B2c

How do B2C companies (with a physical good - like dollar shave club) save on shipping?

Fareez Ahmed

April 1st, 2014

I've validated an idea (via testers and people willing to pay for my product) and am in the process of figuring out pricing and building out the order form.  The thing that is eating up so much in to our costs is the cost of shipping-- right now it accounts for almost half of production costs, when the product itself is around 10 dollars.  Does anyone have suggestions for saving on shipping costs? right now the cheapest I've found is USPS (if it fits it ships at 5.2-5.7$)

ian johnstone Startup founder/advisor/consultant. Passionate about Tech for Good.

April 1st, 2014

You can negotiate discounted rates with some of the big shippers (Fedex, UPS) when you're doing high volume, but I think you need to be doing something like $10k/month to get their attention. They also have options like Surepost or Smartpost where they work with USPS for the last leg of delivery. 

There's regional shipping options that can be much cheaper (in California we have OnTrac, which ships to 7 western states for pretty cheap). If you're shipping to all 50 states it can be a bit of a hassle because you'll have to use different shippers for different packages.

These options might help marginally, but the truth is shipping is pretty expensive and tough to get around. There's big savings are if you can get the package under 13 oz and send them USPS first class.

Antonio Rocha-Ferreira

April 1st, 2014

You haven't told us much. Obviously that the supply chain/shipping can make for 30 to 50% of pricing, specially if you are buying things from China. At a Startup level, I would try to find a local supplier, especially if you have customisation requirements built in the product characteristics and know how that you want to build upon. Are we talking about a whole container? Of that particular product, you need to already have a very good customer base before committing. That doesn't seem applicable to the stage you're in, proof of concept. Find a local supplier. They're much more controllable than overseas and the quality is probably higher. Are you talking about delivery to final customer? If so, are your customers concentrated on big cities? How much would be to get a partner for distribution in each city? Do you have to go with a big brand? Why? Less hassle? Well, business is hassle. Thats why most people aren't entrepreneurs.

Bill Duncan Customer Sales,Industrial Engineering,Packaging,Logistics&Supply Chain

April 1st, 2014

Fareez, I would suggest that you go back to the way that the product is packaged and examine the basic function of the package .Also explain to me if your paying for actual weight versus volumetric weight.I need more details in order to give you advice.

Syed Masud Senior Staff Software Engineer at Motorola Inc.

April 2nd, 2014

USPS is the cheapest in general. If you have a large volume of shipments, you can contact UPS or Fedex as a business and see if they can give you any special deal. The company I work for is getting a pretty good deal from Fedex and uses Fedex for most of its shipments.

Arthur Veytsman Founder at Immerss, 6x Entrepreneur & Angel Investor. Building relationships with Angel Investors worldwide.

April 1st, 2014

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Anonymous

April 2nd, 2014

Fareez, I agree with others about the lack of details.  What are the dimensions and weight of your product?  It would also be helpful to know your current volume and where you expect to be in 6-12 months.  I've partnered with fulfillment companies in the past and saved a lot of money.  It depends where you're manufacturing and what your current process is.

Once I know more details about your situation I might be able to make an introduction to a company that can save you substantially over your current USPS fees.

Huan Liu Co-founder at Vimo Labs Inc.

April 2nd, 2014

Check out the various mailing houses, they have volume discount with USPS. If you have the volume and do not mind paying a yearly fee, you can sign up with USPS for volume discount too. 

In our case, we mail out iPhone cases. If we mail through USPS at a retail location, they charge us $2.32 just for the shipping cost. Through a mailing house, we get the cost down to <$1 if we ship 500 pieces with them at a time. Half of this cost is for the mailing house to buy the envelop, print the label, package and sort the item, and the other half is USPS postage fee. So, in our case, it is a substantial saving over USPS retail. Your mileage may vary depending on your item size and weight.