Strategizing for New Shipping Rates in 2021

In B2B wholesale, shipping is one of the most important aspects in running a fashion business, especially the costs and tracking involved to serve customers and receive inventory from vendors. Recently, major shipping carriers such as UPS, USPS, and FedEx have all announced increased shipping rates — effective January 2021 — due to huge growth in delivery demand from eCommerce. This recent holiday season showed record growth with 42% sales growth year-over-year on Black Friday and Cyber Monday according to an Adobe Analytics study. As a result, major shipping carriers started to adapt to the increased operating costs such as fuel consumption, labor, and development of new infrastructure. As the logistics of shipping are already challenging enough, as a resource we’ve gathered some information on rate changes from each major carrier as well as FashionGo’s own consolidated shipping service. We explain what strategies you can implement to adapt and to be set up for success for both B2B and B2C engagement.

Save More with Consolidated Shipping

Delays and shipping costs must be accordingly put into consideration when planning to stock the newest and best items for the season. Coming into 2021, shipment delays are projected to persist due to the high demand of eCommerce, which consequentially, can impact your merchandising strategy. Even more so when receivable shipments are from multiple vendors with different arrival dates. In order to navigate through the new logistical challenges, you can consider using FashionGo Consolidated Shipping, a convenient and cost-saving method to receive inventory across 500+ participating vendors into one shipment and savings of up to 30% on shipping fees. Paying a shipping premium to multiple vendors and tracking multiple packages can open you to more potential risk through additional costs and delays. Consolidated Shipping streamlines the process by offering buyers a sense of predictability on when they can expect to receive all of their inventory. Taking advantage of any savings in costs will add to staying competitive in cutting costs to preserve profit margins. You can find more details on consolidated shipping here.

• Vendors: Participating vendors will have a Consolidated Shipping icon on the top right of the vendors’ FashionGo home page.
• Checkout: During checkout you can click “Consolidation” to apply Consolidated Shipping.
• Track: All orders can be tracked under one tracking number.

Revisit Cost Structure for Customers

In addition to receiving inventory from vendors, the same shipping challenge exists when serving the customers. With increased shipping rates, these price changes may affect you differently depending on the shipping strategies you already use; free, flat-rate, or calculated rate. If you choose to keep free shipping for customers — as it may be a good tactic to gain new customers and be an appealing option to complete their order — you may want to consider adjusting product prices or operational costs. For flat rate shipping, you may also incur the increased shipping costs if flat rates aren’t adjusted appropriately to the new rates while calculated rate shipping will automatically adjust to the new rates, transferring the incurred costs directly to your customers. It is important to consider which shipping method most suitable to your business and your customers. Additionally, you can also explore other areas to compensate for the increased shipping costs. One way would be to look into packaging alternatives to reduce the overall weight of each package. The cost of shipping is heavily dependent on the weight and more often than not, using heavy cardboard, packing paper, and bubble wrap can bring up the quoted shipping rate. Every product demands unique packaging standards to withstand going from the warehouse to the customer’s address, which is why creativity will be crucial in keeping costs down without sacrificing quality.

2020 proved to be a pivotal year for eCommerce retail with stellar sales growth. Industries across multiple sectors are quickly adapting to the changing behaviors of consumers through investments in online infrastructure and operations. This affects not only major shipping carriers, but other national retail chains such as Amazon and Walmart with new ways to change the shipping experience. These changes are the direct result of eCommerce growth and more changes are inevitable to better serve customers, retailers, and vendors alike. Here at FashionGo, we understand the importance of being prepared for change and will continue to offer guidance and resources essential to adapt and to succeed.

Shipping Carrier Rate Changes

UPS

Effective December 27, 2020. UPS announced it will increase shipping prices by an average of 4.9% for Ground, Air, and International shipments despite posting record earnings for their Q2 earnings report. Additionally, UPS is making changes to the costs of its value-added services such as handling, address correction, chargebacks, and signature confirmation.

• Starting January 10, 2021, additional handling charge will be applied to any package with a combined length plus girth that exceeds 105 inches.
• Starting April 11, 2021, additional handling and large package surchargers for non-hundredweight service packages will differ by zone.

You can find more details here.

FedEx

Effective January 4, 2021. Similar to UPS, FedEx will also be applying additional charges to similar surcharges throughout 2021 and into 2022. Posting record earnings as well, FedEx projects continued increase in operating costs due to the accelerated demand for delivery services. Though price changes compared to UPS are similar, FedEx will be applying charges to a broader range of their services including delivery area surcharge, collect on delivery C.O.D., and all ground and express deliveries for both domestic and international.

You can find more details here.

USPS

Effective January 24, 2021. USPS will increase prices for its Priority Mail, Priority Mail Express, and First-Class Mail services for both domestic and international shipments by an average of 5.1%. Unlike UPS and FedEx, USPS will maintain prices for other services such as signature confirmation, address change, and tracking.

• Retail prices for Priority Mail Express services will increase by 3.6% while Priority Mail Express services will increase by 2.5% overall.
• Packages with a combined length + girth over 130’ will incur a large package surcharge of $100.

You can find more details here.