Shipping costs are the stuff of nightmares for most eCommerce merchants, so the recent announcements of impending 2016 rate increases for each of the three major U.S. domestic shipping carriers means more sleepless nights as sellers grapple with how to maintain profitability without sacrificing order volume.
Following FedEx’s announcement in September that shipping rates would increase 4.9% starting in 2016, UPS and USPS followed suit with similar statements this week. UPS rates will also be increasing by 4.9%, while the proposed increases for USPS are nearly double that with an average increase of 9.5% across all shipping services.
While the increases mentioned are averages, many sellers shipping lower weight items will face higher average increases, so keeping a careful watch on these costs is essential.
FedEx and UPS also announced increases to their fuel shipping surcharges, which adds to the headaches online merchants must endure when considering how their bottom line is affected by shipping costs.
So what’s a seller to do with all this doom and gloom news just ahead of Halloween?
Managing Shipping Rate Changes
Take stock of your current business rules for shipping rates across all your online channels, then ensure you’ve calculated the total cost of shipping each of your products into your price floors and shipping surcharges.
For anyone selling products in volume online, it’s likely you’re already using inventory and order management software to automate the process, much as Monsoon Commerce customers do using Monsoon OMS and Monsoon Marketplace.
Without powerful tools like these, sellers can quickly get mired in micro-management of their product inventory, sacrificing efficiency, productivity, and revenue in the process. By utilizing the features available in these products, the rising costs of shipping can easily be overcome by updating settings to accommodate for rate increases.
Monsoon Commerce users know that maintaining accurate price floors is a key factor in keeping profits high, so products that require item level cost of goods should be first on the list for updating individual values.
Weights and sizes of products shipped can vary widely, so you’ll also want to consider these criteria as you modify rules to account for the higher rates.
For those selling on online marketplaces like Amazon or eBay, you’ll have multiple options available for shipping, such as Free Shipping, Expedited, and International.
If rates are set by the market, you’ll want to include an appropriate amount in the price of your item to ensure costs are covered if a market determined rate isn’t sufficient, or use weight based rules with higher price floor modifiers to manage heavier or oversized items.
For rates you set yourself, consider if a flat rate is enough, or if a per pound rate is more appropriate, then adjust accordingly.
Integrate, Integrate, Integrate
In addition to sellers managing their price floors and shipping options via Monsoon Commerce tools, integrations to carrier specific software such as Endicia, UPS WorldShip, and FedEx Ship Manager offer yet more options for sellers to automate their shipping process and manage costs.
Endicia users can set up rules in Monsoon Commerce to automatically select which USPS mail class to use on a particular order, for example mapping standard orders to use First Class options or expedited orders to ship via Priority Mail.
If you integrate directly with UPS or FedEx, you can set up the appropriate mapping to Monsoon via each service so your tracking and delivery confirmation information can seamlessly pass back through the system to each of your online channels.
For sellers who ship via multiple carriers, consider other shipping integrations like Intelligent Desktop Shipper, which offers rate shopping and business rule automation to get you the lowest cost option that still fulfills your customer expectations for delivery time.
Prep For The Holidays
Sellers will also want to keep in mind the increases to expedited and international shipping options, where for USPS users alone services such as Priority Mail go up 9.8% and First Class International package rates rise a whopping 21.6%!
While most of these price changes don’t go into effect until after the New Year, it doesn’t mean sellers can rest on their laurels over the holidays.
UPS, for instance, also cautioned that delivery expectations will be up to a day longer than advertised as Christmas nears, so when in doubt be sure to upgrade your shipping speed to guarantee packages arrive at their destination within anticipated delivery windows.
For a little extra insurance over the holidays, consider 71lbs your resource for money-back guarantees when FedEx or UPS deliver a package late, whether it’s shipped overnight, ground, or international.
Although the news of rising rates can be downright scary, you can take the fear out of losing profits by being prepared with the right tools so you can sleep soundly this holiday season.
If you are a current Monsoon Commerce customer, please reach out to your Account Manager. If you’re interested in speaking with us about how our software can help you manage your orders and shipping costs, please contact us.