Why are the increased numbers of DTC brands cutting fulfillment expenses using China-based 3PLs and how did one brand cut it by 40 percent? DTC brands are now experiencing growing cost pressures of warehousing fees (typically 20-50 dollars per pallet month in the US), labor scarcity pushing pick-and-pack rates 15-20 percent per year, packaging material costs, and fluctuating logistics costs due to carrier surcharges. The cost of local 3PLs in the US or Europe is also escalating because of increase in real estate, compliance regulation and unionized workforce; average per-order fulfillment is approaching 5-8 dollars, margins are falling to less than 20 percent in many. The Chinese 3PLs appear to be the intelligent choice, with less overheads, closer to production, hence restocks are quicker, and scaling up and down is easy, which allows brands to streamline on the international level. Here a skincare DTC company shifted its operations out of the US-based 3PL to BM Supply Chain in China, which took advantage of free warehouse space, automated warehouse picking, and improved shipping to reduce the overall cost by 40 percent in six months. With fulfillment shifting to a 3PL in China, DTC brands have the ability to cut down on storage, labor and shipping expenses, and in some cases, cut overall fulfillment expenses by 30-40 percent.
Brand Background
1. Industry & product category
The brand is in the skincare industry, and its products are clean and natural formulations such as serums, moisturizers, and masks- targeting millennial and Gen Z consumers who are concerned with sustainability and effectiveness. The category has 50+ SKUs and seasonal variants and bundles and requires strong customization and quality control to ensure trust.
2. Sales channels
Shopify is used to engage with customers directly through its DTC approach (60% of the revenue, focusing on branded experiences), Amazon to reach the widest audience (25% through FBM to manage fulfillment), and Tik Tok Shop to engage customers with impulse purchases (15% with the help of short-form content to make quick purchases).
3. Previous fulfillment model
The brand was using a 3PL in California which was based in the US and was operating its storage, picking and packing and local shipping services. Although it was convenient to the US customer, it was inflexible, only restricted to standard carriers, such as USPS and FedEx, with no scaling flexibility or cost-effective route possible internationally.
4. Key problems before switching
Low AOV products were cut off at high picking charges (1.50-2.50 per order) and margins, monthly warehousing rose to 3,000 and above with 200 pallets and inventory mismatch (delays) frustrating customers, logistics charges increased by 20 percent during peak seasons due to carrier charges, and viral TikTok spikes overloaded capacity and caused delays and stockouts- illustrating how DTC brands can reduce fulfillment cost becomes a survival requirement.
Cost Breakdown Before Switching to China 3PL
1. Storage fees
At the US warehouse, storage was costing an average of 25-45 each month per pallet, which was 2,500-4000 US dollars of the 100-150 pallets of the brand- there were no grace period and fixed leases.
2. Pick & pack fees
Base rates were priced to $1.20-2.00 per order and an extra 0.30-0.50 per extra item- amounting to 4,000-6,000 orders manually in a month, which was further compounded by manual labor inefficiencies.
3. Packaging costs
Custom boxes, inserts, and other branded materials are an additional expense of $0.80-1.50 per order, and the 3PL will impose set-up charges—to the point of $1,500-2,500 a month when kitting together bundles.
4. Domestic shipping cost
The average cost of USPS/FedEx was about $6-12 per domestic package, and it soared to between 8-15 during holidays, and this amounts to 10,000-15,000 every month, and there were no extensive services to international over $15-25.
5. Returns & rework cost
Return processing is $4-7 per run (inspection, repack, reship) and the return rate is 12-15 percent, which is an addition of $3000-5000 every month- sometimes because of the failure of the packaging or oversight of the quality checking and Ecommerce Fulfillment.
6. Errors & operational inefficiencies
Shipment of the wrong item (2-4% rate) and delays increased the refunding and the customer services (1,000-2,000) which implies that it is necessary to optimize the warehouse and shipping costs.
Why the Brand Decided to Move to a China-Based 3PL
1. Lower storage cost
BM Supply Chain provided 30 days of free warehousing, reduced the effective charges of $8-15 per pallet after the grace period- of 60-70% discount upfront and reduced cash flow on seasonal inventory.
2. Proximity to suppliers
The Guangdong pigments gave a restock of 3-7 days compared to 2-4 weeks of the US ports-necessary to the interest of how DTC brands lower the fulfillment cost by lowering holding costs.
3. Lower picking & labor cost
The use of labor at 0.30-0.60 per order allowed affordable scaling, half the rate in the US, and then it did not require the accuracy of WMS automation.
4. Greater packaging flexibility
Kitting, bundling and branded inserts are supported at $0.40-0.80 additional depending on the requirements of DTC such as sustainable materials at no premium.
5. More affordable cross-border shipping
DDP air/sea choices reduced international costs to $5-10 per package 18-30 less than US-based-through special lines to balance speed and cost.
6. Full automation with API integration
Continuous Shopify/Amazon/Tik Tok links made real-time synchronization, avoiding over selling and allowing switching to China 3PL without loss in the store.
