Fulfillment Margins Collapse as Parcel Costs Outpace Revenue

Fulfillment operators saw their margin cushions nearly vanish in the second quarter, collapsing from 9.7 percentage points in April to just 0.6 points by June's end. The rapid erosion was driven by parcel shipping costs accelerating faster than gross merchandise value growth, according to live transaction data analyzed by supply chain software firm Deposco.

Eric Lemus, Vice President of Strategy and Analytics at Deposco, said the core story is a divergence between order growth and dollar growth. Gross merchandise value growth decelerated from 15.4% to 13.4% during the quarter. Meanwhile, order volume growth nearly doubled, climbing from roughly 4% to 8.8%. "Demand is slowing in dollars, but not necessarily in units," Lemus said. "Consumers are still buying, but operators are moving more units through their platform or through their networks without seeing the reciprocal revenue growth as they anticipated."

Parcel Inflation and Peak Season Pressure

Parcel shipping costs rose approximately 13% year over year by the end of Q2, a rate more than three times the pace of broader consumer inflation. Lemus identified carrier mix, dimensional weights, and contracted rates as primary internal cost drivers. Deposco's forward forecast calls for parcel inflation to remain raise at a minimum of 12% year over year through the fourth quarter. This is before the application of peak season surcharges from carriers.

"There's been reports, and what we're seeing is surcharges are likely to range anywhere from 6+% on average," Lemus stated. He warned that compounding these surcharges with the existing high parcel inflation environment will create significant margin pressure for operators during the Q4 peak season.

Inventory Risks and Data Foundation

Inventory levels present another risk. Days on hand closed the second quarter at 89.3, the leanest level in several months. Brands and third-party logistics providers ended the quarter just 3.3 days apart in inventory coverage, an unusually narrow gap. Lemus noted inventory has begun ticking up since July but said the pickup may be too late to fully buffer peak season demand. Operators in the leanest inventory quartile face the most acute exposure to stockouts.

The analysis comes from Deposco's Commerce Signal report, which is drawn from more than $80 billion in fulfilled GMV across over 4,000 brands and operators on its platform. Lemus emphasized the report's foundation in real-time transactional data, which he argues distinguishes it from survey-based or forecast-reliant reports that carry inherent bias and lag.

Strategies for Margin Protection

For operators seeking to protect margins before the peak season, Lemus pointed to carrier diversification as the highest-impact lever available. Data from Deposco's platform shows operators using diversified carrier strategies reduced their parcel spend by 21%. He also cautioned against anchoring forecasts to last year's peak season data due to this year's significant cost volatility. He urged operators to conduct SKU-level inventory analysis to identify replenishment gaps before seasonal demand accelerates.

The Q2 report's forward-looking projections for continued parcel inflation, sustained GMV growth, and lean inventory levels have largely played out as expected. Parcel inflation moderated slightly but is expected to re-accelerate in Q4.