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Shipping heavy/large merchandise

Discussion in 'eCommerce' started by ajensen27, Oct 7, 2015.

  1. #1
    So we've been in business online for over 20 years but our products have always been fairly small and light weight. We've always used USPS Priority because it's fairly cheap and gets to the customer quickly. We have begun to sell a new line of products that are quite heavy and bulkier and customers can purchase them by the case (23x16x15" box that can weigh up to 25 pounds). We just sold our first case and looking at prices for shipping, all 3 major carriers are around $50. We offer a flat rate $7.95 shipping charge and free shipping on orders over $99. There's no way we can make money with shipping costing $50. Our competitors offer basically the same shipping charges as us, so how are they making money? Is there another way to ship that I don't know about? I saw that you can create a UPS.com account and save about 10% off this $50 (still not cheap enough).

    Any help is much appreciated.
     
    ajensen27, Oct 7, 2015 IP
  2. SKUlabs

    SKUlabs Greenhorn

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    #2
    There are a couple of routes you can take here:

    First, you can negotiate shipping rates with sales reps from your shipping carriers based on the volume you ship through them. I just ran your 23x16x15 @ 25 lbs example through a negotiated FedEx account, and I got a quote of $24 coast-to-coast via FedEx Home Delivery. That's way lower than options through UPS or US Postal even with heavy negotiation, so that would be your best bet in this case.

    Your other option would be to charge an oversized item fee to your customer. I've seen this a lot, so it isn't that unusual, as long as it's within reason. Don't expect the surcharge to cover all of the increased shipping cost, but it can certainly help.
     
    SKUlabs, Oct 7, 2015 IP
  3. jestep

    jestep Prominent Member

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    #3
    Not a lot of options. Neither UPS nor Fedex will give much discount for ground shipping. One of our partners literally ships about 2 semi trailers of packages per day and the discount on ground was only about 10%. They get a huge discount on overnight and other air services though.

    Only way I've seen it work for normal businesses who don't want to take a loss on shipping is using free shipping and weight threshold pricing for heavy stuff. The online retailers that still ship heavy products without any shipping markup are taking a loss on the shipping, if not taking a loss on those orders entirely. They're usually betting that they'll make up the money in repeat orders, referrals, or some other channel, but I've been doing the ecommerce / retail stuff for a long time and I've never seen anyone actually breaking even on shipping costs for orders like this.

    The other possibility is that your competitors somehow have a substantial pricing advantage. This really depends on volume as well as whatever contractual agreements the supplier or manufacturer has with them. It's not common, but in other industries I've seen some pretty crazy pricing advantages where some companies have as much as a 50% lower cost on some of the brands they sell. If your competitors are very old or very large corporations, this is a real possibility. One thing that Walmart and even more so Amazon have done is aggressive supply side negotiating. They force suppliers to guarantee not only pricing, but annual or recurring reductions in pricing. Most consumers don't realize this is even happening. But, it's an incredible advantage when one retailer has a guarantee that their cost is going to go down 10% per year as long as they sell a certain number of products per year. Most retailers don't have the ability to get deals like this, but larger ones in closed niches definitely can try to throw their weight around to get favorable pricing.
     
    jestep, Oct 8, 2015 IP