Cross-docking can help your eCommerce company streamline its fulfillment processes, increase customer satisfaction, and reduce order fulfillment cycle time. This post explains the cross-docking process, how it works with full truckload (FTL) and less-than-truckload (LTL) inbound shipments, and how cross-docking […]
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.
How Long Does Switching Fulfillment Companies Take?
Switching fulfillment companies is a pain point that most eCommerce companies don’t take lightly. Changing logistics operations or adding a new 3PL partner costs staff time and freight and can lead to delays in order processing if not done correctly. […]
Supply chain continuity planning has always been essential for eCommerce businesses to ensure continuity of supply, but in an environment of ongoing disruptions, shortages, and vulnerabilities, it’s more important than ever to double down on planning. A continuously updated plan […]
When it comes to how to ship furniture, there are many considerations: what is the cheapest shipping cost, how many pieces are being shipped, how to safely package it so it doesn’t break or get damaged, LTL vs FTL, what […]
Mis-picks can easily cost eCommerce companies hundreds of thousands of dollars each quarter. If your error rate is above the industry average (about 2% to 3%), then you likely face millions of dollars in lost revenue each year. That’s a […]
As we reflect on peak season, communication is key to managing a good relationship between a business and its customer. Let’s be honest, shipping delays can happen. But, you can set the tone of delays by being up front and […]
Many products arrive by shipping container or full truckload (FTL) or less than truckload (LTL) freight. You don’t usually get to choose whether your shipments are floor loaded or palletized, but the difference in loading styles could increase the cost of […]
The pandemic led to an explosion of hobbies and new home purchases, so you (or your company) might be at a connection between the two and wondering how to ship a guitar and amp. If that’s where you’re at, here’s […]
One of the best ways to increase your eCommerce profit margins is by maximizing the value of existing customers rather than enduring a constant churn of new customer acquisition and loss. Focusing on repeat business can help you increase marketing […]
In the past, it was a struggle to find a high-quality photo that perfectly matches the theme of your project. Often you were stuck with very cheap stock images that didn’t fit. Or, high-quality photos were priced out of the […]
Cranking up an online store from hobby to growing enterprise is difficult, but there’s a lot of arduous work already done for many of today’s startups. That’s one reason you’ll see Shopify stores in the lead of many product categories. […]
ECommerce shoppers have the same high expectations for every online store, no matter what size, so small business owners must leverage every tool available to compete with bigger businesses. Nowhere is that truer than in eCommerce fulfillment. While setting up […]
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.
- 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) email@example.com www.redstagfulfillment.com
Don't Just Take Our Word For It
See What Our Partners Have To Say
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.