Two common options for food businesses are using third-party logistics providers (3PL) or distributors. In this article, we will explore the differences between 3PL and distributors for food products, and compare their advantages, challenges, and costs to help you make an informed decision for your business.

The main difference between 3PL and distributors

3PLs provide logistics services for companies, including warehousing, transportation, and inventory management, while distributors purchase products from manufacturers and sell them to retailers and end consumers.

3PL for Food Products

A third-party logistics provider (3PL) is a company that provides logistics services for businesses, including warehousing, transportation, and inventory management.

When it comes to food products, 3PLs can provide temperature-controlled storage and transportation, which is important for perishable items like fresh produce, dairy, and meats. 

3PLs also offer flexibility and scalability, allowing businesses to adjust their logistics needs based on seasonality and demand fluctuations. Using a 3PL can also reduce overhead costs and increase efficiency, as businesses do not have to invest in their own warehouse and transportation infrastructure.

However, there are some challenges to consider when using 3PLs for food products. One of the biggest challenges is ensuring quality control and food safety throughout the supply chain. Businesses must ensure that the 3PL they choose has the proper certifications and procedures in place to maintain the quality and safety of their products. 

Additionally, relying on a 3PL for logistics means giving up some control over the supply chain, which can make it challenging to monitor and respond to issues that may arise.

Some examples of 3PLs that specialize in food products include Americold, Lineage Logistics, and DHL Supply Chain.

Distributors for Food Products

Distributors are companies that purchase products from manufacturers and sell them to retailers and end consumers. When it comes to food products, distributors can help businesses reach a wider audience by leveraging their existing relationships with retailers and other distribution channels. 

Distributors can also provide valuable insights into market trends and demand, helping businesses make more informed decisions about product development and marketing.

One of the biggest advantages of using distributors for food products is the control that businesses have over the supply chain. Businesses can work closely with distributors to ensure that their products are handled and stored properly, and that they are reaching the right audiences. Additionally, using a distributor can reduce the administrative burden of managing multiple relationships with retailers and other distribution channels.

However, using distributors for food products also comes with some challenges. One of the biggest challenges is cost, as distributors typically take a percentage of the sales revenue as their fee. Additionally, businesses must ensure that they choose a reputable and reliable distributor to maintain the quality and safety of their products throughout the supply chain.

Some examples of distributors for food products include UNFI, Sysco, and KeHE.

Comparison of 3PL and Distributors for Food Products

When it comes to choosing between 3PL and distributors for food products, there are several factors to consider:

• Cost: One of the most important factors is cost, as both 3PL and distributors come with fees that can impact profitability. 
• Services provided: Additionally, businesses should consider the service offerings of each option, including temperature-controlled storage, transportation, and quality control procedures.
• Flexibility: Flexibility is another factor to consider, as businesses may need to adjust their logistics needs based on seasonality and demand fluctuations. 
• Quality control and time to market: are also important considerations, as businesses must ensure that their products are reaching consumers in good condition and on time.

Conclusion

In conclusion, choosing the right logistics partner is essential for the success of a food business. While 3PLs and distributors offer different advantages and challenges, businesses must evaluate their specific needs and priorities to make an informed decision. By considering the cost, service offerings, flexibility, quality control, and time to market, businesses can choose the logistics partner that best fits their goals and objectives. 

Whether using a 3PL or a distributor, businesses must prioritize quality control and food safety throughout the supply chain to ensure that their products reach consumers in good condition and on time. Ultimately, the right logistics partner can help businesses increase efficiency, reduce costs, and reach a wider audience, setting them up for long-term success in the competitive food industry.

In this post, we will discuss the differences between floor-loaded and palletized containers, and the factors to consider when deciding which type of container to use.

Key takeaways: Floor-loaded vs palletized

• Floor-loaded containers are designed for loose cargo that can be loaded directly onto the container’s floor
• Palletized containers are designed for cargo that can be loaded onto pallets or platforms inside the container.
• Floor-loaded containers maximize the use of space in the container and are easier to load and unload, while palletized containers provide added protection to the cargo and can be loaded and unloaded more efficiently using forklifts or other lifting equipment.
• Floor-loaded containers are best for smaller, loose cargo that can be loaded and secured directly to the container’s floor but may be more expensive. Palletized containers are better suited for larger, heavier or bulkier cargo that requires pallets or platforms for loading and unloading.
• When selecting a container, it is important to consider the specific requirements of the retailer or distributor you are working with, as they may have specific requirements for shipping or selling products that will influence your choice of container type.

Floor-loaded Containers

Floor-loaded containers are designed to allow cargo to be loaded directly onto the container’s floor. These containers do not have any pallets or platforms inside, and the cargo is secured directly to the container’s floor.

Floor-loaded containers are typically used for loose cargo, such as bagged products, drums, or machinery. Some of the benefits of using floor-loaded containers include the ability to maximize the use of space in the container, and the ease of loading and unloading.

However, there are also limitations and challenges when using floor-loaded containers. They are not suitable for all types of cargo, and the cargo must be securely fastened to prevent shifting during transport.

Additionally, floor-loaded containers can be more difficult and time-consuming to load and unload compared to palletized containers.

Palletized Containers

Pallet loading containers are designed to allow cargo to be loaded onto pallets or platforms inside the container. These containers have a floor, but it is elevated above the container’s bottom rails to allow pallets or platforms to be inserted.

Palletized containers are typically used for heavy or bulky cargo, such as large machinery, furniture, or palletized products.

One of the benefits of using palletized containers is that the cargo is elevated off the floor, which can help protect it from damage during transport. Additionally, palletized containers can be loaded and unloaded quickly and efficiently using forklifts or other lifting equipment.

However, palletized containers can also be more expensive than floor-loaded containers, and they have weight and height restrictions that may limit the amount of cargo that can be transported.

Comparison of Floor-loaded and Palletized Containers

When choosing between floor-loaded and palletized containers, there are several factors to consider. These include the loading and unloading processes, cargo capacity and weight restrictions, safety considerations, and cost implications.

For example, floor-loaded containers may be more suitable for smaller, loose cargo that can be loaded and secured directly to the container’s floor. Palletized containers, on the other hand, may be better for larger, heavy or bulky cargo that requires pallets or platforms for loading and unloading.

In terms of safety considerations, floor-loaded containers require extra care to ensure that the cargo is securely fastened to prevent shifting during transport. Palletized containers, on the other hand, require attention to weight and height restrictions to ensure safe transport.

Finally, the cost implications of using one type of container over the other must be taken into account. While floor-loaded containers may be less expensive, they may not be suitable for all types of cargo, and may not be cost-effective in the long run. Palletized containers may be more expensive, but they may be necessary to ensure the safe and efficient transport of larger or heavier cargo.

Choosing the Right Container for Your Cargo

When selecting a container for your cargo, it is important to consider the specific requirements of the retailer or distributor you are working with. For example, if you are shipping your products via Amazon, they have specific requirements for shipping containers. Similarly, if you are selling products in Costco, they have specific requirements for containers as well.

For Amazon FBA shipments, If you use Fulfillment by Amazon (FBA) for order fulfillment, it’s important to understand the shipping requirements to avoid extra charges and potential refusal of your shipment. While Amazon allows floor loaded containers, palletized shipments are strongly preferred. If you choose to use floor loading, be aware that FBA has numerous restrictions, and you risk shipment refusal if it doesn’t meet their requirements.

