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Discounted Shipping rates?? FedEx/UPS


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#1   cxm322

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Posted 16 January 2004 - 08:50

Hi,

I have been wondering about this for years.
I have contacted both FedEx and UPS about htis before but I never got a response. Perhaps I sounded like too much of a newbie.

I am selling products that are dropshipped for me. However, i want to start shipping myself because I will get better prices for the inventory if I buy outright.

But did you ever notice that wholesalers get discounted rates? Is it smply because they ship in volume?

The problem is, I sell a specific product taht is only about 7 pounds when packaged up but the package is considered an oversized package according to UPS and FedEx specifications. If I were to ship it via FedEx or UPS by just dropping it off to them, it would cost me over $20.00 going accross the country. But my wholesaler can ship the same package for only around $9.00.

Needless to say, I cannot be shipping it for $20.00. My customers would never pay that amount for shipping and if I were toeat the extra cost, I would be out of business quickly.

Does anyone have experience with this? How do you get better rates? is it all about volume? If so, what volume can you expect to be shipping before they will even consider giving you a discounted rate?

ANy insight into this matter would be greatly appreciated.

#2   iiinetworks

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Posted 16 January 2004 - 21:27

But did you ever notice that wholesalers get discounted rates?  Is it smply because they ship in volume?

They also load the truck. I.e. when a wholesaler ships something, the wholesaler does the initial scan of the label (to enter it in the shipper's system) and loads the item into a trailer. The shipper shows up with a truck with an empty trailer (or full of stuff from the wholesaler's supplier), parks the empty, and hooks up the full trailer. As you might guess, this doesn't work unless you are shipping full (at least 60') trailers of stuff at a time (every day).

Have you checked with your suppliers to see if you can do something to make their lives easier? For example, if you bought inventory ahead of time, so they knew that they would get the sale. I would think that it would be easier to find a way to get them to discount you than to get the shipper to discount you. YMMV.

Hth,
Matt

#3   jon_l

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Posted 16 January 2004 - 21:31

Don't know about the US, but I'm guessing its the same as in the UK.

All shippers have their standard published rates.

Accounts holders have special rates, negotiated in advance which depend on a couple of factors:

1. Volume. The more you ship, the cheaper it gets.
2. Sorting. The more sorting you do, the cheaper it gets.

Volume discounts can normally be gained from as little as 20 parcels a month, while the sorting discounts normally need a lot more volume, say 5,000 parcels a year as an absolute minimum. Note that by sorting I mean by post / zip code, or destination country for example.

Its worth talking to all the shippers that you can find, including your countries main postal system (eg Royal Mail in the UK). Tell them the volume you will be shipping and take it from there.

Another good place to start is the shippers that other mail order companies use. You'll probably find out about some shippers that you didn't know about.

Bottom line though is that you need volume, and a lot of it.

Jon.

Edited by jon_l, 16 January 2004 - 21:32.


#4   cxm322

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Posted 16 January 2004 - 21:49

Personally, in the states, I would not even bother using any other company but FedEx or UPS. Telling your customers that you use FedEx or UPS really adds to the security and your integrity in their minds.

I only use the post office on really small shipment. I do not like the post offices service and all their rules.

#5   askulte

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Posted 20 January 2004 - 18:19

As mentioned - volume $ makes a large impact, but so will having a daily account, where the driver stops by your business every day. I believe it costs about $8 to $12/wk for this, but then you get more discounted rates...

Andris
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Andris Skulte

#6   mpiscopo

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Posted 21 January 2004 - 12:25

I ship via FedEx and have noticed that they are giving me a discount which I didn't get before. This is probably automatically calculated based on the volume I ship. I also have a similar problem with one product I sell, glass marbles. They sometimes cost more to ship than to purchase. I have cut the price because of this and told my buyers that we have accounted for the high shipping costs in our pricing structure. The other option would be to offset the shipping cost by including some of the cost in the product price, but this increases the price for everyone regardless on where they are located.

#7   safoo

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Posted 22 March 2004 - 20:18

I believe you can sign up for an account with FedEx.com and print labels online. They will set you up with a 10% discount I believe. It may be only for express packages, but it is a start. Once you move more quantity, you can get better rates. Just call ups or fedex and tell them you would like to be contacted by the regional account rep regarding setting up a business account.

