Minimize the Impact of Dimensional Weight Rates on eCommerce Fulfillment

FedEx and UPS have adjusted their rate structure for shipping smaller items to encourage more efficient packaging density, largely in response to the dramatic upswing in ecommerce sales.

Who will be impacted most? Companies that ship lightweight products in large shipping boxes. For example, with the new rate structure, a one-pound teddy bear could cost more to ship than a three-pound laptop due to a higher dimensional weight.

If you regularly ship lightweight packages less than three cubic feet in size, you may want to explore available opportunities for optimization. These may include:

• Packaging assessment. Take time to analyze package weight, cube information, shipping frequency, etc. Is your product packaged as compactly as possible and shipped in the smallest result in significant savings. Also explore options for more cost-effective packaging, such as poly bags. Make sure your suppliers optimize their packaging too.

• SKU analysis. Review the products you’re shipping and analyze any small, low-margin items that will be expensive to ship. You’ll need to decide if they’re worth keeping in your product catalog with the new rates.

• Carrier selection. Companies shipping overnight or second-day air will experience a greater cost impact from dimensional weight pricing, so consider whether you need to continue offering that level of service. If so, will you absorb the cost or pass it on to your customers? If ground service is an option, it can be worth exploring alternative carriers for cost savings.

• Rate negotiation. With sufficient volume, you may be able to negotiate with carriers for a more favorable “dimensional divisor” - or work with your fulfillment provider to leverage their overall volume discounts.

An experienced fulfillment provider can be a valuable resource as you look for ways to optimize your shipments. From negotiating rates to making packaging recommendations to transitioning to alternate carriers, they can work with you to minimize the impact of the new pricing structure.