For instance, if your boxes weigh over 50 pounds each, they must be palletized to be moved by forklifts, as per OSHA guidelines. Unloading floor-loaded containers may take longer, which could result in additional charges.Amazon also requires that your products be properly labeled and that the labels are affixed to the outside of the container.

If you are selling products in Costco, they require that your products be shipped on pallets, either in containers or on open pallets. The pallets must be standard-sized, and the products must be stacked in a specific way to allow for efficient handling and storage within their facilities. You will also need to affix specific labels to the pallets.

Regardless of the specific requirements of your retailer or distributor, it is important to properly assess your cargo and determine the appropriate container type. Consider the weight and dimensions of your cargo, as well as any special handling or storage requirements. Be sure to properly secure your cargo in the container, whether using a floor-loaded or palletized container, to ensure safe and efficient transport.

Summary and conclusion

Selecting the appropriate container type for your cargo is an important consideration for safe and efficient transport. Floor-loaded containers are best for loose or small cargo, while palletized containers are better suited for larger or heavier cargo.

When choosing between the two, consider the loading and unloading processes, cargo capacity and weight restrictions, safety considerations, and cost implications. Additionally, be sure to consider the specific requirements of your retailer or distributor, and properly assess your cargo to ensure you are using the appropriate container type.

Communication about what to expect with shipping is key to keeping your customers happy. In this respect, it is important to know which shipping dates to track, what can influence these estimates, and how you can optimize shipping efficiency and affordability.

Important Shipping Dates to Track

There are six main shipping dates that you need to understand and be able to track, including the estimated and actual shipping and delivery dates, the invoice creation date, and, when necessary, the return date.

1. Estimated Shipping Date

An estimated shipping date is just that — an estimation of when the order will be shipped. This can be influenced by order fulfillment cutoffs, which can add a day to the shipping estimation. For example, if a customer places an order later in the evening, the estimated shipping date can be a day later than it would have been when placed in the morning. 

These estimated shipping dates are not perfect. However, they should be as accurate as possible to minimize customer frustrations. 

2. Ship Date

The actual ship date is the day the order leaves the fulfillment or distribution center to make its way to the customer. This means that if you offer 2-day shipping, for example, the order will be delivered 2 days after the package leaves the warehouse. 

The ship differs from the order date, which is the date the order is made. This can be related to when the order was placed. E-commerce stores often do not fulfill orders on weekends or after a certain time of day. 

3. Estimated Delivery Date

Just like the estimated shipping date, this is the estimated delivery date, or the day the customer can expect to see their order. This can also vary based on a variety of factors. 

It is not a guarantee. It is an educated guess on when the order will arrive. The estimated delivery date is often displayed at the checkout and can change as other influencing factors crop up. 

There are a variety of reasons that shipping delays can occur. It is important to keep the customer informed to keep them satisfied. This is where order tracking is valuable.

4. Delivery Date

The delivery date is the actual date the item is delivered to the customer. While this will not always match the estimated delivery date, it is important to try and get the actual delivery date as close to the estimated delivery date as possible.

5. Invoice Creation Date

The invoice creation date is the day the invoice is created. It is often days before the order is processed and can also differ from the billing date.

6. Return Date

Returns are part of an e-commerce business, and the return date is the day that the product is returned to the seller. This is a different date than the return cutoff, which is the last day the customer has to make a return. It is also different than the return window, which is the amount of time a customer has to start the return and send it back to the seller.

Factors to Consider When Estimating Shipping Dates

E-commerce shipping is influenced by a variety of factors, many of which can be out of your hands. Again, it is not possible to offer 100% accuracy, but it is important to get as close as possible. Inform your customer about any shipping delays as soon as you recognize the issue.

Weather

Natural disasters, snow, and heavy rains can impact shipping times and package deliveries. In some cases, you can account for these slowdowns, but this is not always the case. It is important to let your customer know right away when weather is impacting shipping times.

Customs

With international shipping, packages can commonly be held up in customs and take longer to be cleared and delivered than anticipated. Carriers like DHL, FedEx, and UPS can help to minimize international shipping times. 

Federal Holidays

Companies are often closed on major federal holidays, which can impact shipping times and add time to the delivery date. This can be compounded when shipping internationally, as recipients are often not aware of federal holiday closures in other countries. 

Transit Times

There are a variety of factors that can influence transit time, which can include the following:

• Chosen carrier
• Shipping method
• Shipping destination

Typically, the further a package must travel, the longer it can take and the more expensive it will be. Expedited delivery options can guarantee faster shipping, but this will also come with higher shipping costs.

How a 3PL Can Optimize Shipping Dates

A third-party logistics (3PL) provider can handle all the inbound and outbound logistics of your order fulfillment. This can include many benefits, such as streamlining your shipping processes to offer more cost-effective options and efficient order fulfillment. 

Some of the shipping benefits related to using a 3PL include the following:

• Ability to offer 2-day shipping: A 3PL can help you compete with bigger retailers by being able to offer faster shipping as standard.
• More affordable rates: 3PL providers have built-in relationships with major shipping carriers. They can often pass their discounts and savings onto you.
• Accurate ETAs: Using advanced technology, including displaying dynamic shipping options and estimated shipping and delivery dates as well as real-time tracking data, can improve customer conversion rates.
• Speed up shipping times: A 3PL provider often splits your inventory between multiple fulfillment centers to optimize shipping routes. This can mean that when a customer makes an order, it is sent to the closest fulfillment center to them for faster and more affordable rates.

References

Main Reasons Why Consumers Abandon Their Orders During the Checkout Process in the United States 2022. (June 2022). Statista.

A poor customer experience can cost you business. In the United States, more than 80% of consumers stopped doing business with a company after a negative experience. 

Positive customer experiences, on the other hand, can help you to create trust and build a strong relationship with your customers. When their orders are delivered on time, in good shape, and as expected, this enhances the customer experience. 

What Is Order Fulfillment?

The order fulfillment process is the entire lifecycle of a sale, from the time the order is placed all the way through to when it is delivered to a customer. The flow of order fulfillment looks like this:

1. The customer places an order.
2. The order is received, often by a third-party logistics (3PL) provider to which order fulfillment is outsourced. 
3. The order is picked from its location in the warehouse, distribution, or fulfillment center.
4. The order is packaged and labeled for shipping.
5. The order is shipped through a shipping carrier to the customer.
6. The order is delivered to the customer.

4 Steps in Order Fulfillment

Order fulfillment is often outsourced to a 3PL, which can help you to scale your growing business and ensure that orders are handled in an automated and efficient manner. The 3PL can handle all aspects of order fulfillment, from receiving the order from your sales channel to picking, packing, and shipping it. 

The 3PL will house your inventory in one or more distribution or fulfillment centers. They’ll work directly with major shipping carriers to ensure the most affordable and efficient shipping methods. 

1. Receiving

The first step in order fulfillment is receiving and storing the inventory at a fulfillment center. 3PL providers often use advanced technology and automation to receive goods from suppliers, organize them in a warehousing storage location, and keep tabs on the inventory. 

With a good order management system, the 3PL can track and monitor inventory to ensure that when orders are received from customers, they can be quickly turned around. 

