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COVID-19 Response

COVID-19: Implications for Fulfillment Operations

Red Stag Fulfillment Operational Status: The status of the global supply chain changes on a daily basis due to the current pandemic. At Red Stag Fulfillment we want to keep you updated on COVID-19 implications for fulfillment operations. We will […]

A container ship at the port

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floor loaded containers

Floor Loaded vs. Palletized Shipping Containers

Many products arrive by shipping container or full truckload (FTL) or less than truckload (LTL) freight. You don’t usually get to choose whether your shipments are floor loaded or palletized, but the difference in loading styles could increase the cost of […]

Efulfillment inventory management

Guide to Improve Inventory Management

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7 Tips for Leveraging Your Sales with Digital Marketing

It is not difficult to leverage sales with Digital Marketing if you use best practices in brand strategy. This way, companies can meet the public’s expectations, providing a qualified experience that will generate more conversions. For this, it is necessary […]

milk run

What Is Milk Run in Logistics?

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ecommerce product categories

7 ECommerce Product Categories to Watch in 2021

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7 Tips for Creating Inventory Forecasts

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RSF uses many fulfillment inventions to remain organized.

Necessity Is The Mother Of Fulfillment Inventions

February 11 is National Inventors’ Day and Red Stag Fulfillment would like to salute the past inventions and present technologies that we use every day, making our warehouses run smoothly and helping orders move accurately out the door. We’ve selected […]

B2B fulfillment

What Is B2B Fulfillment?

B2B eCommerce fulfillment ships products from business to business. The same fulfillment warehouse may provide both B2C and B2B fulfillment services. Your company may need both B2C and B2B fulfillment services. However, the process for each type of order fulfillment […]

Dimensional Pricing

What is dimensional pricing? Will it be the end of your business?

On January 2, 2015, FedEx and UPS changed how they will price shipments. We detail how this could greatly increase shipping costs for e-retailers and other businesses that use companies like FedEx and UPS to ship their products.

In addition, we breakdown why the carriers are making the change and provide examples of how the new calculations work.

Lastly, we provide possible solutions for companies that would like to reduce their shipping costs and help minimize the impact that could come from dimensional pricing.

Transcript

  1. Will It Be The End of Your Business? WHAT IS DIMENSIONAL PRICING?
  2. How does pricing work now? The historical way for calculating costs to send a package was based on a very simple method; Carriers use a table that assigns a “base rate” for every combination of weight (1-150 lbs.) and distance (Zones). The heavier the package and/or the farther you ship, the more it costs. Other surcharges and fees are then added to the base rate as they are applicable (E.g. fuel surcharge).
  3. Does it work? Historically, this pricing structure was ideal because transport trucks could use these same variables in their formulas to calculate transportation costs, and therefore determine the profit margin for each truck transporting goods.
  4. What is dimensional pricing? In other words, many of the lightweight packages you ship today could see A BIG INCREASE IN COST!!! Every package you ship will now have two weights – actual weight and dimensional weight. The larger of these two will be used to calculate the cost of your shipment (Height x Width x Length) Dimensional Factor* = Dimensional Weight * The standard Dimensional Factor that UPS and FedEx will use is 166
  5. Why the change? The convenience of online shopping with in-home delivery, has resulted in an increase in the number of lighter weight packages in bulkier boxes being shipped to homes across the world. Consumers now purchase bath robes and teddy bears online! Bigger boxes take up more room in a truck; so less space and less weight = less revenue per truck for the carriers.
  6. How will this affect my shipping cost? 3 lbs. x Zone 8 $9.84 Base (Daily Pickup) Rate 3 lbs. package shipped in a 12” H x 12” W x 18” L box From: Knoxville, TN (ZIP 37923) To: Reno, NV (ZIP 89501) TRADITIONAL (12 x 12 x 18) / 166 = 15.6 lbs. 16 lbs. x Zone 8 $18.86 Base (Daily Pickup) Rate DIMENSIONAL
  7. 3 Questions to Consider What will my margins be if I eat the cost? If I pass this cost on to my customer – how many will I lose? Will I still be in business 1 year from now?
  8. Solutions Take the Air Out Negotiate your dimensional factor Find a partner with negotiating power (E.g. a 3PL)
  9. Take the Air Out Deliberately engineer packaging to remove as much “air” as possible. If additional packaging is added when preparing to ship, educate your packing team on the effects of their decisions. This should be the first step for any company looking to avoid large dimensional weights You might be surprised how much opportunity there is
  10. Negotiate Dimensional Factor Larger Dimensional Factor = Smaller Dimensional Weight = Less Effect on Your Business Must negotiate with each carrier you use (i.e. FedEx and UPS) There are no guaranteed outcomes Shipping Revenue = Power
  11. Find a strategic partner Quality 3PL fulfillment operations minimize effect to their clients Strategic Partners help with these various strategies Examples: Negotiating power with Carriers Package consolidation Packaging engineering
  12. FOR HELP REDUCING COST OF DIMENSIONAL PRICING 800.815.STAG (7824) info@redstagfulfillment.com www.redstagfulfillment.com

We know what it's like searching for a fulfillment partner...

We've been there before! Red Stag Fulfillment was born out of necessity as the sister company to support a fast growing ECommerce business. You can read more about the story of our development here.

Our business is being the successful extension of your business, and a big part of that is providing tools to help you evaluate us, and other fulfillment companies. That's why we openly share our Fulfillment Provider Questionnaire, as a tool for you to use when selecting your fulfillment partner.

Download a blank questionnaire, or the questionnaire with our answers for your own internal use.

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