We’re one month into the new year and already you might be noticing that your carrier’s invoices are, shall we say, a tad higher than you expected.
Maybe it’s the new, lower threshold for the additional handling surcharge. Maybe it’s dimensional (DIM) weights. Maybe it’s your free shipping offer. Who can tell?
You can, if you take the time to do a little legwork. Don’t get lost in the day-to-day grind of getting shipments out the door and neglect to make a big-picture plan that will keep your budget in check.
Sometimes that means a good, hard look in the mirror. It’s quiz time: Do you fit any of these descriptions?
You based your budget on the GRI.
Both UPS and FedEx said their General Rate Increase (GRI) would be 4.9% this year, so that’s how a lot of companies set their shipping budgets. But because rate increases affect every company differently, companies that used this rate for budgeting purposes could be in for a costly surprise. Both actual and DIM weights saw price increases this year that exceed the GRI, and home delivery of oversized items skyrocketed 33.3%. If you don’t have a great handle on your shipping profile, it’s time to get started. Especially if…
You didn’t analyze last year’s numbers.
Shipping produces a lot of data, especially in your weekly carrier reports — a FedEx CSV file has more than 250 data points to review, and one from UPS has more than 130. It’s easy to let it linger on your to-do list because you’re overwhelmed, but these documents are rich with information that can help you master your budget.
First, are you being charged for things you shouldn’t? Then you’re owed a refund. Yay! But wait: Carriers won’t refund you on an invoice you’ve already paid. Darn! Prevent that from happening this year by carefully analyzing each invoice and then requesting a refund if needed before you pay your bill.
Second, you can learn a lot about your shipping profile from your numbers. Knowing hard data about what you ship, where you ship it to and from, and the surcharges you most often incur will help you negotiate better rates in key areas, like your rate tier, additional handling surcharges, or delivery area surcharges. So you’re likely overspending if…
You haven’t negotiated your contract for a couple of years.
We’re always surprised to hear from shippers we work with that they haven’t negotiated their carrier contract in a few years. If you feel like you’re getting a good deal or you have a great relationship with your carrier rep, you might have let this slide.
But your business has surely changed over the last few years, and we know carrier rates and policies have changed. It’s definitely time to dust off your contract and look at what you’re paying for. Is the DIM weight getting you? Or the complex charges around large packages? Get out your data and arm yourself with the information you’ll need for your next negotiation.
When you prepare to negotiate, don’t forget to consider your shipping policies in addition to your data. How does your website frame customers’ expectations? You won’t know if…
You aren’t in sync with the marketing team.
With alarming speed, Amazon has trained shoppers to expect fast, free shipping. In fact, in 2019 they even upped the ante and said they’d make one-day shipping the standard for Prime members, putting even more pressure on smaller e-commerce businesses. And guess what? Shoppers expect their returns to be free and easy too.
Your marketing team is likely trying to keep up with demand and create the best customer experience possible, making it crucial for you to clearly understand the expectations for shipping they set on sales and checkout pages. What’s the free shipping minimum? What shipping speed options can customers choose from? Do these factors protect your Cost of Goods Sold? Do you have the most economical packaging for frequently paired products on hand?
There’s a lot to they need to know from you too, so if you don’t have a great relationship with the marketing group, start working on it. A box of doughnuts never hurt!
It’s go time!
If you can relate to any of the above, it’s time to take action. In addition to the tips we’ve mentioned, investigate solutions that can help you dig into your data without it taking hours and ensure you find the best carrier and rates for your unique business.
And if you want to know more about ways your shipping could improve, check out our free eBook, Five Shipping Mistakes Your Company Is Likely Making.