In my last post I challenged you to figure out why the USPS was more money for a light-weight residential package weighing five pounds. Congratulations to Steve Foster of the US Post Office. He noticed that the dimensions of my package were 12 x 12 x13, which put it in the category of a Large Package. The USPS charges more for packages that are larger than one cubic foot. So in my case, if that package were just 1″ smaller, it would have only cost $11.76 and the USPS would have been my least expensive carrier. That one inch cost and extra $9.59!
The lesson learned is this: when you are comparing rates and services amongst various carriers, make sure you include the dimensions of the package. Failure to do so will cost you plenty!
The intention of my next several posts is to provide distinctions of the different types of parcel shippers. I am doing this for several reasons:
Parcel shippers and readers of this blog can identify themselves and their needs.
Once identified, they can see what others in their category typically do and discover ideas for saving on shipping that are suitable for them.
Technology companies that offer shipping software can also use this to segment the market and design appropriate solutions with the features and price points for that segment.
The first category is the Consumer— someone who occasional ships a package. In the parcel industry, the consumer shipper is sometimes referred to as the gift shipper because they are typically someone who only ships when they have a gift to send. These are some of the characteristics of consumer shippers:
This is the single largest group of shippers.
Most of them ship by going to the US Post Office and paying for postage over the counter.
If they don’t go to the Post Office, they go to a UPS store and have their packages packed.
Convenience is the most important benefit they seek in shipping.
Consumer shippers pay the most for shipping a package; most pay retail or higher.
Many consumer shippers pay for services they don’t need because of their ignorance about options available. For example, they pay for second day or next day service when a ground package could get there the same day or sooner for a fraction of the cost.
The largest percentage increase in ground parcel rates from both UPS and FedEx go into effect today. While they announced that the average increase is 5.9%, it is important to know that this is only an average. Certain weights and zones are much higher.
What can you do about it?
Minimize surcharges; the cost to ship to a residence is 30% more than a business. Ship your package to your recipients’ office rather than home.
Compare rates with other carriers; look at the cost to ship the package with the USPS or regional carriers. It could be as much as 50% less
Get a discount; if you have a discount, now may be the time to reassess your rates. If you want a professional analysis of whether you are getting the discounts that you deserve, let me know.
Eliminate mistakes; the cost of an address correction has increased by $2 or 33%. It will cost you $8 extra if you don’t have the address correct. Use the carrier’s website or third party software to validate the address.
Ship it with a cheaper service; ship it ground instead of express. Compare delivery times and days.
Many people are looking for ways to save on shipping gifts over the next couple of weeks. The cost to ship a package to a residence is about $2.00 more than shipping it to a commercial business. I calculated a 5-pound package from New York to Beverly Hills and it was $13.51 for a residence and $11.43 to a business with UPS.
An easy way to save money is to ship the package to the recipients business and save 15% or more on shipping cost. Many people prefer to receive packages at their office because no one is at home during the day. No more packages left on the front porch or waiting for deliveries.
Here is Taylor’s Tip:
Ship it to a business address and save on shipping!
Most Amazon sellers make mistakes when shipping packages. When you sell an item on Amazon, you receive a fixed amount as a shipping credit to help cover shipping costs, so it is important to know your shipping costs or you could lose money. If you ship smart, you can make a profit.
Taylor’s Tip “Don’t assume; compare different services.”
Most Amazon sellers assume that Media Mail, available from the United States Postal Service (USPS) is the least costly method of shipping and don’t even bother to compare rates. This is a mistake. If you have a package that weighs less than seven ounces, then you should consider First-Class Mail. The USPS has a special rate for packages weighing less than 13 ounces, and for lighter weight packages it is cheaper than Media Mail! First-Class mail is delivered in three days or less, so your customers should be delighted. You can also add Delivery Confirmation.
Jerry Hempstead retired as Vice President of DHL in January 2006 after 33 years in our industry. At the National Conference on Operations & Fulfillment, Jerry moderated the panel discussion of experts (I was one), entitled “40 Ideas to Reduce Shipping Costs”.
I asked Jerry to if he could provide advice for small business shippers, eBay sellers, and online merchants on how they might be able to cut their shipping costs. In this video, Jerry shares, what he calls, the best kept secrets in the industry for saving on shipping.
Jerry believes that the best way to cut express shipping is to use the carrier’s pre-paid products.
DHL has a product, called ShipReady. You can purchase letter, legal, packs or boxes. The minimum quantity is 10. I looked at the price and it was $16 for an envelope guaranteed to arrive the next day before noon. I then looked up how much it would be to ship that envelope across the country using http://www.dhl.com. The price was double!
Prepaid services don’t have:
Residential surcharges
Delivery area surcharges
Weight limits
Fuel surcharges
This is a GREAT way to save money. Thank you Jerry!
Taylor’s Tip #10, “Purchase prepaid express envelopes; save 50%!”
Taylor’s Tip #9, “Don’t buy parcel insurance from your carrier; save 50% with third party insurance.”
UPS, FedEx, and DHL all offer various forms of insurance if your package is lost or damaged. With these carriers a shipment is automatically protected up to $100 for loss or damage, but if you require more protection than you need to declare a higher value for protection. FedEx and UPS call it “Declared Value”. DHL calls theirs “Shipment Value Protection. The US Post Office offers insurance as well.
The formula works pretty much the same even though the rates are different if you have a retail or commercial account.
For example, UPS charges $0.90 for each $100.00 (or portion of $100.00) of the total value declared, with a minimum charge of $1.80. If you had a package that was worth $500, you would subtract the $100 that is included and have $400 or 4 units x $0.90 for a cost of $3.60.
If you did 10 packages a month, you would be paying $36 just for insurance!
Now here is a secret that many eBay sellers and online merchants don’t know. There are third party insurance companies that will insure your packages for 50% less than the carriers charge.
I had the opportunity to video Walt Moscoso, Director of Sales for U-PIC Insurance services at the National Conference on Operations and Fulfillment.
U-PIC offers discounted package insurance for packages shipped via major carriers such as UPS, U.S. Postal Service, FedEx, DHL, etc. The package is shipped by the carrier but insured by U-PIC, saving you hundreds, perhaps thousands of dollars every year. You will save 60-80% on your insurance costs. There are no minimum requirements.
When it comes to shipping packages, one plus one does not equal two! What I mean by this is that if you have two, 1 pound packages to send to the same address it will cost you considerably more to ship them separately.
If you combine them into one box, you will save money.
Here is a specific example. Let’s say that you want to ship a 1 pound box from New York City to Beverly Hills. The U.S. Postal Service Priority Mail rate for a 1 pound box is $4.60, so if you sent two packages, it would cost you $9.20. The rate for a 2 pound package is $7.50 or 18% less.
You will save $1.70 by combining these items into one box. You will always save money by combining items into a single box. This is always true, with all carriers.
Taylor’s Tip #8, “If you are shipping more than one box to the same address, find a way to consolidate them into one package and save on shipping.”
Posted by mtaylortec 
