4 {{ upvoteCount | shortNum }}
4 {{ upvoteCount | shortNum }}

Negotiating Shipping Rates

by matt71
3 replies
  • ECOMMERCE
    • |
Hi Guys,

Have a question about lowering shipping rates for a new business. Hoping some of you can help me out. We ship physical products that weight about 1 - 4 pounds in the lower 48 states.

As you may know, companies can negotiate lower shipping rates once they have a an established record of shipments for several months. However, a new business, like ours that doesn't have a track record, really isn't in the position to negotiate better rates.

The "negotiated rate" that UPS automatically gave us when we set up our account with them is absurd. There is no way for us to absorb the costs of shipping or pass them on to customers. Even if we split the cost of shipping between ourselves and our customers, it won't allow us to compete with other companies or make a profit. The rates are way too high. The dimensional weight gets us even though our boxes fit our products with very little room left for padding. The rates for USPS are actually even higher.

Can anyone offer advice of how a new business deals with this problem when starting out when we don't have a shipping history to negotiate with?

Thank you for your help!
#negotiating #rates #shipping
  • Profile picture of the author dave_hermansen
    It's impossible negotiate anything without leverage. Get quotes from USPS, FedEx and DHL and play them against one another. Not sure what you are shipping. Size plays a big part in which one will be cheaper.

    I should also say that your competitors are doing it somehow and I doubt their shipping rates are so much lower, it is making the difference between profit and loss. It sounds like they may have negotiated better costs on the products, themselves.
    Signature
    BizSellers.com - The #1 place to buy & sell websites!
    We help sellers get the MAXIMUM amount for their websites and all buyers know that these sites are 100% vetted.
    {{ DiscussionBoard.errors[10858143].message }}
    • Profile picture of the author matt71
      Hi Dave,

      Thanks for answering. I don't think DHL ships domestically anymore. I read an article that they stopped doing that and then wrote to them to confirm. I never heard back from them. Do you know anything about DHL shipping domestically?

      Product costs are pretty standard. I have some contacts that have verified that for me.

      Let me give you an idea of how high the "negotiated" shipping cost is for UPS Ground from NY to California by using an example of an actual product we sell.

      Shipping Box Weight: 1.9 pounds
      Shipping Box Dimensions: 13" long x 10" wide x 7" high
      We get charged the dimensional weight: 6 pounds and this is a box that fits out product with just enough room for a little padding.

      Cost to ship ground with negotiated rate is: $15.22.


      That's just one example. That just doesn't seem right. If you or anyone else has additional advice please let me know.

      USPS would be $10.77 which is lower so I guess I could call UPS and tell them that. But I can tell you that the average cost that others in my industry, charge would charge around $6.00-$7.00 for the same item.
      {{ DiscussionBoard.errors[10859179].message }}
      • Profile picture of the author jr817tx
        Matt, Are you manufacturing and shipping out from your location in the L48? Is that what I understood? Or are you buying and having things shipped into your warehouse and then shipping orders as they are placed online? I may have some other alternative suggestions but I need to understand your process first.
        {{ DiscussionBoard.errors[10859251].message }}

Trending Topics