The days of being able to offer free shipping may be coming to an end for many ecommerce merchants. UPS and FedEx have implemented dimensional weight pricing for ground packages less than 3 cubic feet — comparing the dimensional weight to the actual weight and billing the greater of the two. This change will likely affect as much as 70 percent of packages shipped.
Understanding the dimensional weight impact on your shipping expense is critical. Ecommerce merchants should audit how much their shipping costs have increased and how to proceed. Start with a parcel analysis to see how many of your shipments were affected, realizing that if you have always shipped large items, you were probably paying volumetric pricing, anyway.
What Is Dimensional Weight?
Dimensional weight is cubic volume: length x width x height of the box divided by the applicable dimensional factor, which is 166 for both UPS and FedEx for domestic shipments and 139 for international. When performing this calculation, fractions of an inch are either rounded up or down. If the measurement of a box is one-half inch or greater, it is rounded up. If the measurement is less than one-half inch, it is rounded down.
Shippers must be sure to measure the outside box dimensions, as some manufacturers quote the inside dimensions. Also, be aware that as a small package moves through the shipping chain, it may bulge and its dimensions may change during transit, which may result in adjusted charges.
If your parcel analysis reflects that dimensional weight pricing will increase your shipping expense, here are six ways to potentially lower your cost.
6 Ways to Lower Dimensional Weight Shipping Cost
- Right size or weight of product? If you control manufacturing, start there. Many products are made without consideration of how they will be shipped. If you have flexibility with the size of your product, it can pay off. For example, say you sell backpacks that weigh 2.4 pounds but have to ship in a box that is 18″ x 12″ x 12″. The dim weight is 15.6 [18 x 12 x 12)/166] or 16 pounds. You will therefore no longer pay for 3 pounds (2.4 pounds rounded up), but will pay for 16.
If you can change the material or packaging and ship it in an 18″ x 12″ x 10″ box, you will lower your dim weight by 3 pounds [(18 x 12 x 10)/166], which represents a material savings. If your product weighs more than the dim weight, evaluate the weight break. For example a bottle that weighs 3.1 pounds would be invoiced at 4 pounds. A change in bottle size to 2.7 pounds would be invoiced at 3 pounds. In short, consider the right size and weight of your products.
- Packaging. Consider how your product is packaged at manufacturing, and the material used for the packing. The days of packaging your product for presentation might have to be re-considered. If presentation is a key component of your brand, it might be worth making no changes. But many products can be packaged differently. Consider the value of the material used, the quantity, and the packaging to see where you can get your greatest economies of scale. Think grocery stores shelves and how the packaging has changed in the last decade.
- Preparing your product for shipping. Your fulfillment employees likely prepare shipments and evaluate what’s the smallest box they can ship in and still protect the contents. A general rule for common breakable items is two inches of protection all sides. But it varies greatly based on the product. Regardless, the box size should be larger than the product itself. Training is critical and listening to your employees’ feedback valuable.
- Product mix. It’s not enough to evaluate the product alone. Evaluating the product mix — i.e., how items are sold together — can be critical. Look at how your customers buy products, or how you market them.
For example, I know of a company that adds a free complimentary gift with an order. One product this company sells goes into a 6″ x 5″ x 5″ box, for dim weight of less than one pound. But one of the free items is almost 9″ long, requiring a larger box, which pushed the dim weight to 2 pounds. That can be an expensive free gift. At minimum, you may not be able to change the product mix, but you’ll be able to better understand the cost consequences.
- Customized boxes. Products that are sold as standalone items or require protection during shipment are best addressed at manufacturing. Customized boxes are more expensive, but might be worth considering if it lowers the dim weight. For high volume operations, on-site custom box making equipment might come into play.
- Carriers, consulting, and third party providers. Carrier selection and services vary greatly and are further complicated by negotiated agreements. Complete your parcel analysis before negotiating with carriers to understand how the pricing offered matches your package profile. The overall discount rate from carriers is typically blended and not the same across the weight and zone distribution.
If your clients are regional or your product is shipped out of multiple warehouses, regional carriers are worth considering. Generally, service levels for regional carriers are slightly poorer than for UPS and FedEx. But the differences are narrowing as regional carriers are getting better. Depending on volume, consider using a third-party fulfillment provider with multiple warehouses and lower shipping rates. If you’re going to keep fulfillment in house, using a consultant that can complete a parcel analysis and help negotiate rates with the carriers can be worthwhile.