Making Great Decisions about Shipping and Transportation
by Angela Miale, District Sales Manager, FedEx Services Iowa Nebraska District
I love being a sales professional in small package transportation, because I speak to entrepreneurs every day about their customer experience of (shipping and receiving) their product and ideas (for improving that process). Transportation is unique in the fact that nearly every business has the need for your product, to move things, even if it’s just a first-class stamp on an envelope. That being said, there are a few things to consider when developing your business plan to account for the time, cost, and marketing of shipping.
"Free Shipping"
Most people would conceivably agree that it makes sense that it costs a carrier the same amount of money to move a 1 pound $399 iPod, a $2000 custom-made purse, and a $14.95 T-shirt. However, the perception of shipping cost in proportion to the item's cost truly impacts your customer’s perception of value. If you have a lower value item as well as a low average transaction, then you should offer a "free shipping" promotion over orders of a certain amount. A good rule of thumb for that “certain amount” is three times your average transaction. I promise you that neither FedEx nor our competitor gives shipping away for free! However, this is one of the primary drivers of consumer behavior.
How to Charge for Shipping
The first thing that you should examine in determining what to charge for shipping is the shipping cost of your competitors. Some have a chart according to the total order, the more you order the more you pay. Others bill per package depending on the amount of boxes in the order. Your sales executive can let you know what your average orders are coming to, and give you some samples based on how fast you need the order to arrive. Do not create extra work for yourself and your employees by trying to charge EXACTLY what you are being charged for that particular zone, weight, and package characteristics. Your customers do not expect that. Depending on what your product is, you can learn from any seasoned Account Executive within a few hours of the independent shipping costs that will affect this decision. Doing this research on the front end will dramatically help you create more wealth for your business.
Service Levels
Ask your small package carrier about service levels—not just on-time service, but also time in transit. What is your customer’s expectation in regards to time for delivery? You can save the most money by what we call "mode-shift" which means shipping a more cost effective method. Research the time it takes to deliver product so that you don't put a package on a plane that could go on the ground network. If most of your orders are web-based, your highest shipping day will be Monday. Try to negotiate a later pick-up time with your carrier on Mondays in favor of an earlier one later in the week. You will be able to get more out the door and to your customers sooner. Also, if you can integrate your carrier’s tracking number automatically into your own order entry system, you will save time by diverting "where is my order" calls to your carriers customer service instead of to you. That way, you and your staff can concentrate on growing your business in other ways.
Bottom line is, put the time in on the front end with costing and integrating shipping into your business plan, and have great expectations of your carrier and sales relationship. For further advice or direction, I can be reached at the contact information below. Or, find me on facebook or add me to your LinkedIn with a comment that you are an EDC referral. I am always looking to expand my network!
Angela Miale
Sales Manager
FedEx Services
1.515.986.0959 Office
1.515.306.2820 Blackberry
fedex.com/us/findsupport
