As an Amazon FBA seller, you want to guarantee customer satisfaction through fast and affordable shipments. At the same time, you need to guarantee your sales make a profit. so, as you determine product prices, you will also need to understand how much it will cost to ship the items to different destinations. So, how much does it cost to ship a package?
To understand your potential shipping costs, you will need to consider a few factors, including the package's weight, dimensional weight, destination zip codes, value, and other additional surcharges. Read on as we discuss these variables below. But first, let us see the three shipping methods you could use in your business.
How Do You Ship Amazon Products?
When you set up your Amazon business, you have to decide how to ship your products, where you will have three options. The first is to become a third-party seller where you only advertise your products on Amazon but handle the order fulfillment. In this case, Amazon only takes a small fee from your sale since you use the marketplace for advertising.
Alternatively, you can become an Amazon FBA seller where you will need to send your products to the Amazon fulfillment center; the Amazon personnel will handle your order fulfillment once someone buys.
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Finally, you can also become an Amazon FBM seller if you have the shipping logistics in place to fulfill all customer orders. Regardless of the shipping method you want to use, you will need to understand carrier costs. Your order, to Amazon centers or to your customers, can be fulfilled in the US by different carriers such as FedEx, UPS, and USPS. Different carriers have different shipping costs, so you must also understand their shipping methods or pricing models before sending out your orders. More on this later!
Aptly named the Everything Store, Amazon commands over 40% of America's e-commerce market.
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Amazon has over 310 million buyer accounts worldwide, of which 2 million are Amazon third-party sellers. With such a huge market share, you will likely start making good profits by selling on Amazon. Before you can start making profits, you must commit to excellent Amazon product research. This will help you determine which products can move fast, how much you can sell them for, and how much it will cost to ship them to different zones.
If you are setting up an Amazon seller store, here are variables to help you estimate potential shipping costs.
How Do You Calculate Shipping Costs?
You can calculate the shipping cost based on a few factors. These are:
a) The value of ordered products
Before you can ship domestically or internationally, it is important to get shipping insurance against loss, damage in transit, or theft. While this insurance is ideal for you and your buyer, it can also significantly add to your shipping costs.
b) The package's dimensional weight
The dimensional weight, also called DIM weight, is measured by multiplying the package's length, width, and height, then divided by a carrier's DIM divisor, often 139 for FedEx and UPS and 166 for USPS.
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Your carrier will choose the larger weight; between the DIM weight and the package's actual weight as the billable shipping weight.
c) The actual weight of a package
The package's weight is the other variable a carrier can use to bill for shipping. Also called weight-based shipping, this method is determined by how heavy your package is. This billing method is often used for heavy packages in smaller boxes.
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Different carriers charge different rates for different pounds of weight. Often, you can get flat rate shipping for a set amount of weight, but the bill will change if the package weight exceeds the set limit.
Besides flat-rate shipping, weight-based shipping also features a per-pound rate. This implies that a carrier can have another set rate to charge per extra pound, which is ideal for heavy shipments. For example, a carrier can impose a flat rate of $4 for every shipment. Additionally, they can impose a per-pound rate of $0.50.
Therefore, if you choose this carrier for your order fulfillment and you want to ship a 25-pound package, you would calculate the shipping cost as follows:
- The flat rate of $4 + the per-pound rate ($0.50 x 25=$12.5), so the weight-based shipping cost for this package would be $16.5.
d) The shipping destination
The next variable to help determine the shipping cost is the destination. For this, you will need to understand the different shipping zones in the US. These are geographical locations where different carriers deliver your items, and they all attract different rates/costs. In the US, you can deliver to any of 9 shipping zones by estimating the distance as follows:
- Zone 1 (local): 50 mile radius
- Zone 2: 51 – 150 mile radius
- Zone 3: 151 – 300 mile radius
- Zone 4: 301 – 600 mile radius
- Zone 5: 601 – 1000 mile radius
- Zone 6: 1001 – 1400 mile radius
- Zone 7: 1401 – 1800 mile radius
- Zone 8: 1801+ mile radius
- Zone 9: Freely Associated States
The shipping zones are calculated based on the point of origin, which is the location the package is shipped from, to the destination, which is the buyer's address. So, statistically, the further you ship from the point of origin, or the higher the zone you ship to, the more costly your shipping rate will be.
e) Delivery speeds
Delivery speeds or times can also affect how high the shipping costs can get. Generally, fast deliveries mean more costs, which gives this variable great importance since many Amazon buyers will prefer fast Amazon Prime shipping. However, as you saw in the fourth variable above, shipping zones affect how expensive the shipping can be, meaning the costs can get overly high if you want fast shipping to a higher zone.
To estimate the shipping costs, you will need to choose your fast shipping methods between ground shipping and air shipping. In most cases on Amazon, fast shipping refers to delivery speeds of less than three days, with a 2-day delivery period most common. As such, you can use ground shipping for fast deliveries in lower zones, but you will need expedited air shipping for higher zones.
f) Additional surcharges
While calculating shipping costs, you also need to account for unexpected charges that can arise at any delivery stage. These include accidents, split shipments, delays in transit, or delivery surcharges to remote locations or residential deliveries. To be on the safe side, you need to set aside an emergency budget for any order fulfillment.
How Do Different Carriers Charge for Shipping?
