Are you designing your own product to sell?  This can be very exciting and challenging at the same time.  A lot of people do not plan around the packaging.  This can become as important as the design itself, which we will get into later in this article.  If you are thinking about selling something on line, most have never given much thought to the size of their item or creation.  One of the biggest factor about selling products online is shipping.  Shipping an item is a combination of headaches and high costs.  Do not believe the cleverly crafted commercials done by the U.S. Post office.  Those commercials are created to try and breathe some life into a dying agency that is losing money.  The one part they get right is the fact that shipping can be a hassle, here are some reasons why.

• The costs are very high and will always increase.  Freight is one stable industry in regards to demand.  There will always be demand to move items back and forth.  When prices go up they are passed onto the customer and there is very little you can do about it.  The price is the price, there is no dickering over it.  With that they are always discounts to be had for shipping customers that ship a regular amount of volume but only with Fed EX and UPS.
• Most businesses have no idea how to get a discount.  If a vendor or manufacture has no idea how to get volume discounts for shipping, chances are they will transfer their shipping prices to you.  This forces you to pay close to retail prices for shipping business to business.  Its up to businesses individually to pass on reasonable shipping prices if they want to keep customers.  We have several vendors that we have dropped because they are “too busy” to contact their shippers and get a better deal.  Most of the time you can negotiate a better deal by just asking for it.
• Bigger boxes are a consideration.  I have always said that the smaller the product the better.  If you are designing a product this is something to keep in mind.  If you sell your product on Amazon and its bigger than 18″ on one side, its considered over sized and a hefty shipping charge is applied.  I personally find this quite unappealing and unacceptable.  We pulled a good selling 5 pound product off the Amazon market place because the shipping price was outrageous.  Smaller items are easy, take up less room and are cheaper to ship.  If your new product does not weigh much that is an added bonus.  Larger and heavier products are also subject to more damage. If they are heavy there is a good chance that someone will drop it because its heavy.
• Companies that get the biggest discounts do not often pass them down to customers, this is a revenue generator.  large companies that ship in volume get significant discounts with shipping companies.  This is because they ship a lot of volume and are good customers.  This reduces shipping costs and improves margins for the company.  Not all companies pass these savings on to you.  In some cases by charging regular shipping a company can in some cases make money on their shipping costs.
• Customers are demanding free shipping.  The world of online shopping has spurred a lot of companies to offer deep discounts or even free shipping on some items.  This has become so popular that a lot of customers expect free shipping all the time no matter what the item.  This puts small businesses in a bind to compete especially if they sell and ship heavy items.  A 60 pound box traveling by ground from coast to coast can cost up to $80 in some places.  This is a very real cost that has to come from somewhere.  Eventually it gets worked into the price but can be a significant part of the cost of production.  Customers want low prices and low shipping, this is our own fault and results from what I call the Walmart generation.  Add in the fact that it has to be American made and you have a real problem.  We have created a real challenge for small companies to produce items that sell well and are inexpensive to ship, heaven forbid if its made overseas.  So how do you reprogram today’s customers?  I am not sure that you can, there will have to be a correction somewhere in the future or more items will become unavailable.
• Boxes  Box sizes and availability is another detail you may want to think through.  If you can design a product to fit in a standard box, your costs will go down.  The minute you have to use a custom sized box is when your costs will increase.  A lot of companies can make you a custom box but you will want to try and avoid one of possible.

So with all these factors in place I hope you are inspired to think a little bit more creatively in regards to shipping your great new market changing product to your customers.

Time management

• So when your product ships from overseas you basically do not touch them or handle them at all when you use fulfillment.  You pay a monthly fee per pallet that covers the storage and a freight charge for shipping the product out.  Most fulfillment businesses ship a lot of packages and are willing to pass some of the savings on to you.
• So basically you do not handle your product at all from the time it leaves the manufacturer to the time it arrives to the customer.  This in itself is much better for most business owners in the long run.
• You have to individually crunch your own numbers to see if it will work for you.  You also need to take into account that your product needs to be a complete unit for the fulfillment scenario to work best.  If you have to combine products or do any type of assembly, it takes away from the profit scenario and increases costs.
• Typical storage charges can be from $8 per pallet to $20 per pallet, depending on where they are stored.

