What is Parcel Delivery Really Costing?

What is my parcel delivery really costing me? | ParcelBIDid you ever wake up at night wondering if that 2nd Day Early Morning delivery to Walla Walla, WA was billed correctly? Do you wonder if your flat rate shipping fees are a competitive advantage or killing you softly? Do you see charge corrections on your carrier bills and wonder if they were included on your invoice to your customers? You are not alone.

Shipping product is often seen as the last step in a fulfillment transaction. Printing up that shipping label and getting that shipping charge so that you can generate an invoice is the "goal line", but this last step can be full of hidden surprises and you may be leaking money and killing profits.

Customers can be won and lost based upon how shipping charges are perceived because no one likes to pay for delivery. Unless you are able to build your own fleet of solar-powered drones, you are likely at the mercy of the common parcel carriers for getting your product delivered. How companies handle that cost varies greatly, but in that cost often lies confusion in understanding the details in how it affects the bottom line.

Many companies have different approaches and policies for billing parcel delivery. It can be a flat rate for shipping, or if an order hits a select value, shipping is free. Maybe ground shipping is free, but accelerated delivery is an upcharge. Whatever the policy, it is hard for companies to find out where they may be taking a hit and how much of a hit.

The trick is finding a way to connect the dots on what you thought it would cost, to what it actually cost, and what you actually billed. The approach could be simply looking at your financial statement and comparing your shipping costs are less than your shipping income, if you are covered, then you are good, right?

But what if you could be more competitive by offering a more aggressive shipping incentive? What if you are losing profitability in a product line because of excessive box dimensions? What if you have a sales rep that is unaware that his delivery promises are eating away at a margin?

Does this real-life scenario sound possible in your world: A sales rep sells $181.20 worth of product with $47 of profit, qualifying for free shipping, but it's out of stock at the close warehouse, so it is shipping from a few zones away. To get it there on time, they need to ship it 2nd day, and after calling down to the shipping department, it looks like it will cost $174.84 to ship. It looks good when the customer agrees to pay $256.46 for shipping. One week later, the actual bill comes in from the carrier at $546.65 because of delivery corrections (Large package surcharges and other adjustments) Too add insult to injury, the sales rep received a $12 commission. A $181 sale became a loss of $255.

The mystery of actual costs impact on profitability is one that Parcel BI solves. When we are able to use our full suite of BI solutions along with Parcel BI, we can connect the dots. Assuming there is a connection from the order or invoice to the shipment tracking number, we can empower users to connect the costs to the invoice. From there, drill right into the order information to see what was shipped, how it was shipped and more. Now you can ask the right questions, make the right changes and stop guessing.

Our advanced Sales Analytics has empowered companies to know what customers they may be losing if they were on or off target, what was backlogged, and more. Connecting in our revolutionary Parcel BI tools, we can now empower customers to connect the data and increase profitability by exposing the practices that are costing them money.

Interested in learning more or seeing it in action? Schedule a demo today!

 

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