Let’s face it. “Data” is a trendy term. Everyone wants to talk about it and prove to others that they know what it means to live in a data-driven world. It’s a wildly popular thing to bring up in any conversation, as if simply saying the word “data” will automatically make you look smarter. The word “Data” has replaced prescription eye-glasses for people who want to appear intelligent. Fact: Data is worthless if you don’t know how to use it.As a small parcel shipper, it can be overwhelming to keep track of your shipping data. Although carriers provide some useful data in your billing invoices, it lacks a comprehensive breakdown that truly details your shipping practices. What should you do? If you don’t use a comprehensive third-party audit platform, you should at minimum utilize the carrier's online billing tools.Here, your carriers will provide you with data relevant to your shipping performance, costs, distribution patterns, and customer location tracing. Regardless of how you get your data, ‘getting it’ is merely the first step in appearing intelligent. Are you using your shipping data? If so, what is it telling you? Actionable data influences your business decisions around pricing and other dynamics that impact long-term success. For example, accessorial charge data, zonal distribution, weights, DIM assessments etc help companies set appropriate pricing for their products as well as shipping charges neededto reach preferred margins.Can you afford to offer free shipping? You won’t really know unless you fully understand your distribution model and the package-by-package details that impact your costs. Many companies incorrectly rely on averaged data, such as zone and weight averages, to calculate a one-size-fits-all cost assessment. For companies that ship nationwide, this often leads to an imbalance where margins become unnecessarily limited for longer zone shipments. In other words, the margin you lose by undercharging long-zones is not made up for by overcharging short zones, which naturally have lower shipping costs.When analyzing costs to determine shipment pricing, it’s imperative that more specifics are taken into account. After all, if you build and sell bicycles, you would determine the cost of every part used, from the handlebars to the reflectors, before setting the final price. Why, then, do many companies limit their analysis to their “average zone and weight” to determine their shipping “cost” (whether they build it in to their product’s price, or charge their customers for shipping), and leave out costs of surcharges such as fuel, residential, delivery area, etc. that may also apply? If you could optimize your costs around your company’s shipment details and distribution model, why wouldn’t you? Why this matters? Consider this: The number one reason buyers abandon their online shopping carts is unexpected shipping costs. One of the biggest questions surrounding the logistics industry is whether free shipping really exists. E-commerce companies that provide free shipping afford it by knowing their data inside-and-out and how to leverage it to reduce their overall shipping costs. The two most impactful uses of shipping data are to understand enough to make sure all costs are covered, as well as to build a “compelling business case” for why FedEx, UPS et al should add concessions to your carrier agreement when the time comes to renegotiate. This is where your data analyses can have huge impacts on your costs. If you could chop 10% off your shipping costs, would that help you offer free shipping? What about 15%? 20%?Knowing your data well enough and knowing how to leverage it in your carrier agreement will lead to added revenue, higher margins and better customer experiences by virtue of free, or low-cost, shipping.There you have it. Take off your prescription glasses, walk up to your nearest colleague and say, “Data.” He (or She) will be impressed. For a practical exercise on utilizing data, download the "Shipping Cost Reduction Worksheet" by clicking here.
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USPS Discounted Rates Qualification. Click Here.
White Paper: Become a better negotiator by learningabout cost modeling carrier agreements. Click here.
On-Demand Webinar: How to Negotiate a Better Deal. Click Here.
On-Demand Webinar: Understanding the Fine Print. Click Here.
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