[MUSIC PLAYING] LAURA BEHRENS: In this video, I'll talk about how your warehouse setup has a direct impact on your top and bottom line. From box selection to carrier service levels, each decision you make matters. Shipping starts in your warehouse. When it comes to saving on shipping costs and figuring out the fastest way to get packages to customers, most businesses focus on what are the cheapest shipping rates I can get.
But many companies save millions of dollars each year by optimizing their warehouse first. By planning ahead you can strategically design your packaging and carrier mix to save money and get products into the hands of your customers faster. Let's take a look at different ways to optimize your warehouse and fulfillment operations. First, to put the advice into context, I want to quickly go over how carriers calculate the cost of shipping.
The first concept to understand is the one called dim weight. Many of the carriers including the major ones like UPS and FedEx take box dimensions in addition to the weight into account when calculating the cost of shipping. This is called the dim or dimensional weight. Each carrier uses a formula that involves multiplying width by height by length of the box and dividing it by a number called the dim factor.
This determines if you will be paying for the size of the shipment in addition to the weight. The carriers then take the higher number, the dim weight or the actual weight and charge you accordingly. The obvious cost saving tip is that you should package your orders into the smallest possible box leading to savings for each order shipped. This is particularly important if you're shipping light but bulky items. Multiple box sizes.
As you plan your operations you should stock multiple box sizes that cover most orders. Do not attempt to ship all order types into fewer box sizes. As an example, if you're a selling one product individually, as well as a bundle of five make sure that you are still considering orders of two, three, or four items. Have specific boxes for orders of 1, 2, or the 5 bundle products to account for all of the different combinations.
The end goal is to avoid shipping extra here. Take a look at what average orders look like and stock a variety of boxes to accommodate for them. Different box types. Speaking of packaging another aspect you want to consider is the type of packaging you have. An often overlooked option is to poly mailer bag. Poly mailer are classified under a different and normally cheaper rate by most carriers.
If the goods you're shipping don't need additional protection, poly mailers can be a quick way to save costs. And poly bags can be custom printed with your brand for just a small additional fee. As an added benefit certain poly mailers have double tape strips which mean that they can be used by customers for returns. Some merchants use a hybrid approach and ship one or two item orders in a poly mailer bag but then we'll use a box for larger orders to try to squeeze out extra savings where possible.
Multi-carrier solutions. Another way to optimize your shipping at the warehouse level is to have multiple carriers in the mix at your warehouse. While you may have negotiated rates with specific carriers, it doesn't mean that you need to ship everything with them. Typically negotiated rates cover a portion of your shipments but not everything. Your discounted rates may be focused on a specific dimension or weight class or limited to a certain service level.
By using a multi-carrier platform at your warehouse, it could check the pricing of each package based on the destination, weight, and dimensions across multiple carriers and pick the optimal carrier automatically. This way you are guaranteed that you are optimizing the spend on each box going out of the door. Simpler warehouse operations. Another advantage of a multi-carrier platform is that you're only going to need one shipping station at your warehouse since it can interface with all different carriers.
You no longer need to set up a dedicated shipping stations for each carrier and this significantly simplifies your warehouse flows. If you go with this route, the one customer facing change you should make on your website is to remove any mention of the specific carrier names in the checkout process. And you should only show the estimated delivery window. As you're thinking about multiple carriers, there are a few more things I want to share with you that can help you scale your business.
National carriers like the USPS or Canada Post offer, if it fits, it ships, flat rate regional box. If your products are typically small but heavy using those flat rate shipping boxes could be a way to help you save on shipping costs. So consider using them as part of your shipping option. And a final tip that not many entrepreneurs take advantage of is that most carriers provide free packaging boxes for their customers.
You just have to ask them. Everyone is familiar with the free boxes from the USPS that are available at most post offices but UPS and FedEx will provide free boxes for their customers as well. Customer expectations. As you're thinking about how to improve your warehouse operations you should know that according to Shapiro research 69% percent of shoppers expect their orders to be shipped within 24 hours after they click buy.
So as your planning your processes be mindful about the speed and that fulfillment speed really matters. Data also shows that up to 40% of customer support inquiries are about order statuses. The faster you get your orders out of your warehouse and provide customers with a tracking number, the less customer support increase you're going to get. Business growth starts in your warehouse.
I hope some of these ideas will help you grow your business. No detail of your business is too small even which boxes you have has a direct impact on your growth. Don't skip out the next video. It's about going global. [MUSIC PLAYING]