2. Picking

The next step in order fulfillment is picking. Once an order is received in the 3PL’s fulfillment system, it is pushed to a picking team. The picking team will receive a packing slip with the order information (items and quantities) and where the products are located within the facility. The picking team will collect the items and pass them on to the packing team.

3. Packing

The third step in the order fulfillment process is packing. Orders are packed for security and efficiency. It is important to ensure that the proper packing materials are used to secure the products, for example, and that they are packed into as small of packaging as possible. 

Packages are billed based on actual or dimensional weight (the space they take up). Because of this, smaller packaging is optimal.

3. Shipping

The final step in order fulfillment is shipping. A 3PL provider will work with existing relationships with major shipping carriers to provide you with affordable and efficient shipping options. 

The 3PL will attach a shipping label to the order, and the carrier will typically pick up the package directly from the fulfillment center. After the order has been picked up by the shipping carrier, tracking information is shared with you (and often with your customer), so the order can be tracked in real time. 

Tips for Proper Order Fulfillment

Customers expect their orders to be shipped and received in a timely fashion. It is important to optimize order fulfillment processes to achieve this. 

To ensure proper and optimized order fulfillment, you should use the following tips:

• Optimize your receiving processes. Orders and shipments need to be processed as soon as possible to ensure efficient order fulfillment. This starts with having a strong and optimized receiving process, so you can quickly turn inventory over.
• Adequately forecast demand. It is important to have enough inventory on hand to handle spikes in sales, so you can keep up with customer demand and efficiently fulfill orders. Use historical order data to account for seasonality and peak sales times.
• Have backup plans in place. There are inevitably going to be issues during order fulfillment at some point. Packages can be damaged or lost in transit. It is important to have a strategy for these external factors that you cannot control.

Developing an Order Fulfillment Strategy

Order fulfillment will look different for each business. There is no one order fulfillment strategy that is going to work for everyone. 

There are some important factors to consider when developing your order fulfillment strategy, including your business size, order volume, technology, sales channels, the location of your customers, inventory, and customization options.

Order Volume & Business Size

When your business is still small, and you are not fulfilling very many orders per month it can be more cost-effective to manage your own order fulfillment and to do this in-house. As your business grows and you expand the number of SKUs you carry, and your sales increase it can be helpful to outsource order fulfillment. You should work towards creating an e-commerce order fulfillment strategy that is scalable and can evolve with you as your business grows.

Technology and Sales Channels 

Your order fulfillment strategy needs to integrate into your online sales channels and work with your technology. Order fulfillment software that integrates with your e-commerce sales platform can help you efficiently manage your order fulfillment processes.

Technology should work with you and be leveraged to properly manage your inventory. It should ensure that you can quickly receive, pick, pack, and ship online orders. As soon as an order comes in, it should be pushed automatically to your fulfillment operations.

Location of Customers & Inventory

To optimize shipping routes, it is important to try and shorten the distance between where your product is shipped from and to. Shipping rates and times are calculated based on shipping zones. The more zones a package must travel through (the farther it has to go), the more expensive it will be and longer it is going to take. 

To manage customer shipping expectations, it is beneficial to use fulfillment or distribution centers that are closer to your customer base. 3PL providers often use more than one fulfillment center to split inventory. This ensures that they are shipping the shortest possible distance for the most cost-efficient and fastest shipping options.

Customization Options

If your products are custom-made or require specialized packaging or gift wrapping, it can be optimal to handle order fulfillment in a more hands-on manner. When your products are made-to-order, your order fulfillment strategy will need to be tailored to support this. 

Options for Order Fulfillment

There are several options when it comes to developing an order fulfillment strategy. These can include fulfilling orders yourself, using a 3PL, or dropshipping. Your needs are going to differ from those of your competitors. 

In-House Fulfillment

Typically, when an e-commerce business is just starting out, they will complete all parts of the order fulfillment process themselves. This is called self-fulfillment, merchant fulfillment, or in-house fulfillment. This option of order fulfillment gives you complete control over your entire retail supply chain. 

As your order volume increases, so will the need to either outsource your order fulfillment or invest in fulfillment infrastructure, such as technology, labor, warehouses, and equipment. 

Outsourcing Fulfillment

Supply-chain related tasks, such as inbound and outbound goods logistics, can commonly be outsourced to a 3PL. As your business and order volume expands, order fulfillment logistics can become more complex and time-consuming. 

A 3PL uses advanced technology, giving you a high level of visibility into your inventory and retail supply chain. The 3PL can take care of all your order fulfillment needs, from storing your product in strategically placed fulfillment centers to inventory receiving, picking, packing, and shipping. Using a 3PL can free up your time for other important business aspects and tasks. 

Dropshipping

This form of order fulfillment is the most hands-off, as all inventory is produced, stored, and shipped directly from the manufacturer. A customer will place the order, which will then be forwarded to the manufacturer. The product will be shipped straight from there to the customer. This method gives you the least amount of control over your retail supply chain but can also involve lower overhead. 

Manufacturers are commonly located overseas. This can mean that shipping times are longer, leading to less customer satisfaction.

Order fulfillment is a vital part of your e-commerce business and key to a positive customer experience. As your business grows, it can often be optimal to work with a 3PL for all of your order fulfillment needs.

References

Customer Retention Statistics – The Ultimate Collection for Small Businesses. (January 2021). Small Business Trends. 

What Is Dimensional Weight? (2022) FedEx.

Online sales are up and so are online return rates. In 2021, the average rate of returns for online sales was more than 20%. 

Mistakes due to shipping or order errors are bound to occur. As an e-commerce business, reshipping is something to be aware of and understand how to do well. 

Reshipping Defined

Anytime an order needs to be replaced — for any reason — it is called reshipping. An order may need to be reshipped if it is damaged or lost in transit, or if the wrong order is received. 

Reshipment can be due to mistakes on the part of the retailer, shipping carrier, or customer. Whatever the cause, reshipping involves sending out an order to a customer a second time.

Causes for Reshipping

There are a variety of reasons that a customer can ask for a replacement item that requires reshipping. In order to maintain customer satisfaction and loyalty, reshipment is often the right course of action for a business. 

Reshipping can be necessary if the product was damaged during transit, if the customer did not receive the item they ordered, or if the shipment never made it to the customer. 

Damaged Goods

Items can become damaged during the shipping process due to mistakes on the part of the merchant or shipping carrier. If the item is packaged incorrectly or insufficiently by the merchant, for example, it can move around too much and become damaged in transit. Similarly, items can become damaged due to rough handling or a shipping carrier’s mistake. 

Regardless of the reason for the damage, the merchant should reship the item for the customer, so they will receive the product they ordered in good condition.

Wrong Item Received

Using automated or advanced fulfillment processes can help to minimize order mistakes, such as picking the wrong product. Order accuracy is generally very high, but it is not 100% accurate all of the time. In the event that the customer receives the wrong order, it is the duty of the retailer to reship the correct item.

Item Lost in Transit

Package theft, damage to shipping labels, or incorrect address information can all lead to a package that becomes lost in transit and never arrives at the customer’s location. Even if the mistake is not on the part of the retailer, the merchant should reship a customer’s order if it is lost in transit.