Now that you understand the variables you should consider before sending out a package, it is also good to understand how different carriers calculate shipping costs. This section will look at UPS, FedEx, and USPS shipping calculators to help you determine the best carrier for your shipping needs.
a) USPS shipping costs
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USPS is the cheapest of all three carriers, and they are ideal for your ground shipping needs as they traverse all corners of the country. The carrier offers four main types of shipping:
- USPS First Class Mail. You can use this method for shipping small envelopes weighing less than 16 oz and not larger than 22″ x 18″ x 15″. The delivery can take 3 or 4 business days to reach the destination zip codes.
- USPS Priority Mail. This method is ideal for packages lighter than 70 oz and measuring 108" in length and girth. The delivery will take 1-3 business days to reach the destination.
- USPS Priority Mail Express. This method has the same weight and size restrictions as the priority mail but is delivered faster with a 2-day delivery time guarantee.
- USPS Parcel Select will take 2-8 days to reach the destination. This offer is ideal for bulky packages weighing 70 pounds and measuring up to 130" in length and girth.
If you'd like to try USPS, here is a shipping calculator you can use to estimate the shipping prices before you send the package. The carrier will use the actual weight, DIM weight, delivery speeds, and delivery zones to determine the average shipping costs. Unlike other carriers, the USPS shipping cost does not increase after delivery because of various factors like delivering to remote areas.
b) UPS shipping services
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UPS also uses weight, dimensional weight, delivery zones, and delivery times to estimate the most accurate shipping costs. However, unlike USPS above, their charges can increase due to different shipping factors like delivering to remote areas and Saturday deliveries. That said, UPS offers the following shipping methods:
- UPS Ground which is suitable for local shipping. These orders are usually fulfilled within four days.
- UPS Next-Day Air shipping takes 2 days to fulfill.
- UPS 3-Day Select, which takes about three days to fulfill.
You can ship various types of packages, including:
- A UPS Express Box not exceeding 18" x 13" x 3" dimensions. You can use this to ship items like electronic parts and computers. You will be charged based on the package's actual weight and shipping destination.
- A UPS Express Tube is triangular packaging ideal for items like posters and drawings. It is charged depending on weight and zone but should not exceed 38" x 7.5" x 6.5" dimensions.
- UPS 22-pound and 5-pound boxes are ideal for shipping internationally. The boxes are charged based on a flat rate and destination zone and should not exceed 16.5" x 13.25" x 10.75" and 19.375" x 17.375" x 14" dimensions, respectively.
- UPS PAK. This packaging is charged based on weight and delivery zone, and the boxes can be as large as 17.73" x 16.15" in length and girth.
- Own packaging. This applies when you can package your parcels, in which case the courier will estimate the cost using dimension, weight, zones, and delivery times.
You can use this UPS calculator to estimate how much shipping the package will be.
c) FedEx shipping service
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FedEx shipping costs are calculated using delivery zones, actual and dimensional weight, and delivery speed variables. The carrier offers same-day, overnight, and FedEx ground shipping services. When estimating the price on your label, ensure to have a surchargeable balance as the cost, like in UPS shipping, can also change depending on various shipping factors. You have some packaging options to choose from as well, ranging from FedEx envelopes, boxes, and reusable packs.
Here are three shipping methods you can expect from FedEx shipping:
- The FedEx Ground shipping takes up to 4 days to fulfill.
- The FedEx 2-Day shipping takes 2 days to fulfill.
- The FedEx Standard Overnight shipping takes 1 day to fulfill.
How Much Should You Charge to Ship?
When you know how much your carrier can charge to ship products to your buyers, you need to determine how much you will charge your customers for shipping. However, understand that expensive shipping costs will turn potential buyers away, while low shipping costs may expose you to business losses. You can do the following to determine the best shipping rates.
a) Offer free shipping
Most buyers will want to buy products that ship fast and free, so you might need to offer free shipping. But, as you have seen above, shipping a package can be expensive. So, while free shipping can be good when you need more buyers, it can translate to making no profits if:
- Your products prices are low
- Your customers will only buy a few items
- You have thin profit margins
- You ship to higher zones
So, you can offer free shipping if you can:
- Increase product prices to cover shipping
- Advertise to acquire more buyers/sales so the shipping costs won't overwhelm you
- Ship to lower destination zones
- Set a minimum spend threshold for your buyers to activate free shipping
b) Offer flat rate shipping
The best alternative to offering free shipping is setting a flat shipping rate. For this option, you can charge a minimum shipping rate for all your sales regardless of weight, destination, or other variables. However, for this to be a good business move, you might need to limit how far you can ship and how heavy your packages are.
c) Charge on per-sale rate
You can also pass the shipping cost burden to your buyers by charging the shipping cost on a case-by-case basis. You can charge a fixed rate for each shipment, then another fixed rate for each item you ship. For instance, you may charge $4 for each shipment, plus a $1 rate for each product you ship. This way, if a buyer order three items, you will charge them $4 for the flat rate shipment and an extra $3 for all items.
How to Keep Shipping Costs Low
If you are a new Amazon seller, you can keep your shipping fees low in the following ways:
- Limit your shipping distance. Since your carrier will charge expensive rates when you ship to higher zones, you can limit your shipping distance to local customers.
- Reduce package dimensions. Depending on the packages you will be shipping, opt for more compact boxes that don't take up too much space since the carrier can also charge depending on the dimensional weight. In addition, you can also add a Ships In Own Box label so the carrier won't add another box for shipping.
- Look for carrier discounts. If you can, ship your packages at discounted rates as long as they do not affect the delivery times and other shipping logistics. In addition, if you ship packages of the same weight and dimensions regularly, you can choose prepaid shipping services from your carrier. This means you can get affordable shipping labels upfront to save money and time.
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