Fulfillment Cost as Percent of Revenue

Expressing fulfillment as a percent of revenue lets finance compare logistics spend with marketing and COGS. A rising percent can come from lower AOV even when cost per order is flat.

Fulfillment cost % = (storage + receiving + pick and pack + packaging) ÷ net revenue × 100

Should fulfillment cost as a percent of revenue include shipping?

Definitions vary, so state yours. Many brands report fulfillment (warehouse) cost and shipping (postage) cost as separate percentages, plus a combined total, so changes in carrier rates do not hide warehouse performance.

• Shipping Cost as Percent of RevenueThe share of net revenue spent on outbound postage to customers, before or after subtracting shipping fees collected from customers.
• Cost per OrderThe total cost to fulfill and ship one customer order.
• Contribution MarginRevenue minus all variable costs of a sale, such as product cost, shipping, fulfillment, payment processing, and often marketing, showing what each order contributes toward fixed costs and profit.
• Average Order ValueThe average amount of revenue per customer order over a period, calculated by dividing total order revenue by the number of orders.