It's hard to go online these days and not see someone talking about FedEx and UPS changing to a dimensional weight, or dim weight, pricing model.
The change goes into effect after the 2014 holiday shipping season. Shippers will be facing higher shipping costs. Before we get into 3 ways to avoid these extra costs lets review what dim weight pricing is.
Instead of charging the shipper based on the actual weight of the box, dimensional weight pricing gets calculated based on the volume of the box. Take up more room in the truck or plane and get charged more. Makes sense, right?
With that out of the way how can you avoid extra charges due to dim weight pricing?
Perform an audit
The recent recession caused companies to audit every part of their business. Unnecessary waste got cut and companies started operating leaner. The negative turned into a positive as companies cut operational fat.
Use the change to dim weight pricing like companies did with the recession. Use it as an opportunity to audit your entire shipping process. Most companies keep doing the same thing because it's what they have always done.
The picture to the right shows a package we received. Four small monitor adapters and some RAM got packed into bubble mailers and then shipped in a corrugated carton with void fill. The bubble mailers alone provided plenty of protection during transit. Companies that over pack products in this manner will lose margin with the added costs from dim weight pricing.
After the audit you might find out it makes more sense to partner with an e-commerce fulfillment center instead of handling it yourself.
Often times fulfillment centers can negotiate better rates than individual companies.
Change box sizes
Do your shipments contain products of varying sizes? If you sell multiple SKU's you may be using a corrugated carton large enough to ship your biggest product. You then use the same box for smaller items and add void fill. When we perform a needs analysis the amount of void fill used is one of the areas we find companies waste.
While this helps you leverage your carton spend it will now harm you. Your product may have a need for bracing during transit, but "shipping air" in the form of true void fill material now comes at a greater cost.
One way you can avoid void fill costs and extra expense for shipping air is to use multi-depth boxes. Multi-depth cartons allow for less void fill which saves money and you don't have to add extra SKU's into your box stock.
During your audit you may find out that adding more box sizes that cut down on void fill needs may make more sense. Just remember to keep an open mind and make changes to your process based on the audit and numbers, not your feelings or status quo.
It now makes sense to ship more products in each box. Since an e-commerce shipper can't combine shipments into one box the best alternative is to sell more to each customer.
Thanks Mr. Obvious.
While all companies strive to sell more to each customer now there is extra incentive to do so. If a box is going to cost you a set amount to ship why not fit as many revenue generating items into it as possible right?
Amazon has conditioned us to buy on demand. The change to dimensional weight pricing will start to make consumers buy more goods less often. Use this to your advantage by offering deals within a shopping cart to add-on products to small shipments. Gone are the days of just asking if a customer wants to keep shopping, incent them to do so and everyone wins.
These 3 tips should help you ease the pain and costs associated with the move to dim weight pricing.
FlexPAC is a creative packaging and facilities solutions provider for manufacturing and distribution companies. By striving to understand the ins and outs of their customers' businesses, they help their customers lower total cost of production with the best products and processes for their operations.