The holiday season is over, so you can breathe easy, right? Well, don’t get too comfy yet. After all the stress that came with getting shipments made on time over Christmas, get ready for UPS and FedEx’s new switch to DIM (dimensional) shipping. For those of you who aren’t familiar, dimensional shipping is a pricing system based around the total dimensions, as opposed to actual weight, of the product you’re shipping. For example, say you had a 10-pound package to send. Regardless of the size of your package (up to 3 cubic feet), your price would be fairly consistent in the old weight-based pricing system.
In contrast, dimensional shipping not only takes weight into account but also the space your package takes up. Last year, a 4-pound package would have cost $7.11 to ship. With the new DIM pricing structure, a package of the same weight with 10-inch sides will now cost $8.33. A 12-inch package increases the price to $9.40, a 32% increase over purely weight-based shipping. The equation (shown above) computes a new, chargeable weight based on the dimensions of your package. This new "weight" is generally more than what your package actually weighs.
So what does that mean for small businesses? Well, in a nutshell: your prices will be going up. Everyone is being affected. Either you or your customer are going to be paying for this change. So in order to avoid losing customers and profits, you’ll have to research everything you sell and become familiar with shipping rates applicable to each product.
You’ll also need to look at the actual products you’re selling. If you consistently sell small products, your increase won’t be as drastic as, say, someone who sells refrigerators. The price hike is proportional to the size of the box you ship your product in.
Going into this transition, ask yourself, Is it profitable to continue selling (X) product? Or does the new DIM standard negatively affect total sales? Are there creative ways to combine/bundle products to help reduce costs? How much of the costs should be eaten to retain the most customers?
As long as you know your customers behavior, as well as have a good handle on your business, adjusting for these new changes will be fluid. It’s also good to note that these changes affect everyone. If you’re having to raise your prices, it’s probably safe to assume your competition is as well. And if you make the transition before the competition does, not only will you keep your current customers, but you’ll probably see an inflow of others as well.
Doba is looking for new and better ways to handle these shipping changes in order to minimize any negative impact for our customers. Both FedEx and UPS are optimizing their delivery routes in order to reduce fulfillment costs. This has the potential of driving down future shipping costs. UPS has also stated that they are willing to consider special shipping arrangements depending on the volume of sales/shipping a given business has. So while these changes are big and intimidating, as long as you stay on top of your business, your customer experience, and make smart decisions about what you sell, you’ll be able to remain successful and profitable through this transition.