How to Get from Zero to Ship: Carriers, Rates and Strategies

Jun 21, 2016 by Joey Blanco, ShipStation
How to Get from Zero to Ship
Posted Jun 21, 2016 by Joey Blanco, ShipStation

Running your own online store is multitasking.

Between building out your brand presence on Facebook, Twitter, Instagram, and on your site — in your emails, too — you also have to think about inventory levels, what channels you sell on, and, of course, the ever-complicated question of how you ship.

Shipping ain’t easy, but at ShipStation, we’ve had the privilege of watching innumerable e-commerce businesses figure out best methods and which pratfalls to avoid.

We also have the nitty gritty on carriers and how to find yourself shipping efficiently and cost effectively. Let’s talk about carriers and their rates first.

Carriers & Their Rates

If you’re an entrepreneur in the US, there are 3 big carriers you see over and over again: USPS, UPS, and FedEx.

Of course, there are regional carriers all over the States, too (like LSO and OnTrac), consolidators (Asendia, Globegistics, FirstMile), fulfillment centers (FBA, Shipwire, Newgistics), and heavy hitters like DHL.

See what we mean about complicated?

We’ll dabble into each but with a big focus on the big 3. All of these principles can be applied to your own local carriers, too, whether you’re shipping from the US or the UK, Canada, Australia or anywhere else around the world.

USPS Rate Tiers

  • Retail Rates: This is THE most expensive option to pay for postage. If you walk into the Post Office, you’ll pay retail. Retail covers the cost of not just the postage, but the facility you’re in and the Postal workers, too. Plus, time spent in line is time wasted.
  • Commercial Base Pricing (CBP): With January’s rate increase, the USPS has made CBP the standard bearer of postage pricing. This has deep discounts from Retail & Online rates. These rates are offered by companies like Stamps.com and Endicia and keep you from wasting gas, time, and patience going to the Post Office.
  • Commercial Plus Pricing (CPP): These rates are negotiated directly with the USPS but offer significant discounts, usually on Priority and Priority Express shipments.

FedEx & UPS

  • Retail: This rate is the same whether you buy online or in-store. Like the USPS, it’s also the highest (for the same reasons).
  • Contract/Negotiated Rates: This is a bit like CPP: this depends on your volume AND how much money you’ve spent with UPS or FedEx. It’s something you set-up with them directly but because this can save you A LOT of money, we absolutely recommend reaching out to your account rep with them to see if you can qualify.
  • Dimensional Weight: Ready for a bit of philosophy? Dimensional weight is the POTENTIAL weight of your package. That means, you’re charged based off the weight of what your package COULD contain. Now, in a case that the dimensional weight is heavier than actual weight, you can expect to pay the higher rate. Thankfully, there’s a formula for domestic dimensional weight packages:

L x W x H / 166 = Dimensional Weight

Make sure you’re rounding up to the nearest whole pound, too.

Considering the last point about paying the higher rate, it’d be pretty easy to pay more for a lot less.

For example, you’re shipping a stuffed T-Rex that weighs a total of 5 lbs. in an 18” x 18” x 12” package. That makes the dimensional weight formula 18 x 18 x 12 / 166 = 23.4. Round up to 24 lbs. and wow. All of a sudden you’re paying for an extra 19 lbs. with dimensional weight.

Our protip for dimensional weight? Heavy items in smaller packaging.

That covers the usual suspects of shipping domestically. But what about the consolidators and regional carriers we mentioned? Or even Regional and Flat rates?

  • Flat Rates: Regardless of weight, if you can fit your order in this envelope or package, USPS or FedEx (it’s offered by both) will ship the package for a flat rate. Only caveat is that you MUST use their specific packaging.
  • Regional Rates: When you ship in-state or in the surrounding area, USPS’s Regional Rates might work for you. You’ll find the best savings with smaller, bulkier packages over a short distance but remember to use their packaging.
  • Regional Carriers: Like Regional Rates, Regional Carriers service a very specific area very well. Carriers like LSO, which serves Texas and parts of its surrounding states, or OnTrac, which delivers to the west and northwest, can step out ahead in service, price, and speed.
  • Consolidators: Companies like Asendia, Globegistics, DHL Global Mail, UPS Mail Innovations, and on and on, are consolidators. They take in huge quantities of packages from different carriers (like USPS, UPS, FedEx) and deliver them closer to the actual destination. Sometimes they pass the package off to another consolidator or carrier, but they can also be the delivery service, too.

What this all boils down to is simple: always avoid retail rates and remember that you have a nearly endless supply of carriers. If one doesn’t work out, research and try another.

Shipping Strategies

You know how to find the best rates and services and have an idea of how and what you might be charged from different carriers.

But what and how are you going to charge your customers for shipping?

  • Free Shipping: This is a top level business move. Beyond being a fantastic piece of marketing, shipping costs are among the top few reasons customers abandon shopping carts. By eliminating them (at least from the customer’s perspective), you’ve ensured a happy check-out. Find a way to absorb the cost of shipping in your products itself so it’s less of a hit. Also, test the waters: try setting a threshold (free shipping on orders over $50!) or run a special during a holiday (free shipping from Black Friday through Cyber Monday!).
  • Flat Rate: This takes a bit of legwork: you need to know the average shipping cost of packages at different weights. This is the sort of service that makes sense for multiple, smaller items, but definitely not for a single item order.
  • Charge What You’re Charged: This is the most expensive strategy, but it usually means you won’t lose as much on shipping. Some shopping carts and marketplaces will have plug-ins that can show your customer live rates so they know exactly what to expect.

Ultimately, how you handle shipping depends on what you can afford. Increasing product cost by a few cents to absorb free shipping makes a lot of sense and the word FREE brings folks in.

Returns

Returns, returns, returns. No one likes them but they’ll always exist.

No matter how well you list product specs, details, etc., someone will always find a reason to return something. Do you want to be proactive about them or what for users to reach out?

  • Included: If you’re selling clothing, or boutique items that tend to go as gifts—anything that tends to be returnable—adding in a return label with your orders might be a pain-free way of making the process simpler (and make the customer that much more likely to return to your store). Whereas the USPS will charge you up front for the cost of a return label, UPS only charges 50 cents for unused return labels. If you do go USPS, you can use one of their cheaper (and slower) methods, like Parcel Select.
  • As Needed: When a customer reaches out for a return, just send them a label! Easy, right? Just make sure you have a clear, straight-forward, and easy-to-find return policy. That’s the lynchpin for all of this.

Learn more: How to Write a Good Return Policy for E-Commerce Stores

Simple, right? Once you’re in the weeds, though, the view can change quickly. Keep yourself surrounded by companies that are looking out for you — Ecwid, ShipStation, etc.—and you’ll be able to manage your growth and focus on doing what you love: creating great products.

About The Author
Joey is ShipStation’s Content & Social Media Coordinator. He spent over a year on ShipStation’s Support team which has given him great insight into the product and the users. Outside of work, you’ll find him writing, getting into one of Austin’s great microbrews, or relaxing on a trail with his mutt.

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