As an industry, shipping is an intimidating thing to get into. Many factors play in to the shipping process, such as the shipping companies themselves, what prices they charge based on package size or weight, and what is allowed to be shipped. Because of this complexity, many consumers are overwhelmed and choose whatever shipping carrier is first presented to them, or worse they never even have choice at all.
A business practice called Rate Shopping solves this issue, serving as a cost-effective method to ship packages using various carriers. This process, described in detail below, is provided to all clients who participate in the fulfillment center service SiteRight offers.
What is Rate-Shopping?
When shopping for a shipping carrier, the best option is not always the one which is most readily available or optimally suits a package size. Rate shopping recognizes this and identifies the carrier which provides the best price for a delivery.
This process compares many carriers, including FedEx, UPS, and the postal service, in order to find the cheapest shipping rate while keeping a desired delivery date and requirements in mind. Even within one of those carriers, various formats of delivery and tiers of service are looked into. Rather than simply choosing the first shipping option found, several different options are considered before choosing the best deal.
Imagine buying a car, house, or any other product. You would not simply settle on the first item you found which met your requirements; instead, you would compare several options to find the cheapest deal that still satisfies those conditions. Rate shopping applies this same philosophy to finding a shipping carrier.
Shipping prices are determined and set by shipping carriers in order to account for many costs on their end: weight, fuel, taxes and tariffs, class of freight, and type of product being sold.
Benefits to eCommerce Businesses
Rate shopping is incredibly beneficial to all businesses, especially those on the eCommerce front. The benefits that can be drawn from this process can originate from two specific origin points: reduced shipping costs and improved cost itemization and tracking. These are described in more detail below.
1) Reduced Shipping Costs
Rate shopping significantly reduces shipping costs. Studies have found that this simple procedure can lower costs related to shipping by almost one third. This means that if shipping for a product originally cost an average of $9, it would cost about $6 with rate shopping. This effect may seem insignificant, but consider an entire month’s worth of shipping from your company. If it was $1,000 right now, rate shopping could reduce it to as little as $675.
Reducing any cost is a clear way to increase profit, especially when it comes with no downside. This additional buffer will also give eCommerce businesses room to reduce the selling price of products, attracting more customers and potentially gaining a competitive edge over competitors with no effect on the bottom line. Even better, it may now be attainable to offer some products with free shipping to customers, a commodity which is sought after when shopping for a product.
2) Improved Cost Tracking
In addition to reducing shipping costs, rate shopping allows a much better itemization of costs endured by businesses throughout the shipping process. Many hidden costs are incurred and charged during shipping that are normally difficult for businesses or individuals to find. When operating an eCommerce business especially, it can be difficult to track these charges as it would require meticulously looking through each and every invoice of a product that is shipped.
This causes money to be lost that does not need to be. Rate shopping makes every cost charged by shipping carriers clear, comparing different services to each other. This will give much better insight into what exactly is involved in “shipping cost”, and why it may be more expensive than normal.
SiteRight Rate Shopping
Despite its many benefits, rate shopping can be difficult to implement for companies because of the time it takes to do properly. Although everyone can benefit from this process, companies which ship large quantities often simply don’t have the resources and time to devote to a reliable implementation of rate shopping.
Luckily, SiteRight makes rate shopping available to all customers who use our fulfillment center service. When using this service, every shipping order is thoroughly rate shopped to ensure the best shipping options are chosen in terms of price and delivery date. This real time rate shopping solution will give your eCommerce business the benefits of rate shopping, reducing average shipping cost by up to 30% and improving cost itemization without needing to apply manual labor to research shipping options for each and every order.
Enroll in the SiteRight fulfillment service now to increase profit margins and gain a crucial advantage over your competitors.