Advice on How to Save on Shipping and Packaging Expenses

Discussion in 'Articles & Tutorials' started by Chasers11, Mar 1, 2011.

  1. Chasers11

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    Mar 1, 2011
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    Hey guys,

    As a newbie, I thought I would introduce myself by posting some helpful tips for decreasing your small parcel shipping costs since this is becoming more of an issue with the majority of the shipping companies increasing their shipping rates. In this post, I will focus mainly on dimensional weight and which box to choose based off of it.

    The most important factors UPS and other companies take into consideration when calculating your shipping is the weight and dimensions of your box. I’ve seen many businesses that do not realize the effect these factors have on their costs. Since logistics is one of the main expenses for many small businesses, it is definitely worth your while to learn about some of the main factors that affect your shipping costs.

    Dimensional Weight

    This is calculated by multiplying the length by the width by the height, and then dividing the total by a particular factor. FedEx and UPS will use this to gouge you if you are not careful.

    For ground shipping, your rate is based off of the greater of dimensional weight or actual weight when your box is over 3.0 cubic feet. For air shipping, your rate is based off of the greater of dimensional weight or actual weight for ALL packages. Before January 3 of this year, the dividing factor was 194 for UPS and FedEx. Effective after January 3, the factor became 166 for boxes 3.0 cubic feet or larger for shipments in the US (whether ground or air). So what does this factor change mean? Higher costs for all of us!

    You want to be very particular about the dimensions of the box that you choose for your product. If the size of your total package is over 3.0 cubic feet, then you want to make sure that you are being charged for the ACTUAL weight and not the DIMENSIONAL weight (for ground). You need to be worried about dimensional weight in ALL air applications though. So, use a box that is custom fit to your item to keep your dimensional weight down. Ideally, it should be lower than your actual weight.

    Choosing the Dimensions for Your Box

    Let’s look at how to figure out how to size your box to your product. It’s the general rule that you should have at least 2 inches between your item and the box for padding (bubble wrap, wrapping paper, foam, etc.). This will ensure that your product makes it to its destination safely.

    So, let’s say you sell individual custom coffee mugs. The mug is 5” tall, 4” wide, and has a depth of 5” (including the handle). If you sell these mugs individually, find a box or mailer that is 7” x 6” x 7”. If shipping ground you will be charged the actual weight on the item since your package is less than 3.0 cubic feet. Not only does finding a box that extends 2 inches out from every angle save you on shipping, it generally saves you on the cost of packaging materials since many packaging companies tend to charge more for a cube box, than a non-cube box.

    If you are shipping items in small or large case quantities (e.g. 6 or 12 items), you may consider designing your case sizes around your sales tiers. This cuts costs on packaging (i.e. you are buying one box instead of 6 individual boxes) and it decreases the likelihood that your dimensional weight will outweigh the actual weight.

    Let’s say your sales department is selling product A in quantities of 6 units. If your sales department is consistently selling 12 units at a time, it might make sense to design your packaging so that you are able to ship out Product A in case sizes of 6 units and 12 units. This minimizes your dimensional weight for a common sale and decreases your packaging material costs. In many companies, this can lead to major cost cuts.

    Ideally, each of your products should have its own packaging dedicated to it (preferably in sync with your sales tiers). This ensures that your packages arrive safely and you are not paying an arm and a leg for unnecessary shipping and packaging expenses.

    I’ll post another post here in a couple of weeks with some more detailed solutions to packaging issues that will save your company money. Let me know if you guys have any questions.

    Chase Hague
    Founder and CEO
  2. baffab

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    Mar 4, 2011
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    Good article Chase, I agree with most points. I would say the single biggest way to save on shipping is to keep comparing rates and keep the shippers competative. I use Shipping Sidekick to compare the rates when I ship....sometimes USPS is less expensive....sometimes DHL....etc. you get the idea. And this site offers some pretty good discounts too which make things cheaper also.

    I would also offer that if you are shipping outside the US, don't use the USPS! Keep in mind they hand your package off to foreign postal services.....some of which are not too reputable. Private companies like FedEx keep the package in their posession the entire time and have the same standards all over the world.

    hope this helps!

    Jose K

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