Best Practices for Reshipment

Customer trust is essential for continued loyalty and customer satisfaction. Repeat and existing customers can make up more than half (65%) of your business sales. Therefore, customer loyalty is essential for protecting your bottom line. 

Even if a product is damaged or lost, or the circumstances were out of your control, it is your responsibility to reship items to customers to keep them happy and coming back for future purchases. 

There are a variety of reshipping best practices to follow to ensure customer satisfaction, such as these:

Maintain a Digital Paper Trail

It is vital to keep a digital paper trail to be able to provide proof about any potential shipping orders. Using an order management system can help to offer visibility into your inventory, so you can see where the product is at any point along the order fulfillment process. 

When you are able to track the package from order receipt all the way through to fulfillment, you are better able to investigate potential shipping issues or mistakes.

Use Shipping Insurance

Shipping insurance can help to protect the shipper from further losses on high-value items due to shipping mistakes or damage. The cost of shipping insurance can vary based on the carrier and value of the item. It is a good idea to have this insurance to keep your losses to a minimum in the event of damage, theft, or lost packages, as the shipper will be reimbursed for these issues.

Remain in Contact With the Customer

To help protect the integrity of your brand, it is essential that you maintain clear and effective communication with your customer. In the event that there are any issues in transit, be sure to let them know immediately and reassure them that you will be reshipping their item in a timely fashion.

Take Steps to Prevent Future Errors

Mistakes are a part of any business, but it is also important to ensure that you are learning from these mistakes, so the same errors are not repeated. 

Whenever an error or potential issue is discovered in the retail supply chain, be sure to take the necessary steps to correct the problem. Investigate what went wrong as best you can, and try to find a way to ensure that it does not happen again.

Partnering With a 3PL

A third-party logistics (3PL) provider can offer you high order accuracy rates as well as coverage and reshipment options in the event that something goes wrong during order fulfillment. Benefits of a 3PL related to reshipping include the following:

• Shipping insurance for damaged items: A 3PL often offers courtesy shipping insurance of up to $100 of the order’s retail value to help recover some of the lost costs due to damage during transit.
• Reshipping at no cost for wrong orders: A 3PL will commonly reship items at their own expense in the event of a picking error that resulted in the wrong item being shipped.
• Quick remedy of orders lost in transit: While the 3PL will not cover the loss, merchants are able to quickly identify when items are lost and create a reshipment order.

References

A More Than $761 Billion Dilemma: Retailers’ Returns Jump as Online Sales Grow. (January 2022). CNBC.

Customer Retention Statistics – The Ultimate Collection for Small Businesses. (January 2021). Small Business Trends. 

You need to be able to meet customer demands and expectations without spending too much on inventory storage for product that is not moving. An inventory tracking system can help to optimize your inventory management solution. 

Using inventory tracking software can increase your profit margins, improve customer satisfaction, and simplify your business logistics. It is important to know what products you have and where they are. This is accomplished through an inventory tracking system.

What Is Inventory Tracking?

An important aspect of your business is to be able to track your inventory in real time. Inventory tracking involves knowing what SKUs you have on hand, where they are being stored, where they are in the retail supply chain (shipping from the supplier, in your warehouse, or being shipped to the customer), and what quantities are available at each of your locations. 

As your business grows and evolves, you will often need to advance your inventory tracking system. Inventory can be tracked through a variety of ways, including manual and automated processes. 

Inventory Tracking Systems

Inventory tracking systems allow you to track and monitor your inventory levels and quantities of each specific SKU in real time. This is typically performed using an inventory management dashboard, software, or program. 

Using inventory management software or an inventory management system is an efficient method for tracking your inventory. It allows you to know how much product you have where, and it provides a high level of accuracy and visibility. 

Who Needs Inventory Tracking?

Any business that sells physical goods will need some method of tracking inventory. The bigger the business and more product involved, the more advanced and streamlined inventory tracking should be. Large companies will use complex, automated inventory management and tracking systems, while smaller companies may opt to do these processes manually. 

As your company expands and sells more product, a more technological approach to inventory tracking is optimal. Inventory tracking systems can help your business to better manage inventory turnover and make more informed business decisions regarding your products.

Tracking Inventory Throughout the Retail Supply Chain

It is important to be able to track your inventory throughout the entire retail supply chain. This is much more than just counting your products and logging when they move. You will need to track and monitor your inventory as it comes from the supplier, turns over and moves through your fulfillment center and out to customers, as well as when inventory is damaged or returned.

Tracking Inventory From the Supplier

Buying product from the supplier is a massive investment. As such, it is important to protect this investment — to know where it is at all times. You need to track your inventory after you have purchased it, while it is still at your supplier, and while it is in transit to your fulfillment or distribution center. 

By knowing exactly where your inventory is, especially when it is not yet directly in your possession, you can help to maximize your sales and meet your customer demands. Failure to know the difference between inventory on hand and inventory that is still in your supplier’s hands can lead to missed sales, late deliveries, and difficulties with your inventory accounting.

Tracking Inventory Turnover

Inventory turnover is when your inventory is sold and replaced. A high and healthy inventory turnover indicates that your products are selling and moving well. On the other hand, if you have a low inventory turnover, this can indicate that your products are not selling as anticipated, and this can cut into your bottom line. 

By understanding the average turnover rate for each of your products, you can better optimize your inventory management. This can allow you to ensure that you replenish inventory as needed, set optimal reorder points, and make informed decisions about necessary inventory changes to boost profit margins

Tracking Inventory Returns

Inventory returns are an unfortunate and common aspect of e-commerce, and it is important to know when inventory is sent back to you. By keeping track of what products are being returned and why, you can make informed decisions on whether to keep stocking these products and if they are put back into rotation or need to be examined further. 

Tracking Damaged Goods

It is also important to account for damaged goods in your inventory, as these goods are not able to be resold and therefore should not be counted as regular product. They need to be reflected in a separate inventory tracking category and not as part of your general inventory levels. 

Benefits of Inventory Tracking

All businesses that sell physical goods need some type of inventory tracking. By using an inventory tracking system, you can be sure to meet your customers’ demand and expectations. You can also ensure that you have the proper amount of inventory on hand at all times (not too much and not too little) and be better able to make decisions about when to retire products or when to expand your product line.

Meet Customer Demand

In order to make sales and meet the demands of your customers, you will need to know exactly how much inventory you have available to sell. You cannot sell what you do not have. If you do not know what you have, it is possible to oversell and underdeliver, leading to customer dissatisfaction. 

By ensuring that you know what you have in stock in your inventory, you can provide a more seamless and enhanced customer experience. This can lead to better profit margins.

Optimize Inventory Management

With inventory tracking measures, you can make better decisions on how much inventory to have on hand at any given time. While you need to be able to meet customer demands and therefore need to have enough inventory on hand to do this, you also do not want to be spending too much money on storing excess inventory or inventory that is not moving as quickly. With an inventory tracking system in place, you can help to prevent stockouts as well as save money on extra storage or warehouse fees.

Informed Inventory Business Decisions

Using the data from inventory tracking, you can see what SKUs are performing well and which ones are not. SKUs that are not moving and are taking up costly warehouse space can be retired to save you money on your bottom line, for example, while high-demand SKUs can indicate that it might be time to expand your product line and add more products to your range. 

By using an inventory tracking system, you can make better inventory management and informed business decisions. 