Your oversized package will still be billed at 30 pound or whatever dimensional weight it is, but the discount will help a bit.

#8   RedOak

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Posted 28 November 2005 - 17:19

You know I had the EXACT same question earlier on in my business. I wanted to handle the shipping myself instead of dropshipping my product, but I didn't have a clue how to do it. I looked around and found out that the amount of volume you do dictates what rate you'll have. At about the same time I was approched by a company called Unishippers. They gave me insane discounts on my shipping and really helped me understand the process. I asked them how they could give me, a small business owner (at the time) such deep discounts, and they said that they combine the entire volume of all of their shipping customers to get these rates. That's what I liked, I was part of a network of companies and I didn't need to do a huge amount of volume to get rates that other massive companies have. They also do LTL heavy stuff on pallets for cheaper than my distributor could get it. What I'm most impressed with is the customer service.

After 8 years I still remain friends with the Unishippers account manager who first set me up, if any of you want to get lower rates and real customer service call him at 800.234.9643 and ask for Brian Roberts.

-Craig

#9   kwalker

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Posted 29 November 2005 - 01:03

You can try this.. I get the same shipping discounts as my suppliers.

Contact UPS/FedEx,, whoever, ,and if you already have an account with them, explain to them your shipping needs & "kindly" explain to them that a competetor is getting a lower rate than you, and if they can't give you a lower/better rate, you will consider using another shipper (calling a bluff).

FedEx will normally give a 60% right from the start. I'm not sure about UPS. I also have a YellowFreight account,, not sure right off hand what my discount is. I think it's around 55 - 60% discount.

Also, to get a better rate from the shippers, make sure you update your information with them by advising them that you will ship from your location along with other locations.

You stand a good chance of getting the same exact discounts as your suppliers. Give it a shot.


Hope that helps!

Kevin
"What I didn't know yesterday, I know today & will remember tomorrow"
                                                                                    (By Kwalker)

What do you see when you open up the tep_database-pr2.2-CVS.pdf file that came with your osCommerce download?

#10   TheJackal

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Posted 30 November 2005 - 08:25

The FedEx/UPS discounts definitely come with volume requirements. They tag the discounts to the volume. For that reason, most companies stick with only one carrier as they get better discounts with increased volume.

Even if your volume is not very high, you can always setup a meeting with the accounts executive.
Call the FedEx helpdesk 1800-GoFedEx and tell the customer representative that you want to setup an account and meet with them. It is certainly advantageous to meet them and see how they can solve your shipping problems. Tell them about the price difference your wholesaler is shipping. Let them solve your headache for you. /smile.gif' class='bbc_emoticon' alt=':)' />
- The Jackal

#11   TheJackal

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Posted 03 December 2005 - 05:37

I forgot to add one tip...if you ship a lot using FedEx..you can get another hefty 5% on top of your discounts if you open an american express OPEN credit card.

The Amex Business Card is free for the 1st year but there is an annual fee of $125 after that. I believe there is a limit of $5000 discount...but if you ship a lot like my company, that's still $4875 savings in the bag for doing nothing. /whistling.gif' class='bbc_emoticon' alt=':-"' />

See http://www.fedex.com...vings/faqs.html. Remember that you have to follow the faq instruction to link the Amex card with FedEx.

Disclaimer: I am not affliated in anyway to Amex or FedEx.
- The Jackal

#12   cgchris99

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Posted 04 December 2005 - 18:35

I've been able to negotiate a slightly better ups rate but not great by telling them your going to switch to fedex.

Some of my competitors offer $7.77 flat rate ground shipping. They must be shipping more than I do and have a better discount because from what I can tell it would cost me more money to do this than I would make.

#13   mpiscopo

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Posted 08 December 2005 - 15:01

The flat rate shipping is for USPS ($7.70). Check their website, it is a good deal if you have the time to take your packages to the Post Office (USPS Flat Rate Boxes). I use this service for shipping to Hawaii, Alaska, and USVI. Otherwise I use UPS for everything.

I have negotiated very good discounts with UPS. I found them to be very responsive in sending out an account rep. But you must remember that discounts are based on how much you ship. If you ship less than $700 to $1,000/week it will be difficult to get a decent discount. You'll also need to have a daily pickup from UPS. Once you start moving the volume, don't be afraid to re-negotiate your discounts.

