How Profitable Is A Fulfillment Business? (Updated for 2024)
So you want to start a fulfillment business?
And the first question that came to your mind was, “well, are fulfillment businesses actually profitable?”
With a market size of $2.7B - there’s plenty of business to go around.
Especially considering:
- You could start a fulfillment business with as low as $1,000
- Based on our data, fulfillment businesses generate an average of $67M per year
There’s money to be made. Don’t worry.
But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a fulfillment business.
Let’s dive in!
Is a fulfillment business profitable?
Yes, a fulfillment business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.
For instance, since average revenue is $67M per year with an estimated gross margin of 83%, you could expect to recover your investment within 12 months or even less.
But of course, it all comes down to how much you earn compared to the potential revenues of your fulfillment business.
To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.
Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your fulfillment business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.
Is a fulfillment business worth it?
If you’re wondering if a fulfillment business is worth it, the answer is a big YES. With fulfillment businesses, you have the potential to earn $67M per year (this is based on data reported by real founders).
Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.
With a market size of $2.7B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.
Of course, you must learn and understand every aspect of running a fulfillment business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.
You might want to consider reading more specifics about successful fulfillment businesses case studies.
Examples Of Profitable Fulfillment Businesses
Here are a few examples of profitable fulfillment businesses, and a few more details about them:
1. ShipMonk ($300M/year)
Jan Bednar, the CEO and founder of ShipMonk, came up with the idea for his business when he realized the demand for American products from friends and family overseas. He started a package forwarding company called BedaBox, which eventually expanded into order fulfillment after he saw the potential and the need for improvements in the industry. With a focus on technology and automation, Bednar rebranded the company as ShipMonk, revolutionizing the fulfillment industry.
Is it profitable? Yes
How much money it makes: $300M/year
ShipMonk, a technology-driven fulfillment center, went from $130K in revenue in 2014 to nearly $30M in 2018 and was named America's Fastest Growing Fulfillment Center, with projected revenue of $60M for 2019.
2. OTW Shipping ($4.8M/year)
Nick and Parker, the co-founders of OTW Shipping, started their business in 2020 with a mission to provide eCommerce brands with top-notch fulfillment services. Despite their lack of experience in supply chain or eCommerce, they recognized the potential in the market and quickly scaled their business. In their first 12 months, they achieved $1M in revenue, shipping over 120,000 packages. With plans to triple their numbers in the next year and moving into a larger space, OTW Shipping is poised for continued growth and success.
Is it profitable? Yes
How much money it makes: $4.8M/year
How much did it cost to start: $15K
OTW Shipping co-founders Nick and Parker hit $1M in revenue in their first year of operations, providing eCommerce brands with best-in-class fulfillment and shipping out over 120,000 packages, with plans to triple that number in the next 12 months.
Learn more about starting a fulfillment business:
Where to start?
-> Fulfillment business plan
-> How to finance a fulfillment business?
-> How much does it cost to start a fulfillment business?
-> Pros and cons of a fulfillment business
Need inspiration?
-> Other fulfillment business success stories
-> Marketing ideas for a fulfillment business
-> Fulfillment business slogans
-> Fulfillment business names
Other resources
How much can you make with a fulfillment business?
With a fulfillment business, you can make an average of $67M revenue per year (based on data reported by real businesses).
You can start with an initial investment as low as $1,000. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 12 months.
How much does a fulfillment business make a week?
Based on our data, average weekly revenue for a fulfillment business ranges around $1.4M. As such, you could see monthly revenues of $5.59M.
To know if your fulfillment business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.
Learning your weekly profit can also show whether you're hitting your target goal for your fulfillment business.
How much do fulfillment businesses owners make?
The income of a fulfillment business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.
But to give you some idea, the weekly revenue of an established fulfillment business is about $1.4M. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.
While the potential for earning a good income as a fulfillment business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.
Fulfillment Business Profit Margins
Generally speaking, a fulfillment business can expect profit margin of around 83%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a fulfillment business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.
However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, fulfillment business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, fulfillment business owners can ensure long-term sustainability and profitability for their business.
Fulfillment business owner salary
The salary of a fulfillment business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established fulfillment business, in a prime position, might see an average weekly salary around the ballpark of $1.16M.
But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.
Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.
Conclusion
In a nutshell, a fulfillment business is quite promising if you plan on starting such. With a market size of $2.7B, you can enjoy a potential revenue of around $67M per year with a gross margin of 83%.
Considering this information, you can enjoy a return of investment within 12 months, especially if you have a monthly profit of $4.64M. Overall, the success of your fulfillment business also depends on your effort and knowledge about it. If you persevere with these things, you can ensure that this fulfillment business is profitable.
Make sure you have a proper fulfillment business plan and know how to get clients for your fulfillment business.
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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