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Leveraging Mail Consolidators for Savings

Posted by Greg Marone on Apr 21, 2017 4:23:00 PM

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Online sales represent an increasingly important source of revenue for many businesses, making the need for affordable shipping more critical than ever. Many budget-savvy, high-volume shippers are turning to mail consolidators to reduce the cost of shipping while still providing reliable delivery.

But what are they, and why are they a great choice for some businesses?

How Mail Consolidation (and Consolidators) Work

Mail consolidation occurs when a shipping company picks up and processes packages from multiple customers then sorts the parcels based on major shipping hubs of the U.S. Postal Service (USPS). The packages are then inserted into the USPS system for final delivery.

Client Success Story: Learn How CLS Helped Dollar Shave Club Streamline Their Shipping Processes

There are many advantages to using a mail consolidator. Perhaps the most obvious relate to reducing shipping costs across the board. It's almost impossible to beat USPS delivery rates to begin with, and using a mail consolidation service only amplifies that. Because consolidated mail enters the USPS system so far downstream, smaller businesses are able to enjoy shipping discounts they otherwise wouldn't have enough volume to receive.

Consolidation can also simplify the shipping process. Mail consolidators will generally pickup, sort and document parcels, saving businesses time and money. And instead of managing accounts with both the USPS and a private shipping company, all business can be handled through a single carrier.

For example, rather than sending 1,000 packages through FedEx and 1,000 packages through USPS, you can send 1,000 packages through FedEx and 1,000 through FedEx SmartPost (the FedEx consolidation program) for ultimate delivery by the USPS. With more packages under a single shipping umbrella, your business may be in a better position to enjoy volume discounts as well.

Consolidation makes the most sense for companies that ship high volumes of small packages (generally 5 pounds or less). While delivery may be slightly slower than it would have been if shipped traditionally, the delay is often no more than a day or two depending on the destination's distance from a hub.

Selecting the Right Mail Consolidator for You

In many cases, the best place to start when searching for a mail consolidator is with your current shipping partners. Find out if they offer consolidation services and what advantages they think it may offer your business. The USPS also has a list of shipping consolidators available on its website.

In general, a good consolidator will have a national presence with multiple distribution points and will offer both air and ground services so that delivery times remain similar to those associated with First Class mail. Consolidation should be one of its core business services, and it should already have a large client base since its overall volume will affect the level of discount it can offer compared to traditional shipping.

Other services such as tracking, reporting, warehousing, etc., can also add value to what a consolidator has to offer.

Getting the Most Out of Mail Consolidation

Many businesses are hesitant to embrace mail consolidation because they know it isn't the right fit for all of their shipping needs. Unfortunately, by not using a consolidator where appropriate, they may be wasting thousands of dollars on shipping when they might not have had to.

One of the best ways to address complex shipping needs is to use software to automatically sort parcels into different categories. Businesses can then set parameters to identify which packages are best suited to consolidation based on the size of the package, the customer, the location (i.e., how far it is from a shipping hub) and the delivery commitment. Once these business rules are added into the software the shipping flow is quick, efficient and transparent to the user.

At the end of the day, mail consolidation offers significant cost-saving advantages for businesses and represents a valuable tool for operation leaders and warehouse managers looking to save money. However, which mail consolidator you choose - as well as how you implement your overall strategy for addressing shipping challenges - should be evaluated with your specific needs in mind.

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Topics: shipping costs, shipping