Empowering E-Commerce Success

The True Cost of Shipping – Do YOU Know What You Are Paying For?

We have all heard of the “Amazon Effect” — consumers expecting faster and more reliable shipping for free. And this is where the problem lies for online retailers: providing fast and reliable shipping — generally a premium, high-cost service — for free. This has caused online retailers to more closely evaluate what gives them the best “bang for their buck” in shipping. As it turns out, this is not as straightforward as one might think.

Traditionally, online retailers would receive various shipping quotes based on their shipping profile and then select a single carrier based on the lowest quote. However, in recent years there has been more of a shift to a multi-carrier strategy, where a multitude of shippers may be chosen to transport goods for a single online retailer depending on such factors as geography, package weight, performance quality, delivery options presented to consumers, etc. While the process and tools to aid carrier selection on the retailer side have gotten more sophisticated, cost/pricing structures on the shipper side have also increased in complexity. There are now a multitude of accompanying surcharges that muddy up transparency around the true shipping cost and drive up the cost from a retailer’s standpoint. This is particularly true for residential shipping.

Shipping surcharges vary by each shipper, but can include:

  • Fuel
  • Residential Fee
  • Delivery Area
  • Extended Delivery Area
  • Address Correction
  • Dimensional Weight

And this is an evolving area. Most recently, UPS implemented a “peak” surcharge during selected weeks in November and December for large U.S. residential packages and packages over maximum limits. According to UPS, these surcharges are designed to “offset some of the additional expenses incurred during significant volume surges.” UPS is the first to implement such a holiday penalty, but it would not be a surprise to see other shippers follow suit.

Not having these surcharges adequately reflected in the shipping selection process can have a significant impact on the bottom line, especially when a retailer is shipping thousands of packages daily. And who wants to discover an unwanted surprise when they find the quoted cost of shipping a parcel has increased by several dollars due to surcharges? As online retailers become smarter in their shipping selection processes, generally using real-time “service shopping” technology that compares rates and services across several shippers according to their service requirement, it is hugely important that the rates being looked at are fully loaded — i.e., include any and all surcharges that might be applied to a shipment. Only this will allow for a true apples-to-apples comparison.

Do you have full transparency into all the additional surcharges that you pay for? Are these factored in your shipping selection process? Tired of the multiple surcharges and making sense of it all? Come talk to us at DHL eCommerce — we offer simple and transparent pricing to help you be successful!

For more information, visit our website: www.dhl-usa.com/en/ecommerce

Image: “Tech in Asia

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