Challenges of Inventory Tracking

Inventory tracking can be easy when your business is small, and you are not tracking very many orders at a time. But as your company expands and grows, inventory tracking can become much more complex and time consuming. The more inventory you have, the more difficult it can be to track, and the more important it will be for you to use an automated inventory tracking system. 

Inventory does not hold still either. It is constantly moving throughout the retail supply chain, and you need a robust inventory management system to keep track of where it is at all times. 

Lastly, inventory tracking can be very time consuming and take away from other necessary business concerns that deserve your attention. 

Inventory Tracking Solutions

There are a variety of inventory tracking systems and solutions out there, ranging from manual to automated and highly technological. The stage your business is in can play a role in what kind of inventory tracking solution will be best for you. 

Spreadsheets

An easy option for a smaller business, spreadsheets can help you track low volumes of inventory for products that are all housed in the same location. Your spreadsheet can contain columns of information, including these:

• SKU
• Quantity
• Storage location (such as bin number, shelf number, or room)
• Order information

However, as your business expands, it is easy to outgrow spreadsheets and require a more dynamic inventory tracking method that can give you a clearer picture of where your inventory is in real time. 

Card System

Card systems are rarely used today, as they involve manually tracking inventory and writing the information down each time inventory moves. This is extremely time consuming and prone to human error. More technological inventory tracking methods are generally used.

Apps 

Inventory apps are often a generalized solution that can help you to track inventory in a specific way. They can commonly integrate with your e-commerce sales platform for inventory tracking in real time. While this can provide a less tedious option for inventory tracking, it is also not very customizable and has some limitations.

Inventory Tracking Software

Inventory tracking software is a part of an inventory management solution that can integrate with your various sales platforms and channels to keep track of your inventory at all points in the retail supply chain. Inventory tracking software can range in complexity and what it offers. It is important to choose one that will suit your specific business needs and be able to scale up with your business as it grows.

Third-Party Logistics (3PL) Providers

You can outsource your order fulfillment logistics to a 3PL, which will then include inventory tracking processes and solutions. A 3PL will provide you with the ability to see and monitor your inventory at any point in the retail supply chain, providing you with visibility into your business. 

A 3PL can save you time and money, utilizing advanced technology and systems that can integrate with your platforms for seamless inventory tracking in real time. 

Benefits of Partnering With a 3PL Provider

Partnering with a 3PL can leave order fulfillment and all of the inbound and outbound logistics of your inventory, including tracking, to the experts. The entire inventory tracking system can be automated, integrated, and help you save money and time as well as predict future demand and reduce shipping costs and delivery times.

Integrated Inventory Solutions 

3PL providers often use advanced technology and software. They will commonly offer you a centralized and easy-to-read dashboard that you can access to see where your inventory is and how it is moving at any point in time. Their software will connect directly to your online stores for better visibility. 

Automated Tracking

The e-commerce fulfillment process can be fully automated when you partner with a 3PL provider. They can offer you real-time inventory reports, send orders directly to customers, and provide e-commerce order tracking that can be passed on to the customer to monitor the status of their order at all times. 

Cost-Effective Inventory Management

Using a 3PL provider, you can keep better track of your inventory, set automated reorder points, and optimize your shipping routes and inventory management options. A 3PL can help you to recognize what inventory is in high demand and what might need to be retired to save you money on warehouse costs. 

A 3PL provides you with better visibility into your inventory and the ability to make more informed business decisions. 

Demand Forecasting

Using order history data from an inventory tracking system with a 3PL, you will have the ability to better predict demand and understand seasonality (when sales are likely to spike). Recognizing these patterns and trends ahead of time can help you to keep up with future demand and optimize your inventory management processes. This can prevent stockouts as well as overstocking issues.

Split Inventory

Distributing your inventory among multiple fulfillment or distribution centers can optimize your shipping costs and routes. The closer your product is to the customer, the faster and more affordable shipping will be. 

3PL providers often have multiple fulfillment centers they can split your inventory between to save you money and enhance customer satisfaction. Packages will have a shorter distance to travel to customers when your product is distributed in this way, resulting in shorter shipping times and cheaper shipping costs.

References

Why Is Inventory Management Important? (August 2021). Business.org.

The market for e-commerce retailers requires that you do something to help your small business stand out. This can include using custom packaging. With product unboxing going viral, the packaging you use for your products can help you to build a better brand image and enhance your relationship with your customers.

What Is Custom Packaging?

An alternative to standard packaging, custom packaging can be used to create branded packaging that can incorporate your company’s logo, colors, or theme. Custom packaging can be a reflection of your business’s values as well. 

For example, if you are an eco-friendly company, using environmentally friendly customized packaging can show your customers that you take your mission seriously. Depending on your product, customized packaging can also ensure that it arrives to its delivery point safely and securely.

Custom packaging can include packing materials, shipping containers, filler, and printed inserts. Customers’ relationships with an e-commerce business are created through the initial contact (often the website). They can be further solidified through order fulfillment. Using custom packaging can enhance this relationship. 

Benefits of Custom Packaging

Custom packaging can give you an edge over your competition, helping your brand to stand out. A high-quality custom packing box is not merely a secure method of transporting your product. 

It can also help to make a better first impression, make your brand more memorable, increase the perception of the value of your product, make a statement about your brand, create better brand loyalty, and be more eco-friendly. Product packaging can be one of the most important factors influencing your customers’ purchase decisions.

Favorable First Impression

Aesthetics are a major factor in creating a good first impression, and using custom packaging can help you to make this first impression well. In a highly competitive marketplace, customers often make snap decisions about a business based on their first impression. With custom packaging, you can attract positive attention. 

Make Your Brand Memorable

A positive unboxing experience can help to make customers remember your brand better, creating a favorable impression that they are more likely to retain. This can be carried over onto social media as well in unboxing videos. Adding a hashtag to your custom packaging can also increase shares about your product and brand.

Increase the Perceived Value of Your Product

Using premium and custom packaging can make your product seem and feel more expensive. As a result, it can feel like it carries more value than it actually does. Premium packaging improves brand perception and can make customers more excited about your brand.

Make a Statement About Your Brand

With custom packaging, you can make a statement about what your business or brand stands for with messaging and the types of packaging used. This can be used to show and not just tell what your brand is about. This can help to create your brand’s personality and make it stand out against competitors.

Better Brand Loyalty

Repeat customers are a big part of your profit margin, with 65% of your business coming from existing customers, on average. With custom packaging, you can create better brand and customer loyalty, encouraging customers to continue to buy from you and to remember your brand when searching for new products.

Enhanced Product Protection

With custom packaging, you can create a solution that is designed specifically to protect your products in transit. This can mean using special inserts to secure your product and more durable boxes to send goods in. Custom packaging can fit your brand values and also be tailored to the needs of your product directly.

More Eco-Friendly Packaging

Customers are often looking for more eco-friendly options. Packaging that has less impact on the environment can be a way to align with your brand’s values while also making customers feel better about their purchases. Biodegradable and recyclable packaging can be customized for your brand.

Most Common Forms of Custom Packaging

There are a lot of different types of custom packaging to choose from. Your choice will depend on a variety of factors, from what type of product you are shipping to your budget for doing so. Custom packaging ranges from boxes to envelopes to mailers with some of the most common forms outlined here:

Corrugated Boxes

Also called regular slotted container boxes (RSC boxes), corrugated boxes are some of the most common types of shipping boxes used today. They are easy to construct and collapse. They are rugged and durable and can accommodate a variety of different product sizes.

