Today I would like to write about a topic that is important to every business. It is not a topic that is exciting but it a subject that needs to be understood to better run your company. I refer to SHIPPING. I know that not all companies ship their products, however many do. I have received numerous questions about this area therefore I will do my best to examine this part of enterprise.
We discovered early on that the shipping costs of products would play a very important part of our business. We were excited to receive an order, but we quickly realized, that seemed to be the easy part. We then had to pack and ship the order so our customer received the items undamaged and in a timely manner.
As has been said many times – experience is a great teacher. We soon had more experience than we really wanted. Experience isn’t always good but leaning from it is. One of the biggest obstacles with a new company is deciding who to use as their main shipping company. Depending on the type of product that is being shipped, your choices may be limited.
There are many questions you need to answer when deciding who to use.
For example, is you are shipping an item that is hazardous you will have many more restrictions and requirements than someone shipping shampoo or pillows.
Is your product fragile or require other special handling requirements? If an item is damaged will your shipper honor a claim? Do you have to add additional insurance to cover any damage? What percentage of packages shipped are damaged? We recently met with our UPS rep who brought along the person in charge of claims. They were extremely pleased to announce that our claim ratio was absolutely incredible. Our claims history report showed only one claim every 4,455 packages shipped. This ratio far exceeds UPS’s average of all their shippers. This was great news and a wonderful testament to those people who work in our warehouse. This success was developed over time and experience as we weathered the learning curve. Selection of shipping companies as well as packaging materials has added to our success. A future newsletter covering the topic of packaging materials seems to be in order.
Do you ship enough packages to qualify for a daily pick-up? If you have to drive to the Post Office, are you willing to stand in line? Will your local Post Office give you the service you need?
Will you need to purchase your own shipping equipment or will your shipping company provide these for you? By equipment I refer to computer, label printer, postage meter or online software, etc?
These questions are the tip of the iceberg when contemplating your shipping needs.
If you are going to entertain the thought of using UPS, FedEx or other major carrier you need to ask additional questions. Do I ship enough to qualify for a good contract? Can I receive a discount from the “street rate”? The street rate being the rate that anyone off the street can get. A business owner with a new business has no track record that allows them bargaining power. Volume shipping gives you more clout in your rate negotiations. Ergo: the more you ship the better your rate.
One additional thing you may not have considered. Do you have a place in your business that allows easy access for the driver to pick-up your packages?
When we started Sunburst Bottle we placed our packages on the walk-way that led to our home. Luckily there was an overhang that protected the packages from the rain during inclement weather. Not long after we began the business the walk-way was filled with packages and we had to move the business. Thankfully we were able to move the business or we would have run into a major obstacle.
Think ahead and prepare for success as your shipping needs grow. Problems are easier to deal with if we see them in advance.
There are three major shipping companies that I would recommend. These companies are household names and should come as no surprise to you. I refer to these three:
US Postal Service (USPS)
Since most of our orders are fairly large and therefore heavy USPS is a minor carrier for us.
We use USPS for our very small orders that weigh 2 to 5 pounds, depending on destination. We also use USPS to ship to Alaska, Hawaii and Canada. UPS and FedEx to Alaska and Hawaii are very expensive. UPS and FedEx to Canada have to pass through customs which is an added expense to the customer.
USPS shipments do have a few issues that could be classified as negative. Most USPS orders cannot be tracked. They can have delivery confirmation but that only tells you the package arrived. If the package does not arrive you have no way of tracking where the package may be. Filing a claim with the USPS is burdensome and time consuming. I have included some information from the USPS online site concerning their claims process:
Claims for Loss can be filed 21 days (after mailing) at the earliest, and no more than 180 days after mailing. Claims for Damage or Partial Loss may be filed immediately and no more than 60 days after mailing. For items destined for APO/FPO locations, the earliest filing is 45 days after mailing, and no more than one year after mailing. For more information about claims filing timeframes, visit: http://www.usps.com/insuranceclaims/domestic.htm
If you have small items that can be shipped Priority Mail, the USPS may be a good choice for you.
FedEx is a good company and can compete in most areas with UPS. They have been around a long time and have a good reputation. FedEx built their reputation on overnight delivery. I am sure you are aware of the slogan upon which they build their reputation: “When it Absolutely, Positively has to be there overnight”. We have used FedEx in the past with good results but their network is not as large as UPS and do have some delivery issues in some of the “out of the way places”. Since we ship to many of these less populated areas, we do not use FedEx.
United Parcel Service (UPS)
UPS is our favorite shipping company. We have used FedEx and Airborne in the past but UPS is our first choice in dependability and national coverage. They have a huge infrastructure which allows delivery anywhere in the country without delay. Tracking numbers are issued with each package and can easily be viewed online from initial shipping through delivery.
Independent Freight Carriers
We use several different trucking companies to ship pallet orders. We “shop” the rates of several vendors which helps keep these vendors “honest”. and allows us to receive their best prices. This saves our customers shipping costs.
Each of these companies has their strengths as well as their weaknesses.
The type of product you ship could be a great determining factor on who you use as your major shipper. For instance, I have a very good friend who has a very successful online sunglass company. He uses USPS exclusively for his shipping. He ships via priority mail and this works very efficiently for him. He knows what the cost is ahead of time and can factor in his shipping costs very easily. I have told him numerous times that I envy him because his shipping is extremely easy.
I have barely touched on the issue of shipping but hopefully this information will be helpful. This is probably elementary for many of my readers but others will receive some enlightenment.
Until the next Message In A Bottle…..
…..here’s to your success….