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The traditionally thin margins that are often associated with eCommerce must be protected at all costs. But what if there were actually areas that could not only be optimized to maintain margins, but also grow them? This is where shipping strategy and packing optimization comes to play.
Most people see shipping as a necessary evil and an unavoidable added expense. However, on the contrary, the most successful eCommerce companies actually use shipping as a differentiator and growth mechanism. One place we can look for low-hanging fruit, ripe for improvement, is packing optimization. So, what is packing optimization? It is the simple practice of using the smallest possible box for shipping of any order, regardless of piece count and size. By leveraging hardware-free dimensional pricing mechanisms, your company can use this as a means to mitigate shipping costs and even increase profit margins.
A common way to calculate packing optimization is to use a hardware-free dimensional pricing calculator that finds you the most cost effective service and box size to minimize business expenses. By doing so, businesses can then provide optimized in-cart pricing directly to buyers, which reduces shipping costs while also increasing conversions.
While using a dimensional pricing calculator gets the job done, just imagine if your software could automatically determine the optimal packing for a mix of items without any human intervention on your part. Not only would you save money on shipping, time, and labor costs, but you would also eliminate the chance for human error. That’s what hardware-free dimensional pricing and packing optimization software is all about!
If you choose to use shipping software to utilize packing optimization, the next question is, which shipping software should you select? There are many factors you must consider, but the very first step is determining what your needs are. Do you ship parcel, LTL or both? Do you need software that is able to rate shop both parcel and LTL options? Do you need software that determines when a large quantity of boxes would be better suited for LTL shipping or when a pallet would be more cost effective to ship as loose boxes?
While there are a number of ways to achieve dimensional pricing optimization for every need, not all options are hardware-free. Some 3rd party softwares require hardware and software to provide packing optimization, so it is critical to spend enough time determining what your needs are and how you need the software to work. It may be helpful to visualize how you currently fulfill orders and try to pinpoint where you would benefit from such efficiencies, which often includes removing a step or two from your current fulfillment process.
Another thing to keep in mind is carrier flat rate boxes. Through packing optimization methods that include hardware-free dimensional pricing calculations, you can implement a system that determines when it is more cost effective to leverage a carrier flat rate box instead of a standard box. By using software capable of making these decision on an order-by-order basis, you will ensure that every shipment is priced appropriately and can be confident you are not giving your hard earned profit to the shipping companies.
Regardless of whether you choose to go with a hardware based solution or hardware-free, the sooner you implement a packing optimization method into your fulfillment processes the better. This will allow you to reduce costs, increase business, and free up resources to focus on what matters most: continuing to grow your business.
How does your shipping strategy stack up against your competition?
In 2017, if you don’t have a good shipping strategy, competitors will eat your lunch. Amazon continues to invest in their fulfillment strategy and it is crushing its rivals. Delivery expectations are going up, but cost control is more important than ever. Where do you start? Can you leverage shipping automation to improve your ability to scale? There are so many factors to consider such as pricing strategy, fulfillment locations, shipping software and technology, personnel, customer experience, and more.
To determine how you stack up in key strategic areas, use our simple calculator that diagnoses your process maturity and identifies the key areas where you can improve.
As we gather more data we’ll be able to give you comparisons against other companies similar to you in size and freight profile.
Get started on the survey and if you have feedback just let us know.