When doing planning for your e-commerce business, a shipping strategy might not be the first thing you think of. Considering that eCommerce fulfillment leaves a lasting impression on your customers, it should really make it into the planning session. According to a study by Walker Sands, 79% of consumers surveyed said that free shipping would make them more likely to shop online. To get access to a target audience that requires free shipping, it’s essential that you educate yourself on how shipping is priced so that you can absorb the shipping cost while maintaining your strong profit margin. You can also require a minimum spend from your customers if you want to offer free shipping, which will increase your average order value and give you a little more padding to cover the cost of shipping.
The price of shipping is determined by shipping zones, as well as the type of service. Shipping zones are used to measure the distance a package travels. In the United States, the zones are numbered 1 to 8 and they change depending on where you are shipping from. The point of origin location is always designated as zone 1. From there you will calculate which zone your destination is in, based on the distance the package needs to travel. Smaller businesses usually opt for using USPS based on price. In the case of USPS, the shipping zones and distances are calculated based on the table below. You can get a domestic zone chart on the USPS website by entering your local 3 digit zip code.
|
Shipping Zone |
Mile Radius (from original location) |
|
Zone 1 |
50 miles |
|
Zone 2 |
51 – 150 miles |
|
Zone 3 |
151 – 300 miles |
|
Zone 4 |
301 – 600 miles |
|
Zone 5 |
601 – 1000 miles |
|
Zone 6 |
1001 – 1400 miles |
|
Zone 7 |
1401 – 1800 miles |
|
Zone 8 |
1801+ miles |
Shipping Zones Outside the US
USPS also uses zones 9 to 13 for international locations. These include locations outside the contiguous United States, US Territories, and in cases where you are shipping to a military base or diplomatic location. These will be referred to as APO, FPO, or DPO addresses.
Calculating Zoned and Unzoned Services
Shipping carriers calculate the rate for different services according to the zones they need to ship to. USPS zoned services are Priority Mail Express, Priority Mail, USPS Retail Ground, and Bound Printed Matter. The greater the zone, the higher the cost of the zoned service. Some services have a flat rate and cost the same regardless of where in the United States you ship to. USPS unzoned services are First-Class Mail, USPS Marketing Mail, Library Mail, and Media Mail.
Weight and Dimensional Weight
All packages are affected by distance and service, but weight and dimensions also affect the cost of shipping packages across the country. The weight of a package will greatly affect the price of shipping it to any zone. The heavier the package, the more dramatically it will affect the price increase to ship it.
In the case of dimensional weight, shipping carriers estimate the weight calculated from the length, width, and height of the package, measuring the longest point of each. The final shipping cost is based on whichever weight calculation is greater, the actual weight or the dimensional weight. For this reason, it is important to put packages in the correct size boxes so that you don’t overpay because your packaging takes up too much space.
How to Reduce Shipping Cost and Time
You will have more flexibility regarding your fulfillment location if you choose to outsource your eCommerce fulfillment. Depending on where you have your nexus, this can considerably reduce the distance your products will have to travel to reach your customers. Most 3PLs (third-party logistics providers) or fulfillment providers will have multiple warehouses that are strategically located, giving you a geographic footprint that a single eCommerce company can rarely attain when doing self-fulfillment. This enables you to split your inventory and send it to different locations.
Consider where the majority of your customers are based when allocating inventory to warehouses across the country. A good 3PL will use sophisticated algorithms to automate fulfillment and route your orders to the closest or most cost-effective fulfillment center. Not only will it be cheaper to ship your products, but it will also reduce shipping time, getting your products to customers faster. With multiple fulfillment locations, you can offer faster shipping such as guaranteed two-day shipping via ground in more regions, instead of having to default to expensive air shipping to get the order to your customer on time.