).
Cost of pallet wrap for orders built (usually a fee versus actual cost).
BOL (bill of lading) charge for outbound pallet orders.
IT or "technology" fee, usually per user to login to the 3PL's system.
General labor. Industry standard is $40 per hour billed in 15 minute increments.
Cycle count fees.
Etc....
There are at least 14 fees noted above; let's think about the mathematics of that. With an average of 21 working days per month and a typical small client having an average of 14.33 touchpoints per day, a small client of a 3PL could expect an invoice each month consisting of 624 lines (considering most touchpoints involve multiple fees). 624! And, that is not even including reconciling freight charges.
When thousands of invoice lines are present, the 3PL pay per touch model has historically demonstrated that in practice, costs have a tendency to grow regardless of good intentions in the beginning. Not to mention it strips out any economy of scale benefits increased sales brings for the client.
Again, pay per touch does have a certain allure on paper. But in practice, the clear trend is that a small brand, for example, would incur (on average) a $7,500 per month cost to self-warehouse, a $4,000 cost to partner with a 3PL and $3,400 cost to partner with Pet Industry Warehouse; freight costs excluded from all. Most 3PL's offer some discount scheme for freight and of course having your own account would be fine but may be difficult to acquire similar discounts due to the combined volume of a 3PL. Pet Industry Warehouse simply passes freight costs through.
One additional distinction about Pet Industry Warehouse is our unique Zero Short Guarantee. Simply put, if your customer doesn't receive 100% of their order....we'll buy it! Check it out here. Other 3PL's simply push their problems into the freight carriers' claim process which is notoriously a black hole. For even the most scrupulous analyst, this makes Pet Industry Warehouse a very easy choice.
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