FedEx was difficult to get to meet with us to discuss discounts. Once their account rep happend to be driving by and saw several thousand pounds of boxes in my driveway waiting for the UPS pickup, they were knocking on my door daily. I used them to bid against UPS and got a better rate.

#14   cxm322

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Posted 08 December 2005 - 18:33

Well, there has got to be a way to get reduced shipping. I mean, my distributors can ship oversized packages at non-oversized prices. All of them. Some are larger distributors and the others are smaller ones. I also know CD sellers on Amazon that send all their single CD orders via UPS. They have to be getting better rates than regular rates because it would cost $7 or so to ship one CD with UPS/FedEx. They could send the same package via USPS media mail for under $2 and USPS Priority for about $5. These sellers are not making more than a couple buck per CD sold so you know they are not paying $7 per CD to ship. If they paid $7 per CD to ship, they'd have been out of business the first day they entered. Amazon only gives you $3-5 as a shipping credit and the profit per CD is the same amount or less.

As far as the distributors that can ship oversized and not pay the oversized price, it costs them, say, $10 to ship a package that would cost me over $30 because the package is oversized. When I tell the UPS and FedEx counter people about this, they all act clueless.

It must be the volume thing. And I think that volume is way beyond my volume. Who knows, but after many years of finding an answer, I cannot get one. All I want from UPS/FedEx is to tell me exactly what I need to do in order to get these prices. If it is volume, I just want to know at what volume do they consider not charging you oversized fees. But you'd think that I was pulling teeth because I cannot get that simple question answered. I have asked UPS/FedEx counter people as well as tried emailing UPS/FedEx. I get nowhere either way. The counter people are oblivious to the fact that my distributors get great, non-oversized rates for oversized packages and when I email them, I never get a response.

All these little "tricks" to getting discounts like using the AMEX open card, etc are all great, but it is not the only way to get discounts and are surely not the way other businesses get discounted shipping.

I need to figure out how I can ship oversized packages for non-oversized prices. I not only want this info to use for myself but to incorporate into an ebook for newbie online sellers. This info is very hard to come by to the point that I think that FedEx/UPS keep it all a secret until you are up to par with a good volume enough to justify giving you good, doable prices. then, they will contact you. Who knows, but after years of searching for an answer and not getting one, I am beginning to think that you have to be a part of some "good old boy network" or something.

#15   TheJackal

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Posted 08 December 2005 - 19:36

I don't understand what you are trying to get at? Are you trying to get hold of a discount for your business...or information for the ebook? If the former, what volume they expect is not relevant...what matters is what volume are you doing now? If the latter, then it is academic to me. How does it help knowing that I need to ship $1 million to get a 50% discount? Its the sales volume that decides shipping volume and not the other way round.
- The Jackal

#16   reflous

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Posted 09 December 2005 - 08:11

We currently ship 5-10 tons a day with UPS. We have the "best rate" (supposedly).

Shipping ground to a residence cross country is still about $5 for 1lb. There is a substantial surcharge for shipping to a residence, it would only be about $3.50 to ship to a business cross country. I don't know what you're shipping, but if you get into hundred weight, there are significant discounts you can utilize. The real advantages to UPS is you get a signed receipt of delivery, can track packages, $100 insurance per shipment by default. Our retail orders average $30 so

USPS is definitely cheaper for most people doing small orders. My friend's business is currently shipping about a hundred packages a day using USPS. He rented a machine to print labels and postage pretty cheap, like $25/mo. He just ships everything priority mail at the fixed $3.85 or whatever and builds the risk of fraud/stolen packages (due to lack of signed receipt) into his pricing. The advantages to USPS are: USPS provides shipping packaging (boxes/envelopes) for free and a cheap flat rate.

#17   aethernet

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Posted 13 January 2006 - 03:13

Google is your friend

I heard about getting discounts at my old work that shipped about $250 per day and I think we were averaging about 30% off. A few months ago I left to start my own company and the other day I decided to call Fedex about reducing my rates. My rep told me that my average was a whopping $18 per day for the last 3 months but discounts started at $5 per day. She also said that printing your own shipping labels qualifies you for 5% off and that if I belong to any associations that some times they offer discounted rates. I asked her what she meant and she said she wasn't supposed to clarify anymore than that but to check with any associations I belong to.

