How much will dimensional weight shipping cost retailers?

Shipping Management

Transportation costs money. While gas prices are actually declining, that doesn’t change the fact that getting goods from one corner of the country to another costs money. Shipping is an even greater expense when talking about getting goods from one┬ácontinent to another.

This is why many shipping companies, such as the United Parcel Service, are introducing dimensional weight pricing. In the past, retailers were charged primarily based on weight and delivery speed. Lighter packages cost less to ship, as they tend to be smaller and shippers can fit more product into the back of trucks, boats and cargo planes.

This helps shipping companies ensure they are getting paid fairly for the space available to them in their transportation vehicles.

But there are numerous instances of retailers abusing this to save money. For example, merchants may only want to order a certain size box to get bulk prices, which results in them shipping products in boxes that are much bigger than their contents, or perhaps the items they sell are just really awkwardly sized and weighted, resulting in a huge box that weighs a feather.

Either way, shippers have had enough. Dimensional weight shipping will charge retailers based on how big a package is as well. This helps shipping companies ensure they are getting paid fairly for the space available to them in their transportation vehicles. However, it also potentially adds news costs that merchants must deal with.

How will eCommerce operations be affected due to dimensional weight shipping?

This is a question retailers will have to answer for themselves and make adjustments to their order fulfillment and shipping procedures if the cost is high.

Under the new dimensional weight pricing formula enacted by UPS, Chen estimates shipping costs will rise by as much as 20 percent.

Internet Retailer recently interviewed Daniel Chen, director of marketing sales at Ampere Creations, about how dimensional weight shipping will affect his firm. Chen expects the company’s Internet business to grow 50 percent over the next three years and account for 15 percent of total sales by 2016, which means the merchant will be shipping a lot of packages to customers.

Under the new dimensional weight pricing formula enacted by UPS, Chen estimates shipping costs will rise by as much as 20 percent – a significant expense for any firm. The retailer will be forced to significantly change the way it ships products to tackle the price increase. One potential change includes the switch to mylar bags, which provide less protection but does not take as much physical space as a box. Ampere Creations will also be shifting the firm’s distribution center from Los Angeles, California to somewhere in the Midwest. This could shorten shipping distances and reduce costs as a result.

Dealing with dimensional weight costs

There are numerous other ways merchants can get around dimensional weight shipping costs. In addition to implementing mylar bags, retailers could also take another look at the boxes they use – ordering multiple sizes may be more costly upfront but can lead to reduced shipping costs.

Ship-from-store is another option, much like order fulfillment and distribution locations, which can reduce shipping distances and thus expenses.

Retailers could also consider steps to reduce their reliance on logistics. For example, in-store pickup options may lead to more customers heading to physical locations to retrieve their goods instead of waiting for them to be shipped. Ship-from-store is another option, much like order fulfillment and distribution locations, which can reduce shipping distances and thus expenses.

Of course, merchants always retain the option of modifying prices as well. Retailers could increase the threshold for free shipping, boost shipping costs or even work the extra expenses into the prices of items themselves. Conversely, they could also look for areas to improve operational efficiency and use the money saved to offset dimensional weight shipping prices.

Retailers have a lot of options at their disposal, it is critical they pick the right one.

3 Responses to “How much will dimensional weight shipping cost retailers?”

January 02, 2015 at 9:27 am, Jason Archambault said:

Great article, great topic. Dimensional weight is going to impact our business, how bad is yet to be seen. But initial numbers show that some products may see a shipping increase of at least 66%. For example, we have one product that weighs 10 lbs, but measures 15x15x22″ (2.9 cubic feet). So in the past it has shipped at the 10 lb rate. Now due to dimensional weight will ship at the 30 lb rate. When shipped to zone 8, it looks like a 66% increase for us. Closer zone are less than 66% increase in cost, but still will hurt.

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January 02, 2015 at 1:22 pm, David Anderson said:

Wow, that is quite a bit of an increase! Hopefully shipping increases like that won’t negatively affect your orders and sales. What steps are you taking to inform customers and/or improve efficiencies elsewhere to offset these increases?

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January 02, 2015 at 1:22 pm, David Anderson said:

Wow, that is quite a bit of an increase! Hopefully shipping increases like that won’t negatively affect your orders and sales. What steps are you taking to inform customers and/or improve efficiencies elsewhere to offset these increases?

Reply

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