Are you leaving your shipping money on the table?
How might the average small business decrease shipping costs? With shipping costs accounting for 10% of an e-merchants sales, managing shipping costs is a critical component to managing all of your business costs.
It's no surprise that FedEx and UPS keep increasing their rates on January 6th of every new year and the threat of USPS closing post offices and reducing personnel does not hint to a good outcome. Unless you ship Amazon-level volumes, it’s more and more difficult to gain leverage and cut a break with your shipping carriers.
Have you explored guaranteed-service refunds?
Did you know FedEx and UPS provide a money-back-guarantee promise on every overnight and ground shipment?
Even if your package is only 60 seconds late, FedEx and UPS offer a 100% money-back guarentee. This area, guaranteed-service refunds, is often unexplored area of savings. To take advantage of the guarantee you would need to identify these shipments as outside of their service level agreement (late deliveries) and file these claims within a specific time period.
How much savings can I expect with guaranteed-service refunds?
Shippers can expect interesting savings. Depending on your mix of packages and ratio of overnight to ground deliveries, you could expect between 3-7% of your shipments to be ‘late’, which corresponds to the same range of potential refunds and savings you could expect to receive.
Who will monitor my shipments for savings?
For larger companies with a full staff in their shipping department this could seem like a worthwhile function to perform, but for the majority of small and medium size merchants, the task of auditing every parcel shipment, comparing against the published service level, and filling these claims could end up being time-consuming and tedious. Not to mention, the process becomes even more cumbersome to manually review as many of the 43,000 zip codes in the US come with ‘exceptions’ to the carrier’s published guaranteed time.
For smaller companies, the question, "Who at your company will audit these late shipments?" remains unanswered.
Many small business shippers outsource their shipping function to a 3rd party logistics company (3PL), and of the ones that allocate limited shipping headcount to ensure daily orders are fulfilled. Rarely does a shipping manager have the time or resources to analyze their past shipments.
Enter a shipping auditor. Many work on a contingency-based fee, meaning they only collect their fees once they identified savings for you. Since shipping auditors are not on your payroll, they do not represent a fixed cost for you. Many have experience in auditing and identifying late-delivery shipments. You should consider evaluating your shipping auditors based on years of experience in the industry and level of technology automation.
Now, services like 71 lbs offer small businesses a way to have access to the same tools Fortune 500 companies can use. This way, every small business can capture their share of the $2B of unclaimed refunds.
The opportunity of retrieving refunds from late delivery shipments, plus relying on a contingency-based auditing provider to file these claims, could be significant. We recommend that you keep negotiating with your shipping carriers for lowering standard rates. Then enjoy additional savings by having a shipping auditor analyze and audit your shipments.
This post was contributed by Jose Li, CEO of 71 lbs, a "set-and-forget" system that allows small businesses to easily and automatically collect late-shipment refunds owed to them via the FedEx & UPS money-back-guarantee. Jose formerly ran FedEx's Retail and e-Commerce practice and can be reached at email@example.com