Every now and again the rules to the games we play can change. Before 1979, there was no three-point line in the NBA. 36 years later, Steph Curry is a household name and just rewrote the record books for three-pointers made in the finals. While the core concept of the game has remain unchanged, new advantages are available for players and teams that choose to capitalize on them. Dimensional weight pricing can be a similar opportunity for e-commerce companies that are seeking a more cost-effective supply chain.
When UPS and FedEx began to calculate costs for items less than three cubic feet earlier this year, it created a new element to the expense of shipping goods. Dimensional (DIM) pricing is anticipated to impact about 1/3 of FedEx’s packages. Furthermore, the cost for some of these packages could increase by as much as 30%. This is causing an obvious concern for retailers and shippers.
However, if approached correctly, these new parameters can actually become a competitive advantage. First we need to address how DIM pricing works.
Dimensional Weight Pricing
Dimensional weight pricing is a technique that uses an estimated “weight” that is derived from multiplying the length by the width by the height of a package and then dividing that number by a dimensional factor (for domestic packages UPS and FedEx use 166). So while an item may be very light, the size of its packaging could dramatically increase its cost to ship. The larger number between DIM weight and actual weight will be applied.
Now that this has been defined, how can an e-commerce operation capitalize on this new formula? These two tips can turn a challenge into an opportunity:
1.) Evaluate Your Current Operation
Does your product really need to be shipped in a box? If an envelope or bag could work just as well, there could be significant dimensional savings. If it does require a box, are there more efficient ways to package it? There can be a lot of wasted space in boxes that are designed for easy handling. Modifications can create tremendous savings within this new formula.
2.) Keep the Customer in Mind
Of course, when a different type of package leaves your warehouse, a different package will arrive at your customer’s door. Historically, depending on the item, there is going to be some level of expectation when it is delivered. As your packaging transitions to meet these new demands and cost parameters, maintaining your branding and consumer expectations is critical. Each business will have a different list of customer priorities, balancing these along with new operations can create a seamless change that equals more savings.
Finding savings inside of a supply chain that becomes more complex each day is a key focus across all industries. While consumers and vendors alike will continue to evolve and present new demands and challenges, strategic thinking and access to critical resources can turn these obstacles into advantages. Barrett Distribution Centers, through experience with a variety of e-commerce operations, creates customized supply chain solutions to meet new challenges just like dimensional weighting. For more information, click here.