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When Does Your Free Shipping System Begin to Cost You Money?

Posted by Greg Marone on Mar 3, 2017 5:50:14 PM

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When your business was first launched, they probably chose a free shipping system from a carrier like UPS or FedEx. But now as your business has grown, you may find that these carrier-provided systems no longer meet your needs.

You may notice a bottleneck at your shipping station, or you may realize that you're losing money because you can't easily compare shipping rates. Whatever the reason, once your business exceeds your shipping needs, you'll quickly come to realize that free shipping is rarely fast shipping.

When Free Shipping Systems Work

Free carrier-provided shipping systems work well for many small businesses. A carrier may send a technician to your business and install the system. If you're a high-volume client, they may even help interface their carrier-provided shipping system with your host system preventing the need to manually enter shipping data.

If your business ships fewer than 500 packages per day using a single carrier, a free shipping system will usually meet your needs. Smaller operations can also typically justify the additional labor costs associated with operators entering more data into the system, and they shouldn't have a bottleneck during busy periods.

Small businesses may also use batch processing to make shipping orders more efficient, which reduces the need for a more robust system.

When You Need to Consider an Alternative

Two to five years after you start your business, you may realize that your current shipping process isn't working well. You may notice piles of packages waiting to be shipped, and you may have several different shipping systems on the floor to handle your workflow.

Maybe you've decided to offer several different shipping services, so now you have free carrier-provided systems from FedEx and UPS taking valuable square footage from your operation. Labor costs are high, and plenty of your employees spend most of their day at a shipping station. Your company's shipping process feels slow, and your "free" shipping systems may be beginning to cost you money.

If you're still near the 500-package threshold and only use a single carrier, you may want to call your preferred carrier for help. A shipping carrier may offer technical assistance to top clients that can improve your overall shipping interface. A quick call to the local office may net you a free visit from a technician to help optimize your free shipping system.

But after you've exhausted your shipping system options from a single carrier, it usually becomes more cost effective to invest in a multi-carrier shipping system. A multi-carrier shipping system will have an initial cost, but it will pay for itself quickly and soon begin to save your company money every day.

How Multicarrier Systems Save Money

A multicarrier system allows you to completely streamline your operational flow throughout your shipping process. You can efficiently compare shipping rates, so you can choose the cheapest service for each package.

There is also no wasted time as your workers shuttle packages between several different carrier-provided systems, guessing at which carrier would be the best service for each shipment. Your multicarrier system will also seamlessly integrate with your host system, drastically cutting down labor costs and reducing user errors. Plus, there's no bottleneck caused by a slow system.

If you're starting to see bottlenecks at the ship stations, an increase in human resources required to process your parcel shipments, or you can't get every shipment processed by the end of the day, it's probably time to look at an upgrade. Investigate your current shipping process and consider ways you could make it more efficient. Then you can crunch some basic numbers to decide if you're ready to jump to a multicarrier system.

Chances are, you will be saving money each month by making the switch.

integrated pack and ship station

Topics: shipping system, shipping costs