Implementation: How the Transition Was Executed
1. Step 1 — Audit of SKUs & packaging rules
The brand unified 50 plus SKUs under standardized naming and dimensions, determined packing SOPs of bundles to fit in systems of BM Supply Chain, minimized error in the future through mapping variants at an early stage.
2. Step 2 — Inventory transfer plan
Halfway option: 30 percent fast-movers remained in a US micro- warehouse to deliver in 2 days, and 70 percent moved to China on sea, which would be implemented in 4 weeks to prevent disruptions.
3. Step 3 — Store API connection
Shopify (order pulls), Amazon (FBM tracking), and Tik Tok (SLA alerts) integrated APIs – with 99% accuracy in the sync, use auto-pushbacks to allow customers to see the order.
4. Step 4 — Packaging optimization
BM Supply Chain automated stations quantified the dims of minimal boxes, with branded inserts in them- reducing by 25% the material waste due to AI cartonization.
5. Step 5 — Route optimization using AI-based carrier selection
AI tools ranked routes based on cost, time, and dependability, using default option of special lines in the case of US (7-12 days, $6-9) and DDP in the case of EU, balancing speed to Tik Tok virals.
6. Step 6 — QC & new fulfillment SOP rollout
Inbound QC sampled 20 percent of arrivals, and picking (dual-scan) and returns – training through video calls guaranteed 98 percent accuracy on the first day.
The Results: 40% Fulfillment Cost Reduction
1. Storage cost reduced by 60–90%
Free 30 days and reduced rates reduced monthly bills by half, to $3,000 to $800-1200 –saving that was increased by turnover.
2. Pick & pack cost reduced by 50–70%
The prices were reduced to $0.50-1.00 per order, which will be able to save the money by 2,500-4,000 monthly due to effective labor and automation.
3. Packaging & material cost reduced by 20–40%
Custom components of 0.50-1.00 additional expenses amounted to $1,000-1,800- optimization of sourcing reduces waste.
4. Cross-border shipping cost reduced by 18–35%
DDP/special lines in average were lower at $5-9 compared to the previous period of $8-12-saving of 3,000-5,000/month on increasing international volume.
5. Overall cost reduction: 40% total
Between 20,000-28,000 to 12,000-17,000 in monthly payments- liberating 8,000-11,000 to invest back.
6. Operational improvements
Wrong-item rate: reduced to less than 0.2; customer service tickets improved 35-60; inventory turnover improved 25-5x/year; viral response time reduced by half to 24-48 hours- pro China fulfillment case study value.
Operational Improvements After the Switch
1. Faster restocking cycles
Delivery factory to warehouse within 3-5 days facilitated speedy reaction to trends, 40% stockouts- important in cost-saving fulfillment technique.
2. Automated inventory sync
Real-time APIs removed oversells, and ensured 98% availability which is important in multi-channel operations.
3. Real-time tracking for customers
Automatic updates through Shopify/ Tik Tok minimized questions by 50 percent leading to improved trust and reviews.
4. Better packaging quality
Scale unboxings, kitting and inserts enhanced unboxings, which dropped damages by 25% increasing UGC on Tik Tok.
5. Smoother viral scaling
Tik Tok spikes (up to 3x orders) without going to overtime with flexible staffing- 95 percent on time.
Challenges Faced & How They Were Solved
1. Time-zone communication
Early delays were sorted out by having a committed BM Supply Chain manager to cover 24/7- cover- to get fast responses.
2. Customs & compliance learning curve
BM DDP support managed tasks, pre-shipment audits did not make holds, EU/US imports were smoothed.
3. Transition period slower at the beginning
The incremental inventory changes during 6 weeks reduced the disruption and the US hybrid inventory filled the gaps.
4. Need for SKU standardization
Walls such as the Category-Size-Color-Variant Correction that existed before, which was incorporated in the WMS and allows mapping.
Lessons Learned for Other DTC Brands
1. SKUs must be standardized early
Synchronized naming eliminates switching problems-audit.
2. Use hybrid (China + local) during transition
Retain 20-30% domestic to expediency as China volume is developed.
3. Ensure API automation is fully connected
Integrate twice: cover orders, inventory, tracking.
4. Don’t delay packaging optimization
Shipping: Intake dims/materials early to save shipping.
5. Choose a 3PL familiar with your product category
The skincare competency of BM Supply Chain guaranteed customized QC and bundling.
Conclusion: China 3PL Is a Cost-Saving Growth Driver
In this instance, it has shown a 40 percent saving by having free storage, reduced labor/picking, improved packaging, and efficient shipping, making fulfillment more of a driver than a cost center. The 3PLs in China such as BM Supply Chain are the new DTC growth engine, through which the company can scale up to global expansion. When your fulfillment cost is increasing, consider China-based 3PLs – the cost-efficiency, the faster turnaround, and scaleability can be just what your brand is looking for in 2026.