Very little manufacturing waste is created in production. Corrugated boxes are economical with a uniformed finish.

Rigid Boxes 

These high-end boxes offer a high level of protection for luxury items as well as a positive unboxing experience for your customers. Rigid boxes will also often need a custom designed insert to keep your products in place, which can also enhance the unboxing experience and provide better brand recognition and loyalty.

Paperboard Boxes

These are lightweight boxes that are also strong and commonly made from recycled wastepaper. Paperboard boxes can be folded into boxes and cut into a range of shapes made to fit your product dimensions exactly.

Poly Bags

When shipping soft, non-fragile items, such as apparel, poly bags can offer an eco-friendly lightweight option. Poly bags are waterproof, tear and tamper resistant and the smooth exterior can easily be customized for your brand.

Paper Mailers

Another option for shipping apparel, as well as small products, paper mailers are an eco-friendly and lightweight option that can easily be customized in line with your brand’s aesthetics.

Plastic Mailers

Bio-based polyethylene plastic mailers are environmentally friendly and great for lightweight items. They are also waterproof, tear-resistant, and tamper-resistant.

Foil Sealed Bags 

Commonly used for food items, there are a variety of eco-friendly foil sealed bags that can be customized to fit your brand.

Dunnage Packages

Dunnage packaging is used when your product needs extra protection in transit. It can include a variety of products, including honeycomb craft paper and bubble wrap that are built into padded mailers. These products include an extra layer of padded cushioning that is sturdy enough to prevent bending. Dunnage packages are often made from recycled and biodegradable materials for an eco-friendly option.

Bottle & Cap Packages

When packaging liquids, bottle and cap packaging is typically ideal. Packing caps can include stoppers, corks, child-resistant caps, metal caps, and glass closures. Glass bottles offer an eco-friendly packaging option for liquids.

Jute Packages

For grains and dry foods, jute packages are an eco-friendly option. They are durable, offer natural ventilation, and help to prevent damage to packaged products.

How to Customize Your Packaging

Packaging can be customized from the inside out. For e-commerce businesses, the most common types of packaging are mailers and shippers. To customize your packaging, you can choose the following options:

• Printing on the exterior of the package: Digital printing is often used to imprint your brand’s logo, messaging, colors, or theme onto the outside of mailers and boxes. These can be created quickly and ordered in bulk.
• Filler: Tissue paper, filler, and custom inserts can be branded and printed with your desired coloring or information for custom packaging inside of the box.
• Promo materials: Insert cards and printed inserts can be used as promotional tools to promote your brand inside of your mailer or shipper.

Costs of Custom Packaging

Custom packaging can range in price from as low as 10 cents per box up to over $10 per box. Typically, the more items you buy at one time, the lower the price will be. Buying in bulk can save you money on custom packaging. 

Custom packaging can be an added expense that your business might not be ready to consider. Unbranded boxes and mailers can be less expensive when you are just starting out. 

Custom packaging has a lot of benefits when you are ready to go this route. The following factors can influence costs:

• Materials
• Size
• Ink coverage
• Tooling
• Quantity

What to Consider When Customizing Packaging

Aesthetics are not the only thing to consider when looking into custom packaging. You will also need to consider who your customers are, what types and shapes of products you are shipping, and how fragile the products are.

Your Customer Demographic

It is important to understand whom you are marketing and selling to when customizing packaging. The goal is to cater to your audience while fitting your brand’s purpose. 

Product Shape & Type

You will need to balance form with function when creating custom packaging to ensure that your items are properly and securely packaged. If you have oddly shaped items, it can take some trial and error to find the right packaging solution, for example. It’s worth the time investment to get this right.

Fragility of Your Product

It is incredibly important that your products arrive undamaged to your customers. This can mean that fragile items need additional protection and potentially custom inserts to keep them snug and protected in transit.

The size of the packaging and packing material should fit the item as well. Your cost will go up with larger packages, for example. Because of this, it is important to ensure that you are packing things in appropriately sized containers.

References

E-Commerce Sales Grew 50% to $870 Billion During the Pandemic. (February 2022). Forbes.

Effect of Product Packaging in Consumer Buying Decision. (December 2012). ResearchGate.

Customer Retention Statistics – The Ultimate Collection for Small Businesses. (January 2021). Small Business Trends. 

There are multiple different types of freight shipping, which can offer your e-commerce business a safe, reliable, secure, and cost-effective method of shipping goods in bulk.

What Is Freight Shipping?

Large shipments of goods that are transported via air, land, or sea domestically or internationally classify as freight shipping. Often, freight shipping uses a variety of transportation methods, which can include the following:

• Trains
• Vans
• Trucks
• Ships
• Airplanes

Items shipped in bulk are loaded into large, sturdy containers or onto pallets to be shipped as freight. 

When Packages Are Considered Freight

Shipments that are over 150 pounds or bigger than 30 inches by 30 inches by 30 inches are considered freight. Packages that are under these dimensions are more commonly sent as parcels. 

A standard pallet size in the United States is 48 inches by 40 inches. Generally, a standard truck can fit up to 26 pallets. 

Inventory that is loaded into a truck via a pallet can be easily unloaded using a forklift or a dock. Warehouses regularly have an elevated dock and/or the use of forklifts to unload pallets from trucks. Freight can also be floor-loaded into trucks and then manually offloaded.

Freight Shipping Methods Explained

There are five main types of freight shipping methods:

• Full truckload (FTL)
• Partial truckload (PTL)
• Less-than truckload (LTT)
• Intermodal
• Expedited

FTL (Full Truckload)

When shipping freight, you can fill an entire container to transport your inventory. A full container can usually hold between 24 and 26 pallets, and they can be moved via the road or by rail. FTL shipments are sent directly from the pickup location (such as the manufacturer) to the destination (like a fulfillment center).

PTL (Partial Truckload)

A PTL shipping is generally between 6 and 12 pallets. They will typically be kept on a single truck throughout the shipping process.

LTL (Less-Than Truckload)

One of the most commonly used freight shipping methods, LTL shipments are usually between one and six pallets. With LTL shipments, the freight is often moved between different trucks throughout the journey.

Intermodal

With intermodal shipping, different methods of moving the freight are used. This can include rail and truck, or a combination of rail, ship, and trucks. Using rail during the freight shipping process can help to save money on fuel costs.

Expedited

The most expensive method of shipping freight, expedited shipping generally involves a combination of truck and air. This type of freight shipping is usually only used for time-sensitive shipments.

Preparing a Freight Shipment

Freight shipments need to be prepared differently than typical parcel shipments. You will need to take steps to ensure that the goods are shipped, handled, and received as accurately and securely as possible. 

Taking the following steps can help ensure that your shipment remains safe and secure:

• Prepare high-quality and appropriately sized pallets. When using a pallet, it should be made of wood or plastic, be sturdy enough to support your load, and be large enough to contain it.
  
• Prepare appropriate shipping containers. If you are not using a pallet for your freight, then prepare appropriately sized and sturdy shipping containers, corrugated boxes, or crates. Be sure to use dunnage on all sides of the container to secure your items and reinforce the edges. Seal all seams and openings with reinforced tape.
  
