We're a third party fulfillment provider that approaches things a little differently.

Our business is being the successful extension of your business.

Enter your email below and we'll keep you up to date with the latest industry news, trends, and our growth, delivered right to your inbox.
Improve Inventory Management

5 Ways to Improve Inventory Management in 2020

One of the best ways to increase the profits from your eCommerce business in 2020 is to improve your inventory management. Even if you think you’ve got a good system for inventory management, a few tweaks could take your process […]

fulfillment center

Fulfillment Center vs. Distribution Center

A core part of every eCommerce business is order fulfillment. Both a fulfillment center and a distribution center might be part of your eCommerce supply chain. Both play a part in the fulfillment process. But how do you choose between a […]

eCommerce platform

Best ECommerce Platforms 2020

One of first decisions when you start your eCommerce website is the look of your online store. There are a few questions you will have to answer. How much time and money do you have to spend on customizing your […]

How to Calculate Shipping Costs

Shipping costs can be some of the trickiest to get a handle on for e-commerce businesses that want to balance customer satisfaction with affordability and margin control. The vast majority of your customers expect shipping to be fast and usually […]

Shipping containers

Building a Resilient Supply Chain

When the coronavirus pandemic hit Asia in early 2020, many businesses experienced major supply chain disruptions. This highlighted the need for companies to build resilient supply chains. Now, more than ever, it’s essential to make your supply chain resilient to […]

eCommerce business continuity

Building an ECommerce Business Continuity Plan

If recent years have taught us anything, it’s the importance of having an eCommerce business continuity plan. Floods, fires, tornadoes, hurricanes, and now a pandemic can disrupt supply chains and slow the pace of eCommerce. The coronavirus has shown the […]

Subscription eCommerce Business box

How to Find the Best Subscription Box Suppliers

Subscription boxes are one of the hottest categories in eCommerce. In fact, subscription box sales doubled each year between 2011 and 2016. If you want to jump into this lucrative market, first you have to find subscription box suppliers. Consumers […]

Shopify Fulfillment Network (SFN): A Guide

The Shopify Fulfillment Network is a service provided by Shopify that provides storage, inventory management, picking, packing, and shipping for Shopify sellers. Sellers ship their merchandise to a distributed full-service network of Shopify fulfillment warehouses, where items are stored and […]

Inventory turnover ratio

Understanding Inventory Turnover Ratio

Your company’s inventory turnover ratio is an important metric. A simple inventory turnover formula can help you understand and improve your inventory management. When you get clear about your inventory turnover ratio, you can run your business with smaller carrying […]

handling returns during the pandemic

ECommerce Returns During the Pandemic

The novel coronavirus pandemic has brought an influx of customers to online retail. Online sales were up 76% in June 2020 over 2019. That is good news for eCommerce businesses. However, many are facing challenges in dealing with returns during […]

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.

Getting started is simple

Your stuff icon

Send us Your stuff

Your orders icon

Send us Your orders

Give us 30 days icon

Give us 30 days to impress you

Take the first step
Start your no-obligation
30-Day Risk-Free Trial