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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 […]

third-party logistics

Third-Party Logistics: Definition, Process, Resources

The traditional business model of handling many or all operations in-house isn’t always the most productive. This is particularly true for small eCommerce businesses. Many eCommerce companies have been able to expand operations while operating on a shoestring. Third-party logistics […]

RED STAG FULFILLMENT VS EFULFILLMENT

Red Stag Fulfillment vs. eFulfillment Service

At Red Stag Fulfillment, we are always excited to find our next great client. But we know that we aren’t the right fit for every business. In fact, we aren’t able to accept most of the companies that inquire about […]

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3PL, 4PL, and 5PL Explained

Logistics has become increasingly sophisticated. The current worldwide crisis has put supply chains in the news. However, the role of outsourced logistics in the supply chain hasn’t been fully explained. Most people may have heard of 3PL, 4PL, 5PL, and […]

Net promoter score

Red Stag Fulfillment Gets Near Perfect Net Promoter Score

The Net Promoter Score is a proven method to determine customer loyalty and satisfaction. According to CustomerGauge, the average NPS for logistics companies is +55. Transportation and logistics companies benchmarked on Customer Guru showed an NPS range from +8 to […]

RED STAG FULFILLMENT VS SHIPBOB

Red Stag Fulfillment vs. ShipBob

At Red Stag Fulfillment, we only accept a small number of the companies that contact us as clients. We’re not snobs. We just know our strengths and we’re hyper focused on working with companies whose needs align with the value […]

Tiffany Myers

Employee Spotlight: Tiffanie Myers

Take a few minutes to get to know Tiffanie Myers. Tiffanie works in our Inbound Department as an Inbound Co-lead in our Knoxville fulfillment center. She has been with Red Stag Fulfillment since 2018. How long have you been at RSF, and […]

COVID-19 Business Management

Leading and Managing Your Business Successfully in a Crisis

The current environment will test most businesses’ ability to operate and manage in a crisis. An effective response by a company requires transparency, accountability, and above all, strong leadership. Businesses need to be clear about who is making the decisions, […]

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7 Pitfalls of Amazon FBA for ECommerce Sellers

Fulfillment by Amazon or Amazon FBA lets sellers in the Amazon marketplace take advantage of Amazon’s giant logistics operation to ship their orders. FBA items are eligible for Amazon Prime shipping and Amazon handles your angry customers (which Amazon considers […]

#thankatrucker

#ThankATrucker

As the coronavirus pandemic spreads, the impacts are rippling through the economy and the supply chain. While many workers have been forced to sit at home while their workplaces are shuttered, truck drivers are facing extra demand. Their work to […]

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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