• Try not to reuse shipping boxes. If you must reuse, be sure that they are not compromised and that all old shipping labels are removed.
  
• Attach shipping labels. The label needs to be visible and contain the shipper’s address and telephone number on each side of the pallet.
  
• Follow all freight carrier instructions. Each carrier will have their own way of managing freight shipments, some of which even require pre-authorization, so be sure to check with them to see what they are.

How to Estimate Freight Shipping Costs

There are several factors to consider when estimating freight shipping costs, which include the following:

• Size and weight: The bigger and heavier your shipment is, the more expensive it is going to be to ship.
• Origin and destination: The farther your package has to travel between pickup and delivery, the higher the shipping rates will be.
• Mode of transportation: Rail or road shipping is going to be less expensive than shipping via air, for example. 
• Special handling considerations: If your shipment needs temperature control or contains hazardous materials, you will incur additional shipping charges. 

Benefits of Freight Shipping

There are numerous benefits when it comes to shipping bulk items via freight, including lower costs and more reliable and secure shipping methods.

More Cost-Effective

Freight shipping can offer lower costs and more cost-effective methods for shipping goods in bulk. It is commonly used to order goods from a supplier or manufacturer for your e-commerce business. Especially when using PTL or LTL freight shipping methods, you will only pay for the space your pallets/containers take up and can therefore split the truck shipping costs with other shippers.

Reliable Carriers

Using a quality freight shipper can ensure that your products are delivered on time, safely, and without worry. There are a variety of freight shipping experts to choose from, including FedEx Freight, UPS Freight, and DHL Freight. 

Safer Shipping

Shipping your goods on a pallet can be safer than shipping them as parcels. The risk for theft and damage are much lower. You will also have the ability to track your goods in real time at every step along the way from pickup through to delivery.

Freight Shipping FAQs

What can be shipped as freight?

Most things can be sent as freight. However, it will be important to check with your carrier if you are shipping expensive items, hazardous items, or items that require temperature control.

What is a bill of lading?

Issued by the carrier, a bill of lading acknowledges the receipt of cargo for shipping. Generally, a bill of lading includes the destination of the goods, the type, and the quantity.

What is freight classification?

Freight class is determined by value, liability, density, weight, height, length, and ease of handling. It ranges from 50 to 500. The lower the number, the lower the cost. Freight classification is a standardization used by freight carriers for pricing.

What is the difference between parcel and freight?

A parcel is a smaller individualized package that is sent through traditional carriers, while freight is shipped in bulk for heavier items. Typically, parcels cannot exceed 150 pounds. Anything over that will be classified as freight.

How are freight shipping costs calculated?

Freight shipping costs will depend on weight, dimensions, mode of transportation, freight class, how far it has to travel, packaging type, and how fast it needs to arrive.

How can a 3PL help with freight shipping?

A third-party logistics (3PL) provider can handle all your shipping and order fulfillment needs. Freight shipping can be used to ship goods to a 3PL fulfillment center. The 3PL can set up freight shipments, receive the freight, unpack and store the inventory, and then work to efficiently and effectively fulfill customer orders.

References

Cargo Shipping Market Size to Hit 13.19 Billion Tons by 2028. (March 2022). GlobeNewswire.

FedEx LTL Freight Shipping Options. (2022). FedEx.

Schedule a Freight Pickup. (2022). United Parcel Service of America, Inc.

DHL Freight. (2022). DHL.

The dimensional weight, or DIM weight, of a package relates to how much space the package takes up. If this is greater than the actual weight of the package, DIM weight is used for shipping costs. If the package’s actual weight is more than the DIM weight, that is used to calculate shipping costs.

Due to DIM weight being a factor in shipping costs, it is even more important to ensure that your packages are as small as they can be while also protecting the items you are shipping and allowing for packing materials. A large box, even if it is lightweight, can cost more than a smaller, heavier one. 

Every carrier has a slightly different formula and method for calculating DIM weight.

What Is Dimensional Weight?

Dim weight, or dimensional weight, takes into consideration the size of the package you are shipping in relation to its actual weight. Package volume is used in addition to weight when calculating dim weight. In general, dim weight is calculated by taking the package length and multiplying this by the height and the width to find the package volume. 

DIM weight helps to lower the amount of space a package can take up. Since there is limited space on delivery trucks, it is more cost-effective and ecologically friendly to use smaller boxes when possible. You will be charged based on whichever is greater, the dimensional weight or the actual weight of your package.

How to Calculate DIM

To calculate dimensional weight, measure the length, width, and height of a package and divide it by the carrier’s divisor. You will use the cubic size of the package in inches divided by the DIM divisor to reach the package’s dimensional weight in pounds. If your package is not perfectly square, you will measure the package at its longest points and round up. 

Use these steps to calculate DIM weight:

1. Using the longest points on each side, measure the length, width, and height of your package. If your package is irregularly shaped on any side or has bulges, be sure to take these into account and measure at the longest point to avoid special handling fees.
   
2. Typically, you will need to round your measurements up to the next whole number.
   
3. Multiply these package dimensions to come up with the cubic size of your package in inches. For example, if your package is 25 inches by 10 inches by 10 inches, the cubic weight would be 2,500 cubic inches, which is the product of these three measurements multiplied together.
   
4. Each major shipping carrier has a dimensional factor, or a DIM divisor, that represents cubic inches per pound. USPS uses a DIM divisor of 166, for instance, while FedEx uses 139 as their DIM divisor. 

In the previous example, the DIM weight would be 15.06 pounds for USPS, while with FedEx, the DIM weight would equal 17.99, or 18 pounds. If the package weighs more than 15 or 18 pounds (based on the carrier), the pricing will be based on this instead of the DIM weight. If the DIM weight is greater, that calculation is used for billing.

DIM Calculators by Carrier

Every major carrier calculates DIM weight slightly differently, and each provides a calculator to help you estimate DIM weight before shipping. Carriers can use different divisors based on how far the package must travel along with other factors.

USPS

When shipping packages with the USPS (United States Postal Service), if the package exceeds 1,728 cubic inches, its volume will need to be divided by the DIM divisor of 166 to find its weight in cubic pounds. To find the DIM weight for USPS, use the following formula:

Length x width x height / 166 = cubic weight in pounds

Each of these measurements is to be rounded up to the next whole number. If your package is not rectangular, you will need to multiply the result of the length times width times height with an adjustment factor of 0.785. If the dimensional weight exceeds 70 pounds, you will pay the 70-pound price.

UPS

To calculate the cubic size of your package in centimeters for UPS, you will use the following formula:

Length x width x height (each rounded up to the nearest centimeter) = total cubic size

To calculate dimensional weight, you will divide the total cubic size in centimeters by 5,000 and increase this number to the nearest kilogram. You will then need to determine if the actual weight or the DIM weight is greater for your billable weight.

FedEx

FedEx provides a dimensional weight calculator that you can use to find the DIM weight of your package. Simply type the length, width, and height (in inches and each rounded to the next whole number) into the provided calculator and click “calculate.” The DIM weight will be found using the following formula:

Length x width x height / 139 = cubic weight in pounds

Just as with the other carriers, the billable weight will be whichever is larger, the DIM weight or the actual weight of your package. DIM weight applies to both FedEx Ground and FedEx Express. 

