The 'Split Shipment' Trap: Why Storing Your Order Costs More Than You Think

"We want to order 5,000 notebooks to get the RM 15.00 price, but our office is small. Can you keep them in your warehouse and send us 500 units every month?"

This request lands on my desk every week. It sounds like a win-win: You get the bulk price, and we get a guaranteed long-term order. But in practice, Split Shipments are the silent killer of profit margins—for both of us.

This article breaks down the hidden logistics costs that make "free storage" a myth.

[Image blocked: The Hidden Cost of Split Shipments]

The "Free Storage" Fallacy

When you ask a supplier to hold stock for you, you aren't just asking for shelf space. You are asking for Inventory Liability.

In a standard 5,000-unit order, we print, pack, and ship everything in one go. The transaction is closed in 3 days. In a "10x Split Shipment" model (500 units/month), the transaction stays open for 10 months.

During those 10 months, we are paying for:

1. Pallet Rental: Your goods occupy 2-3 pallet spaces that could have stored fast-moving stock.
2. Insurance: We are liable if the warehouse floods, burns, or if rats eat your notebooks.
3. Capital Lock-up: We paid the factory for 5,000 units upfront, but we only get paid by you in small trickles.

The "Pick & Pack" Multiplier

The biggest hidden cost isn't storage; it's Handling.

• Bulk Shipment:

  • Forklift driver moves 1 pallet to the truck.
  • Admin prints 1 Delivery Order (DO) and 1 Invoice.
  • Total Touchpoints: 2

• Split Shipment (x10):

  • Warehouse staff must locate your pallet 10 times.
  • Open the shrink wrap 10 times.
  • Count 500 units 10 times.
  • Re-shrink wrap the remaining stock 10 times.
  • Admin prints 10 DOs and 10 Invoices.
  • Finance chases 10 payments.
  • Total Touchpoints: 60+

Every time a human touches your order, it costs money. By splitting the shipment, you have multiplied the labor cost by 3,000%.

The "Last Mile" Sting

Shipping 5,000 units on a single 3-ton lorry might cost RM 300. Shipping 500 units via courier (10 times) might cost RM 80 per trip. Total Logistics Cost:

• Bulk: RM 300
• Split: RM 800 (+166% Increase)

Why We Charge a "Stocking Fee"

If a supplier agrees to split shipments without charging extra, they are either:

1. Desperate for sales (risky partner).
2. Already overpriced (you overpaid initially).
3. Going to cut corners on the later batches.

Professional suppliers will charge a Stocking Fee (usually 10-15% of the goods' value) or a Per-Drop Charge (e.g., RM 150 per delivery). This isn't a penalty; it covers the rent, labor, and admin work described above.

Smart Alternatives to Split Shipments

If you truly don't have space, try these strategies instead of asking for free storage:

1. Quarterly Drops: Instead of monthly (12 drops), ask for quarterly (4 drops). This reduces the admin/handling load by 66%.
2. Third-Party Logistics (3PL): Rent your own small storage unit. You will quickly realize that paying RM 300/month for a locker is cheaper than the RM 2,000 markup a supplier might add for "logistics services."
3. Just-in-Time (JIT) Agreements: Sign a 1-year contract for 5,000 units but allow the factory to produce them in batches (e.g., print 1,000 every 2 months). This saves storage costs but requires a firm "Take-or-Pay" contract.

Summary

Inventory is a hot potato. Nobody wants to hold it. If you force your supplier to hold it, be prepared to pay for the privilege. The "Bulk Price" is a reward for taking the goods off our hands, not for letting them sit on our shelves.