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Drayage truck

What Is Drayage?

Article by: Jake Rheude

Published:

We live in a multi-modal world. Before a product arrives on your customer’s doorstep, it has probably traveled on several different modes of transport. One of those was undoubtedly drayage. Though you might not be aware of drayage, it’s a […]

DIM Weight Pricing Explained

Article by: Jake Rheude

Published:

The 2014 holiday season marked the last Q4 end-of-year sales period where packages shipped based on actual weight. Beginning in 2015, UPS and FedEx instituted a dimensional (DIM) weight pricing structure. Since then, the US Postal Service has adopted this […]

shipping zones

What Are eCommerce Shipping Zones?

Article by: Jake Rheude

Published:

Carriers such as FedEx, UPS, and USPS use shipping zones to determine the shipping cost of a package. Zones relate closely (but often not exactly) to distance traveled. In the continental US, most carriers break down the country into seven […]

Brandon Bennett

Employee Spotlight: Brandon Bennett

Article by: Jake Rheude

Published:

Take a few minutes to get to know Brandon Bennett. Brandon works in our Receiving Department as an inbound lead in our Knoxville fulfillment warehouse. He has been with Red Stag Fulfillment since 2015. So before you started working at […]

eCommerce Growth

The 2010s: A Decade of ECommerce Growth

Article by: Jake Rheude

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As 2019 comes to a close, it’s a good time to look back at a decade that was marked by remarkable change, not the least of which is eCommerce growth. Every year, new technologies made online shopping more accessible and […]

USPS shipping dimensional weight mailboxes

DIM Weight Changes to USPS Shipping Rates

Article by: Jake Rheude

Published:

In the summer of 2019, the US Postal Service changed the way it calculates shipping charges. The USPS has added new dimensional weight pricing. As a result, USPS shipping rates for some packages will increase substantially. The USPS shipping change […]

Shopify wholesale

How to Open a Shopify Wholesale Store

Article by: Jake Rheude

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A wholesale business is a great way to jump-start or expand your existing Shopify store. Perhaps you’ve been approached by businesses that want to buy your products wholesale. Or maybe you want to expand your markets. A Shopify wholesale store […]

Best crowdfunding fulfillment

Best Crowdfunding Fulfillment Companies of 2019

Article by: Jake Rheude

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Crowdfunding campaigns are a popular choice to start a new business or launch a new product. If you run a successful crowdfunding campaign, however, your work isn’t done until you have the rewards in the hands of your backers. Dealing […]

Red Stag Fulfillment warehouse

RED STAG FULFILLMENT TO BUILD NEW KNOXVILLE FULFILLMENT CENTER

Article by: Jake Rheude

Published:

Knoxville, TN, October 17th, 2019: Red Stag Fulfillment, a Knoxville-based third-party ecommerce order fulfillment company, along with its parent firm, Mollenhour Gross, LLC, intends to invest approximately $16 million in the project to expand total warehouse capacity and fulfillment service […]

Employee Spotlight: Ataya Vandiver

Article by: Jake Rheude

Published:

Get to know Ataya Vandiver! Ataya has been with Red Stag Fulfillment since 2017 and she currently is a Kitting Specialist in the Kitting and Special Projects department in our Knoxville fulfillment center. Take a minute and learn more about […]

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.

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