Negotiating Shipping Rates with Multiple Carriers

June 3rd, 2013

I am thinking of adding shipping and providing shipping boxes to the users of the product that I am building and wanted to know if any of you have experience negotiating rates with FedEx, UPS, USPS, DHL etc. If so is there a contact person or department that you recommend? I would greatly appreciate it.

Anonymous

June 3rd, 2013

Hi Lona, Yes, I have experience with this. The very shortest & simplest answer is that at startup-volume, there's not really any negotiation to be had. You pay the normal business rates until and unless you reach a scale where the loss of your business would make a meaningful impact on the provider. That said, I would highly encourage you to consider USPS over any of the other carriers you mentioned; they're *much* cheaper, just as fast (there is no "first class" parcel anymore, for example), you can insure and "track" (though not as in-depth), and you can get free shipping supplies of basically unlimited quantities--though of course they'll be unbranded. Happy to speak with you more about this if you wish; my previous startup shipped about $2M of merchandise a year between 2002-2008. Best, Cynthia Cynthia Schames Founder & CEO AbbeyPost cynthia@abbeypost.com www.abbeypost.com

Matt Dykstra Co-owner and Designer at Leesa Dykstra Designs

June 3rd, 2013

We were able to negotiate rates with Fedex without much trouble as a small business. They have graduated increments of discounts based on shipping volume. Their quota's aren't as high as you would think either.

We originally started out with a small discount that still ran a bit more the USPS. We let them know that we don't want to have to price shop our shipping. We let them know what our shipping volume was going to be. They renegotiated the rates with us and now use them exclusively for our domestic packages. (which is a large bulk of our orders) Our letters and international shipments still typically ship cheaper through USPS though.

As for who to talk to, we have a regional sales rep that we deal with. For a startup, you'd probably want to look into their small business program and get in touch with someone through there.

We have done no research with UPS at this point, but plan to at some point. For us, their prices were the higher of the three starting out, so we left them off the preliminary list.

vince mota

June 3rd, 2013

These rates are pretty standard unless you're shipping many units. The costs basically are mostly determined by weight, speed of delivery, delivery option, size boxes, volume and location to/from.

If shipping within the USA and have at least 50-100 orders daily would suggest outsourcing fulfillment to another company. They would handle all product storage, shipping/packing and even tasks like returns, customer service, etc.

Hope this helps,

Vince

Jonathan Vanasco

June 3rd, 2013

From what I've gathered, once you hit around 50k in monthly spend they'll start to cut you great deals. With numbers less than that, I sort of felt they were all laughing at me.

Jonathan Vanasco

June 3rd, 2013

From what I've gathered, once you hit around 50k in monthly spend they'll start to cut you great deals. With numbers less than that, I sort of felt they were all laughing at me.

Lona Duncan

June 3rd, 2013

Thank you so much Cynthia for your detailed response. As you pointed out we are just a startup and the volume is not going to be significant. There are a couple of other startups that will need the same service so I was wondering if we went in together and negotiated as a group would that help?

I'll email you separately but just wanted to post this follow up question in case it is helpful to other founders in the same situation.......

Jonathan Vanasco

June 3rd, 2013

@Cynthia / @Lona - IIRC, FedEx and UPS have some internal "small business" programs that give you a nominal discount off the business rates (like 5 or 10% less). There are a handful of startup programs that have negotiated similar rates - at one point FoundersCard had a decent discount.

IIRC, at ArtWeLove we found that UPS was the most reliable ground delivery for packages. FedEx was hit-or-miss ( FedEx overnight and ground are totally different ). USPS was good for letters, but not packages. For overnight, FedEx was more reliable than UPS.

Kevin Matthews Director of Engineering at Action Factory

June 4th, 2013

Lona, If you are trying to negotiate to get custom prices, I'm not much help. But if you are looking for an easy way to integrate shipping and rate lookup into your app, check out Easy Post (https://www.geteasypost.com/). Hope this helps. Kev

Lona Duncan

June 4th, 2013

Great Kevin! My next question was going to be Shipping Api's! Anyone else have their favorites?

Jonathan Vanasco

June 4th, 2013

Have you looked at Apache's OfBiz platform ?

It's in java and kind of bulky, but there are shops available that consult on it. It's a proven ecommerce platform ( 1800Flowsers, UnitedAirlines, etc) and supports just about every shipping carrier and option.