Flat-rate shipping for each carrier does not take DIM weight into account as long as the package does not exceed the weight requirements and fits into the appropriate packaging.

References

What Is Dimensional Weight? (2022) FedEx.

Postal Explorer. (2022). USPS. 

Dimensional Weight. (2022). United Parcel Service of America, Inc.

Dimensional Weight Calculator. (2018). FedEx.

One way to build customer loyalty and ensure customer satisfaction is to be able to manage these expectations about order fulfillment. Shipping costs need to be as low as possible while also being reliable.

Shipping Factors to Consider

Just as your business is unique, so are your shipping needs. There are several factors to consider when creating a shipping strategy, including how many orders you need to ship regularly, what packing materials to use, the size and weight of the items you will be shipping, and the geographical location of your customers. 

Order Volume

One of the most important factors to consider when developing a shipping strategy for your e-commerce business is to consider how many orders you will be shipping out each month. Small businesses just starting up are likely to have a much smaller order volume than a more established online retailer or big-box store, for example. 

When your business is smaller, you may be able to manage DIY shipping, for instance, printing your own labels and dropping packages off at the post office yourself to fulfill customer orders. As your business grows, your shipping needs can change, and it can become harder to manage a higher order volume yourself. 

Your shipping strategy will need to evolve. It can be worth it to look into discounts and options from major shipping carriers or outsourcing order fulfillment to a third-party logistics (3PL) provider.

Packaging

Packaging materials are essential for protecting your product in transit to ensure that they arrive to the customer in good condition. You will need to consider what types of items you will be mailing when considering how to package them.

For example, when shipping clothing, a poly mailer bag can do the trick. When shipping fragile items, you will need to consider bubble mailers, crinkle paper, or bubble wrap to keep them safe. 

Major carriers also offer flat-rate boxes that can help save your small business money on shipping smaller and heavier items. Pay attention to costs here as shipping lightweight items can often be more expensive using these flat-rate boxes, however. 

You can also use custom packaging to showcase your brand by incorporating your logo into customized packing and shipping materials. When your budget allows it, this can provide you with a branded shipping experience for a lasting impression on your customers. 

Another factor to consider is eco-friendly packaging for better sustainability. It can also be a way to promote eco-friendly core values, helping to foster relationships with customers with similar values.

Package Dimensions & Weight

Typically, heavier items cost more to ship than lightweight ones unless you are using flat-rate shipping. Another factor to consider is dimensional weight (DIM), which is the amount of space your package occupies in relation to its actual weight. 

In shipping, costs are calculated based on whichever is greater, the DIM or the actual weight of the package. You should try to use the smallest box possible for your orders while still keeping them secure.

Shipping Destination

Another factor influencing the cost of shipping is how far the packages must travel. The further your orders need to be shipped, the more expensive shipping can get. 

Shipping costs are generally calculated based on the shipping zone. The more shipping zones a package needs to travel through, the more expensive the shipping will be. 

When shipping packages within the same shipping zone, you can offer faster and more affordable shipping. It can be beneficial to try and keep your products as close to your customers as possible. You will want to use a fulfillment center that is in an urban or central location when possible. 

Shipping Solutions by Carrier for Small Businesses

Each of the three major carriers — USPS (United States Postal Service), UPS, and FedEx — have small business solutions with their own sets of pros and cons. You will want to choose a carrier that will best suit your small business shipping needs. 

USPS

USPS has several small business solutions, including free package pickup, their Click-N-Ship service that allows you to print Priority Mail and Priority Mail Express shipping labels yourself while earning USPS Loyalty Rewards, and USPS Connect Local, which can offer same-day and next-day delivery for local customers. 

USPS can offer some of the best last-mile delivery capabilities since they already run daily local routes. Last-mile delivery can greatly impact shipping times and costs. It refers to the most efficient method of transporting packages to their final destination.

UPS

UPS offers a variety of business tools for your shipping strategy, including free packing materials, the option to schedule pickups, international shipping, and the ability to easily view and track your shipments. Businesses can also be eligible for shipping discounts and a dedicated support team through UPS Connect.

FedEx

With FedEx Small Business, you can be eligible for shipping discounts and rewards through My FedEx Rewards. FedEx offers you the ability to calculate dimensional weight to better understand your shipping costs ahead of time. FedEx can also offer scheduled pickups and temperature-controlled shipping options as well as a variety of resources for small businesses.

Methods for Lowering Shipping Costs

As a small business owner, the goal is to use the most cost-efficient shipping strategy while also being able to manage customer expectations and suit your business needs. This does not always mean the cheapest option. There are multiple ways you can reduce costs related to shipping, including negotiating shipping rates with carriers, dropping your orders off instead of having them picked up, buying packing materials in bulk, and outsourcing your order fulfillment processes.

Negotiate Rates

Shipping carriers will often work with small and growing businesses to offer discounts and special offers. Typically, you will need to contact a carrier representative to determine what the rates are and what kinds of offers your business can qualify for. When you are shipping at higher volumes, as in over 100 orders per month, you can also often negotiate reduced shipping rates with carriers.

Drop Off Instead of Having Orders Picked Up

USPS offers free package pickup, but both FedEx and UPS charge a fee for this service. If you can drop packages off at the carrier’s storefront, you can save money on package pickups. 

Buy Affordable Packing Materials in Bulk

Traditional and plain packing materials, as opposed to branded packaging, can also be less expensive, especially when ordered in bulk. While bulk ordering packing materials can be more costly up front, it can save you money in the long run. The major carriers also often offer free shipping supplies.

Outsource Order Fulfillment

As your business grows, outsourcing order fulfillment to a third party can help to save you time and money on shipping. A third-party logistics (3PL) provider can help you to scale up your business by attending to your shipping needs in a more cost-effective way. Using a 3PL can also save you time allowing you to focus on other aspects of your growing business and leaving order fulfillment to experts.

When to Use a Third-Party Logistics (3PL) Provider

A 3PL will usually already have a relationship with the major shipping carriers. Therefore, even if your order volume might not qualify you for shipping discounts directly, you can reap these benefits by using their discounts when you use a 3PL. 

A 3PL will work to find you the lowest possible shipping rates while also ensuring that orders are fulfilled to the customer’s expectations and satisfaction. As your business scales up, a 3PL is able to keep up with demand and ensure that orders do not fall through the cracks. 

Some of the major benefits of working with a 3PL include the following:

• Reduced shipping costs
• Better use of your time
• Highly scalable up or down based on order demand and seasonality
• Advanced technology to better manage inventory and track orders along the retail supply chain
• Optimized inventory control, shipping routes, and supply chain logistics
• Inventory storage
• Affordable expedited shipping

A 3PL provider can successfully store your inventory, often by distributing among different distribution centers to optimize shipping routes and geographical distance from your customers and take care of all your order fulfillment needs. As your order volume and customer demand increase, outsourcing order fulfillment can be more cost-effective and save you time.

References

66% of Americans Expect Free Shipping on All Online Orders. (June 2021). Jungle Scout.

What Is Dimensional Weight? (2022) FedEx.

Small Business Solutions. (2022). USPS.

Business Shipping Tools. (2022). United Parcel Service of America, Inc.

FedEx Small Business Center. (2022). FedEx.