sweeping money

Shipping is confusing. It’s also expensive. Together, these two variables make building trust among consumers difficult.

How carriers price shipments ranges greatly depending on the item and its destination. In user research, we at Shyp frequently hear from small businesses, eBay sellers, and large shippers alike that certain carriers are “cheaper” than others, “better” at certain services, or that flat rate products are “best”. Given the number of variables in determining shipping cost, blanket statements like these are rarely accurate.

One exception, however, is the Postal Service, whose First Class Mail product is the low cost leader for shipments that weigh less than a pound. The Postal Service will ship your t-shirt or DVD anywhere in the country, completing delivery within four days, for $3. No carrier can compete with this incredible service, which they offer, in part, because they are governmentally mandated to deliver mail to virtually every business and residence six days a week.

First Class Mail aside, there are four key factors that determine the cost of shipping:

  1. Dimensions
  2. Weight
  3. Distance (called a “Zone” in industry speak)
  4. Desired transit speed

Only four factors make it sound simple, but the number of variabilities and complexities that are created when weighing each of them against one another is when things get quite complex. For example, if you’re shipping a small stack of DVDs, the Post Office’s Priority Mail product may be more expensive than FedEx Ground. But, let’s say you’re shipping a set of three heavy hardcover novels, the Post Office’s flat rate boxes may be the best option. But if you were shipping your newly sold Star Wars video games on eBay, a flat rate box would be more expensive than simply using Priority Mail. Confusing? We know.

Let’s dive in a little deeper. The Post Office’s pricing is far easier to understand than that of other carriers. The Post Office has few fees on top of base postage – in fact, most shipments don’t have any and price is purely based on physical weight. The Post Office’s First Class Mail service charges flat rate by the ounce, regardless if it’s traveling within Chicago (“Zone 1”) or from New York to San Francisco (“Zone 8”). Easy to recite for consumers; hard for the logistics guy in me to comprehend.

However, for UPS or FedEx, you’ll notice that base pricing is only one of several line items you may find yourself paying. Common additional surcharges include fuel (even with oil at decade low levels), residential fees, return to sender, and others.

Additionally, UPS and FedEx calculate both the dimensional and physical weight, and charge for the higher of the two. This concept of dimensional weight pricing is really important to understand. The effect of multiplying three dimensions causes shipments to often weigh – and therefore cost – a great deal more than many anticipate.

Take, for example: a 10 x 10 x 10 box full of feathers that weighs a pound or two. Under physical weight billing, that shipment costs the 2 pound rate, but under dimensional weight it would be billed at the 6 pound level – a 3x increase. FedEx and UPS essentially tax inefficient shipments – those that will cause trucks to “cube out” before “weighing out”. For this box of feathers, the Post Office will still only charge the 2 pound rate.

This dynamic is why people tend to gravitate towards the Post Office, where a pound is a pound is a pound, or leverage flat rate boxes, which the Post Office has cleverly marketed in their “If it fits it ships” campaign.

In a pricing context, the Post Office is somewhat like Southwest Airlines, with no hidden or added fees.  The private carriers, on the other hand, tend to take on characteristics of a Spirit Airlines flight where the base transportation is quickly overshadowed by the many fees you inevitably incur (i.e. being charged for a glass of water). There is tremendous variability in determining shipping cost, and our customers – many eBay sellers – have a great deal of variety in what they ship. You need to be smart about your carrier selection to optimize on cost/speed.

This complex pricing structure is why every shipment sent through Shyp runs through our custom algorithm to pull every available rate from each of the carriers we work with. Then we choose the cheapest.At Shyp we try to make this process simple by providing a very similar service to what Kayak does for airfare. We compare every carrier option across UPS, FedEx, and the Post Office and choose the cheapest retail rate on our customer’s behalf. This saves our customers up to 50% on shipping.

We also help minimize the dimensional weight of your shipments through our custom packaging approach. We don’t use peanuts, air pillows, or bubble wrap as filler. Instead, we custom print the right sized box, and aim to minimize volumetric size to reduce spend. A non optimized package can result in spending 40 percent more on postage due to wasted space and unnecessary filler (more on this in a future post).

Regardless of what you’re shipping, I’d love for you to try Shyp for yourself and tell me what you think. I’ll even give you $30 off your first shipment.

View Matt’s original post on LinkedIn here.