Direct Response marketers can save money on shipping costs by learning lessons developed by package consolidators. Consolidators combine many packages into one larger unit. This one heavier item ships at a lower cost per pound than the many lighter packages. Upon arrival at a hub, the larger package is broken down into the components for final delivery.
In Direct Response, marketers prefer to drop-ship quickly to individual households, and don’t have the luxury of true consolidation. But consolidation science has developed tools to make their process more efficient. This can be applied to upselling in Direct Response while structuring the offers to take advantage of weight and dimensional limits.
“Small package carriers charge customers a per-package rate based on the carton weight and the distance between origin and destination,” explains Tim Zinner of Parcel Industry.com. This means that the cost of per-pound shipping is more expensive for lower-weight packages. In other words, smaller, lighter packages, which have to bear the burden of a proportionately high shipping cost, have intrinsically lowered the value of the offer to the consumer.
“Savvy shippers have taken advantage of these lower rates and have started packing larger quantities into cartons,” says Zinner, “In addition to reducing shipping costs, parcel consolidation also helps to reduce the number of charge-backs.” This shipping process is more efficient, as it takes advantage of packaging optimization. Marketers can do the same thing by creating offers that include assortments that push the limits of the size and weight parameters. For example, a marketer offers a product at $40 with $8 shipping and handling. An alternative is two products at $60 with the same $8 shipping and handling.
In his article, Zinner outlines a strategy for achieving the lowest possible shipping cost using drop-shipping:
-Consolidated cartons must stay within dimensional weight range determined by small package carrier.
-Contents should be effectively arranged within the parcel to fit into smallest size carton.
-Utilize Zinner’s software algorithm that determines the most efficient way to load a package – “simply tell the program what products should be shipped and the software generates a guide explaining where the ‘pieces’ should go.”
Using Zinner’s algorithm, shippers can increase productivity and efficiency through packaging optimization. If your company is considering enlisting fulfillment services, contact a2b Fulfillment today. A2b, a 3PL company, offers a complete range of fulfillment services, including warehousing in Atlanta and Toronto, e-commerce fulfillment, as well as shipping services like LTL, FTL, Rail and overall supply chain management. For more information, call 866.843.3827.