Shipping costs

Another factor is shipping costs.  You do not want to pay full retail shipping to your fulfillment company that is just wrong.  A 20% discount to new customers is not unheard of with a decent volume of shipping.  If you have a fulfillment center centrally located in the country, then you can ship to either the west coast or the east cost with reasonable costs.  If your center is on either cost, you have higher costs when sending to the opposite coast.  For example, if your fulfillment is in California, and you ship to New York, then that is going to cost you more to send a box than it would to Arizona.  Having an office centrally located is a good advantage over time.

Summary

Personally I have done both types of shipping discussed in this article.  I may have switched to fulfillment sooner, had I known some of the details discussed here.  Depending on what type of ecommerce store you run, it may be necessary to use a combination of both types.  Larger operations use more than one fulfillment center to handle shipments.  Usually they have one on each coast to take advantage of the shipping cost savings.  Finding the right system for you involves a bit of homework and some brainstorming.  This is a small price to pay for not being held hostage to all the details of shipping your product to your customer.

Ecommerce Shipping and Fulfillment Part 1

Ecommerce Shipping and Fulfillment Part 2

Fulfillment

So how do you touch your items less and spend less money?  Fulfillment is a different way of looking at the physical process of moving your items and touching them less

Here is a break down of things you do NOT do, but still gets done by someone else.

• Items unloaded from ship, trucked to warehouse near port
• Shipping container stripped out (unloaded) and put on pallets
• Items labeled and shipped to your customers when ordered.

So how do you save money?  Most of the money you save is in time.  Most online business owners today get sucked into a vortex of time wasting activities, not realizing how much time they give away working “in” their businesses when they should be working “on” their businesses.  Here is a sample breakdown of how the fulfillment process can save you money.  Substitute your own money amounts into the examples.

• Unloading the truck and moving into warehouse.  Most likely a full day’s work plus hiring or employing some help.  Generally you can figure 3 people to unload the typical twenty foot container.  (the reason you need help is that typical trucking vendors allow you two hours to unload, you cannot unload this all by yourself in two hours)
• You will need a forklift and pallet jack unless you have a loading bay. (most do not)
• Items will have to be stacked in some particular order according to stock numbers to keep the inventory organized.  This can take a good chunk of time depending on what you are receiving.  Personally we remove all the items from the truck and spread them out before we move them inside.  When overseas manufacturers load your containers, they do not do it with any particular order, so things can be mixed and matched to load maximum volume into the container.
• Product may need to be reboxed or combined for final product assembly.
• Product then needs to be “picked” or selected, when the customer orders it.  The shipping label, packing invoices are printed and then it somehow makes it way to UPS or Fed Ex for shipping.  All of this takes time.  If you hire someone or employ someone, this can be many hours of their job functions.

If your are looking for Part 1 of Ecommerce Shipping and Fulfillment

If you inventory products for your ecommerce site finding a good solution for shipping and storing your products can always be challenging.  Most warehouse the items yourself and spend lots of time “touching” your products.  So what is “touching” and how does it cost you money?

The typical scenario

You bring in goods from overseas and they get off a boat and are trucked to your location.  You (the receiver) unload and move them into a warehouse.  Generally you will spend some time inspecting your inventory and organizing it so that you can pick your items and ship in an effective manner.  Sometimes if the packaging is not complete, you many find yourself repacking or re boxing items for final shipping.  So here is how the “touching” is applied

• Unloading it off the truck, you have to do this
• Into the warehouse
• Organizing in the warehouse
• Possible repacking
• Final pick for shipment to the customer who ordered it

This is five times that the item is touched, moved, processed or handled.  If you are smart, you most likely have an employee do this work, which means you pay the employee and manage the process.  Not counted here is the managing of the items coming from port and getting to your ware house that is a separate discussion.  The warehouse cost is also not included in the cost at this particular point.