Ecommerce Fullfilment Blog | Red Stag Fulfillment

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RSF Awarded Best Ecommerce Fulfillment

Article by: Jake Rheude

Published: 04/28/2016

Red Stag Fulfillment is honored to announce the recently awarded 2016 Best Ecommerce Fulfillment Service for Heavy & Valuable Goods by FitSmallBusiness.com, a top independent researcher of business solution providers. For any ecommerce or e-retail business, working with a fulfillment service […]

Evaluating E-Fulfillment Companies

Article by: Jake Rheude

Published: 04/13/2016

The Impact of the Product Size and Weight on E-Fulfillment When looking at outsourced e-fulfillment options, merchants and manufacturers focus on key factors such as financial stability of the provider, accuracy of inventory, fulfillment and shipping, client retention, experience, technology, […]

Delivering Total Value For E-Consumers, Part 1

Article by: Jake Rheude

Published: 03/22/2016

Article Summary: Understanding your business model and how to deliver the highest level of value to your customers. Evaluating outsourced order fulfillment: Is it the right option for your business? Is your current shipping process a core competency? Are you backlogged […]

Measuring Performance: Processing & Receiving

Article by: Jake Rheude

Published: 03/09/2016

Imagine this scene: You’re boarding an airplane, shuffling your way through the aisles, dodging people’s elbows as they stuff their luggage in the overhead compartment, hoping that you’re not seated next to the family with the crying baby. You reach […]

The Genesis of RSF

Article by: Jake Rheude

Published: 02/29/2016

Born From Ecommerce, For Ecommerce For entrepreneurs and business owners, the beginning of this story may resonate all too well. In 2009, a small eCommerce startup launched and began the exhausting effort of developing a user-friendly website and navigating the […]

Amazon Seller Prime Fulfillment

Article by: Jake Rheude

Published: 02/22/2016

When e-commerce behemoth Amazon launched its seller-fulfilled Amazon Prime program in June 2015, it assured businesses that they would earn huge savings by qualifying their products for Prime’s discounted shipping rates without having to store their goods in Amazon’s fba […]

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

Will It Be The End of Your Business? WHAT IS DIMENSIONAL PRICING?
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).
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.
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
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.
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
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?
Solutions Take the Air Out Negotiate your dimensional factor Find a partner with negotiating power (E.g. a 3PL)
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
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
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
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.