Intrigued, I turned to Google and after about 15-20 minutes of searching I now have 5% off all methods for printing my own labels, plus 31% off everything except Ground and 10% off Ground from the new (free) association I belong to, plus 5% off Ground and Express / up to 15% off International and Overnight from my new method of payment and possibly another 3% off from using a certain software package. Thats averaging somewhere around 40% off for my shipping needs and is in no way related to the quantity I ship.

The information is out there, you just have to know how to find it. Most of it is even on Fedex's website!

Quoted from: TheJackal

"How does it help knowing that I need to ship $1 million to get a 50% discount? Its the sales volume that decides shipping volume and not the other way round."

If I currently ship 10 widgets a month for $100 each and find out that if I ship 20 widgets a month I can ship them for $80 each, then my profit margin will be increased by $20. Then I would reduce the cost of my widget by $10 and that could help me sell the 20 widgets a month. Then I would ask my supplier to reduce the cost of my widget because I am buying twice as much. Then I would hire a Swedish secretary because my business has just doubled in size.
/biggrin.gif' class='bbc_emoticon' alt=':D' />

Edited by aethernet, 13 January 2006 - 03:18.


#18   kitchenniche

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Posted 15 January 2006 - 17:28

Great Thread!

We currently sell all our packages via Canada Post. We only get 5% off the usual price. However, we can send packages below 250g for only $3.95 to the U.S. and packages below 500g for only $4.99. If i send such a small package within Canada it costs about $7.99... If a package is above 1kg and goes to the U.S. it gets pretty expensive as well...

We've spent more than $5200 in the last 4 months for shipments. We probably try to get better prices from UPS and still send the 250 - 500g packages that go to the U.S. with the Canada Post. We've already contacted the Canada Post about better prices and they said if we send 14 or more packages a week (we send about 40 a week) we'd get better prices. However, we're still waiting for a call of them.

Does some of you guys ship lots of fragile items? What happes if a fragile item breaks if you ship it via UPS or Fedex? We've had some differences with the Canada Post about fragile items. I understand that they don't pay for broken fragile items. However, if even the box is totally beaten up and has holes in it, they need to pay for it.
HIM - Dark Light - Out on 26/09/05

#19   suvlights.com

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Posted 19 January 2006 - 06:17

I had the same problem, it seems that companies do not want to tell you how much you need to ship to get a decent discount because its like buying an expensive item, "if you have to ask you can't afford it..."

You could try to bribe a UPS / Fedex employee to ship the item for you... they get 50% off ! LOL

#20   cxm322

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Posted 19 January 2006 - 09:54

Google is your friend

I heard about getting discounts at my old work that shipped about $250 per day and I think we were averaging about 30% off. A few months ago I left to start my own company and the other day I decided to call Fedex about reducing my rates. My rep told me that my average was a whopping $18 per day for the last 3 months but discounts started at $5 per day. She also said that printing your own shipping labels qualifies you for 5% off and that if I belong to any associations that some times they offer discounted rates. I asked her what she meant and she said she wasn't supposed to clarify anymore than that but to check with any associations I belong to.

Intrigued, I turned to Google and after about 15-20 minutes of searching I now have 5% off all methods for printing my own labels, plus 31% off everything except Ground and 10% off Ground from the new (free) association I belong to, plus 5% off Ground and Express / up to 15% off International and Overnight from my new method of payment and possibly another 3% off from using a certain software package. Thats averaging somewhere around 40% off for my shipping needs and is in no way related to the quantity I ship.

The information is out there, you just have to know how to find it. Most of it is even on Fedex's website!

Quoted from: TheJackal

"How does it help knowing that I need to ship $1 million to get a 50% discount? Its the sales volume that decides shipping volume and not the other way round."

If I currently ship 10 widgets a month for $100 each and find out that if I ship 20 widgets a month I can ship them for $80 each, then my profit margin will be increased by $20. Then I would reduce the cost of my widget by $10 and that could help me sell the 20 widgets a month. Then I would ask my supplier to reduce the cost of my widget because I am buying twice as much. Then I would hire a Swedish secretary because my business has just doubled in size.
/biggrin.gif' class='bbc_emoticon' alt=':D' />


Thanks. I spent many many hours (days) on Google trying to find all the stuff you mentioned and could not find anything. I guess I am not as smart as you are?