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How to Manage ECommerce Inventory Replenishment

Inventory replenishment, also called stock replenishment, isn’t just for retail establishments. It is also a vital part of eCommerce fulfillment and inventory management. Developing an inventory replenishment plan will save you money, increase your profitability, and improve your sell-through. Here’s […]

container ship demonstrates need for a backup plan

Suez Canal Blockage Reminds Us All to Have a Backup Plan

Sometimes the unthinkable happens, and this week we saw a container ship the size of a skyscraper turn sideways and block all traffic in Egypt’s Suez Canal, demonstrating a clear need for transportation backup plans. For more than 24 hours, the […]

floor loaded containers

What You Need to Know About Floor-Stacked Containers

If you have products shipped from your manufacturer to your eCommerce fulfillment warehouse, they will probably arrive in a container. If they come in floor-stacked containers, that can affect your shipping and fulfillment costs. Here’s the scoop on floor-stacked containers. […]

Red Stag has warehouses around the United States

12 Best Practices to Streamline ECommerce Fulfillment

Streamlining eCommerce order fulfillment can be a complicated process, but getting it right helps companies improve margins and customer satisfaction while reducing costs. It can be a valuable part of your growth strategy by making it easier to offer reliable, […]

Inventory forecasting

Inventory Forecasting and Planning

When you first started your eCommerce business, your inventory planning process might have been as simple as ordering inventory on a wish and a prayer. Once you’ve established your business, however, you need to plan ahead. Inventory forecasting is an […]

The Genesis of Red Stag Fulfillment: ECommerce 3PL

A successful eCommerce company depends on a high-quality fulfillment operation or partner. Without that, you’re constantly at risk of losing inventory, making mistakes, and hurting customer relationships. Our founders, unfortunately, learned that the hard way when they started an eCommerce […]

Amazon Seller Prime Fulfillment: 2021 Update

Editor’s note: We’ve updated this article with the latest information for 2021. Since originally published, Amazon has introduced and updated new requirements, plus shifted service signups to an ongoing waitlist. For detailed questions about your business and to get a direct comparison for services currently available, such […]

outsourcing fulfillment

How to Get Started When You’re Outsourcing Fulfillment

Accurate, fast eCommerce fulfillment is an essential asset for online business owners. It’s vital to pick the best fulfillment option for your company. Sometimes, that will mean outsourcing fulfillment because you’ve grown too large to ship orders yourself. In other […]

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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