Offsetting the Parcel Oligopoly:  Helpful Hints for Controlling Your eCommerce Delivery Spend

July 17, 2018 by Amware Fulfillment

There are many industries that are chock full of competition.  Unfortunately for your business, parcel delivery isn’t one of them. 

Much like Henry Ford was glad to sell people a car in any color “as long as it was black,” your company is free to use any eCommerce delivery option you want – as long it involves UPS, FedEx, DHL or the USPS. 

This longstanding oligopoly wouldn’t be a problem if parcel shipping costs represented a small portion of your budget.   However, in most cases, they’re responsible for a mind-blowing two-thirds of your fulfillment budget.  And according to the latest statistics, they’re getting more expensive every year.

Thankfully, Amware wrote the book (or rather the eBook) on how to successfully reduce your parcel costs.   You can download the full version here, and we hope you will, because many of the eCommerce delivery options it mentions could save you big.  Meanwhile, allow us to share a few highlights below. 

Make It A Point To Understand The Nuances Of Each Parcel Carrier’s Pricing Structure

It’s not uncommon for carriers to hide surcharges and other fees within the fine print of their pricing sheets.  In fact, according to freight transportation consultant Giles Taylor, “small parcel carriers are masters of accessorial charges, which include dimensional weight surcharges, residential delivery surcharges, and other costs over the base rate.” 

ecommerce delivery

Although it may seem tedious, make it a point to read all terms and conditions of your carrier agreements carefully (the Devil’s always in the details).  It will help you do a far better job of weighing the pros and cons of each eCommerce delivery option that’s being offered – and avoid many cleverly disguised billing surprises. 

Beware Of Bundles

Much like cable companies, it’s not unusual for carriers to try to wow you with packages of multiple services that – at first glance – may seem like a great deal.  But often, many of these bundles could end up costing you more than your company would have paid if you’d purchased each service à la carte.  In light of this, make sure you conduct a careful cost analysis on any bundled eCommerce delivery options before signing on the dotted line, because sometimes the non-savings you discover will surprise you.

Combine Parcel Carrier Services with the USPS

If you prefer to use UPS or FedEx  for shipping but don’t enjoy paying their residential delivery surcharges of $3.60 for Ground or $4.15 for Express Services, consider using either SurePost (UPS),  SmartPost (FedEx), or  Smartmail (DHL) instead.  These hybrid services rely on these three carriers to ship packages most of the way while leaving the final mile delivery to the USPS, a combination that could potentially shave 30-40% off your total delivery expense.

Leverage 3PLs’ Volume Shipping Discounts

Because 3PLs handle large volumes of business, they have a higher aggregate shipping spend that they use to negotiate better rates than your company could get through its own direct negotiation.  As a result, some 3PLs can pass along shipping discounts in the 10-40% range for heavier packages and lower but still significant discounts for lighter packages.

Leverage 3PLs’ Multi-DC offerings

Search for 3PLs that offer various distribution center models for your company to choose from including the option of  using a single DC or multiple DCs as your needs dictate.  Some examples of such models include:

  • Using a centrally-located warehouse that offers access to both coasts while also enabling your company to service its Midwestern customers.  This approach may enable your company to eliminate anywhere from six-to-eight zones for a typical transit, depending upon your final distribution point.
  • Establishing a two-or-three-DC network to capture the lowest cost of shipping and quickest transit times for your clients’ orders.  Granted, there will be additional costs associated with carrying inventory in more than one facility.  However, depending on the volume your company ships to  certain regions of the country, it may be more than offset by your potential shipping savings.

Look For An Experienced Fulfillment Provider To Help With Parcel Shipping

On a final note, if you’re looking for a partner to help implement these methods (and some of the others discussed in our eBook), consider working with a 3PL like Amware that specializes in B2C warehousing fulfillment.  Not only can it steer you in the right direction across the parcel carrier landscape, it can also help you tap into many other money-saving options both inside and outside the warehouse.  

Looking to Reduce Fulfillment Costs?  Start with Parcel Shipping.  Here’s How. Download our eBrochure.


Filed Under: Parcel Transportation, eCommerce Fulfillment