Fulfillment Cost Reduction

When Operational Costs Start Quietly Eating Your Margin

Most brands feel the pressure of fulfillment costs long before they know where the money is actually going. You see shipping bills rise faster than sales. You notice labor hours growing out of proportion to order volume. You watch packaging expenses creep upward. None of these problems scream for attention individually, but together they drag margins down. Fulfillment cost reduction starts as a financial question and quickly becomes an operational one. You cannot cut what you do not understand, and you cannot understand what you do not measure.

Brands often begin cost conversations in the wrong place. They start by negotiating with carriers or switching to cheaper packaging. Those tactics help, but they only scratch the surface. The biggest savings hide in process design: how inventory moves, how workers pick, how data flows, how automation shortens steps, and how accurate the WMS is. When you improve those systems, costs fall naturally because errors, rework, and wasted effort fall with them.

Understanding the Real Drivers of Fulfillment Cost

Many leaders assume that shipping rates are their largest cost driver. Shipping matters, but the hidden costs inside the warehouse often do more damage. Walking inefficiencies increase labor. Poor slotting raises handling time. Inaccurate receiving creates downstream chaos. Every unnecessary touchpoint burns money. Without operational clarity, brands throw discounts and promotions on top of an already expensive process, hoping volume will fix the math. It never does.

Maureen Milligan, Director of Operations and Projects at G10, says she sees the root cause often. She explains that "most of the customers who come to us from another 3PL, their challenges have always been access to their data, order accuracy and efficiency, and meeting the committed requirements." Each of those challenges translates directly into cost. The less accurate your data, the more labor you burn. The more errors you make, the more replacements you ship. The more missed commitments you have, the more chargebacks you pay.

Scanning as the Simplest Cost-Control Tool

It sounds almost too simple: scan everything. But accurate scanning eliminates hours of wasted labor. If workers rely on memory or paper notes, they create gaps that someone else has to reconcile later. Those reconciliations cost real money. Connor Perkins, Director of Fulfillment at G10, puts it plainly: "you want everything to be scanned in the warehouse, nothing done on paper." When every movement is recorded, the WMS becomes a living cost map. You see where slowdowns occur, where inventory stalls, and where workers spend too much time hunting for product.

Warehouse Layout and Slotting Reduce Labor Waste

Labor is almost always the most expensive part of fulfillment. You cannot reduce labor sustainably by pushing people harder. You reduce it by designing smarter paths. Slotting fast movers near pack stations cuts walking. Separating similar SKUs prevents mispicks. Wide aisles reduce congestion. Clear labels lower the mental load. Automation amplifies those benefits. Holly Woods, Director of Operations at G10, explains that "the Zebra robots are allowing efficiency with pick paths. They are lowering fatigue on employees." Lower fatigue means faster work and fewer errors. Fewer errors mean fewer replacements and reships.

Reducing Errors Reduces Cost Every Time

Mistakes are not just frustrating. They are expensive. A mispick costs labor to fix, a new shipment to replace, and goodwill with the customer. A mislabeled pallet for a retailer costs chargebacks. A missing item in a subscription box costs an emergency resend. Order accuracy improvement is one of the most powerful tools for fulfillment cost reduction because it eliminates entire categories of avoidable spend.

Shipping Optimization Begins With Data

Shipping cost reduction is not simply a matter of negotiating cheaper rates. It begins by routing orders from the right warehouse, using the right packaging, and selecting the right service level. A multi-node network helps here. G10 operates in South Carolina, Wisconsin, Nevada, Arizona, and Texas, which shrinks zones and reduces transit times. That geography becomes real savings when the WMS routes orders automatically based on proximity and carrier performance.

Connor notes that G10 clients "can see their daily orders, they can see KPIs, and they can see historical transactions." That visibility includes shipping trends by region. When you see which lanes underperform or overcharge, you can shift services without guessing. Shipping becomes a data problem, not a habit.

Packaging Optimization as a Strategic Lever

Packaging looks like a small cost until it is not. Oversized boxes incur dimensional fees. Weak boxes cause damage. Extra filler adds cost and time. Smart packaging reduces dimensional weight, protects the product, and speeds packing. G10’s team examines packaging as part of the operational system, not as a disconnected task. When packaging fits product velocity and carrier reality, costs fall across the board.

Reverse Logistics Is a Cost Center You Can Shrink

Returns are expensive, but they do not have to be chaotic. With scanning, defined disposition rules, and clear workflows, reverse logistics becomes structured. Joel Malmquist, VP of Customer Experience at G10, explains that returns decisions follow a simple logic: "it looks good, we are going to restock this, or it looks damaged, we are going to either dispose of it or put it in a quarantine area." That structure reduces delay, shortens refund cycles, and puts salvageable inventory back into stock faster.

Peak Season Cost Control Depends on Preparation

Peak season has a way of magnifying every weak process. If your operation is barely stable in July, it will collapse in December. That collapse is expensive. Emergency labor, weekend shifts, and expedited freight eat margin. Holly describes G10’s preparation: "we start planning peak times months ahead of time. We run forecast models, staffing models, and we audit inventory." That discipline prevents panic, which prevents unnecessary spending.

Multi-Channel Fulfillment Without Multi-Channel Waste

Brands that grow across channels often build redundant processes. They separate DTC from B2B, marketplace from wholesale, and subscription from retail. That separation multiplies labor and packaging complexity. G10 avoids this by running all channels from the same operational backbone. Joel explains that Shopify orders flow directly into G10 while B2B shipments also move into "places like Target and Walmart." When one engine runs all channels, you eliminate redundant steps and reduce cost through consistency.

Technology Turns Insights Into Savings

A modern WMS does more than track inventory. It reveals waste. It shows which SKUs move slow, which orders require the most touches, which packers need support, and which shipping decisions should change. Bryan Wright, CTO and COO of G10, describes how ChannelPoint tracks everything: "it shows the product landed on the dock at 8 o'clock. At 8:10, John picked it up and took it to location XYZ." That level of traceability shows exactly where cost is hiding.

Fulfillment Cost Reduction as a Growth Strategy

Cutting cost is not only about saving money. It is about unlocking growth. When fulfillment becomes predictable, accurate, and efficient, brands gain confidence to scale marketing, expand catalogs, and enter new channels. The less money you waste inside each order, the more fuel you have to grow the business.

Mark Becker, CEO and founder of G10, captures the strategy when he says that "we are going to grow with them." Fulfillment cost reduction is one of the ways that promise becomes tangible. Lower operational waste creates room for investment, experimentation, and expansion. If your costs feel out of control or you suspect your warehouse is doing more work than it should, it may be time to rebuild the system with a 3PL that treats efficiency as a daily discipline.