A thoughtful e-commerce fulfillment strategy is crucial to delivering on customer’s expectations of fast and affordable shipping. With rising shipping costs that eat into every e-commerce company’s profit, it’s more important than ever for retailers to understand every part of their fulfillment chain.
A strategic use of zone shipping will help a business increase its bottom line by reducing fulfillment costs and time in transit.
What Are Shipping Zones?
Shipping zones is a term used by shipping carriers to measure the distance a package travels from the point of origin to the final destination. Carriers use these zones to define pricing contracts where each package price is based on the destination zone.
Measured in zip codes rather than miles, U.S. domestic shipping zones range from Zone 1 to Zone 8, with Zone 8 being the farthest away. The site where the package is originally shipped is known as the point of origin and is located in Zone 1. The ending location of the package is called the destination zone. The zone number of the destination zone is dependent on how far away it is from the point of origin.
How Are Shipping Zones Calculated?
Shipping zones are calculated based upon where the point of origin is. Zones are also dependent upon which carrier is used and service type (Ground versus Next Day Air).
Need to know an order’s shipping zones?
- FedEx Zone List – Select “Yes” & “Domestic” when generating a rate sheet. Enter the zip code of origin. Choose the shipping service type, whether that’s Same Day, 2-Day or Ground. Download the zone chart to Excel.
- UPS Zone List – Enter the origin zip code and download the zone chart to Excel.
- USPS Zone List – Navigate to “Get Zone for ZIP Code Pair”. Enter the origin and destination zip codes. Submit and find the shipping zone for the destination.
How Do Shipping Zones Affect Cost?
The cost to ship a package is typically dependent on how far the package needs to be shipped. In most cases, the higher the destination’s shipping zone number, the more the carrier will charge to ship the package.
While most carrier services are zoned, specific services use a flat rate. This lets businesses pay the same price regardless of the destination of the package. USPS lists out which services are zoned versus have a flat rate. Check the selected carrier’s website for more information.
Shipping Zone x Package Weight = Shipping Cost
The final aspect that affects shipping rates, aside from carrier and shipping service, is order weight and dimensions. A heavier package will cost more to ship. A heavier package shipping to a higher number zone will cost even more.
Shipping costs are calculated based on whichever number is higher: the physical weight of the parcel or the dimensional weight, a metric based on the volume of a package.
How To Offer Fast Free Shipping, Courtesy Of Shipping Zones
With Amazon’s free Two-Day Prime Shipping Guarantee, customers’ expectations are rising to anticipate their packages sooner and at a lower shipping cost. To meet these expectations, brands can use shipping zones their advantage and offer fast, free shipping.
Less Expensive Shipping
Shipping to a farther zone costs more. Shipping to a closer zone costs less. By reducing the number of zones a retailer ships to, a brand can save on shipping costs while delivering a better customer experience.
Shorter Time in Transit
Additionally, shipping to a closer zone takes fewer days. With customers believing that 4.1 days is the maximum acceptable time to wait for a package delivery (down from 5.5 in 2012), ensuring speedy delivery speeds is crucial.
Where Is The Best Place To Ship Orders From That Will Reduce Shipping Zones?
If outsourcing fulfillment, as opposed to self-fulfilling orders, a business will have more control over choosing fulfillment center locations.
Close to Customers
A brand should choose a location that is close to their customer base to reduce zones shipped to. Review past order history to determine if there is a centralized area of previous orders. If a brand’s customers are dispersed throughout the U.S., at a minimum select an east coast and west coast facility.
Multiple Fulfillment Center Locations
Use multiple fulfillment centers to eliminate shipping zones. If a company uses only one fulfillment center in California, an order to New York will typically be in Zone 8. By using a fulfillment center on both sides of the coast, shipping zones can be reduced from 8 to around 6 zones.
How 3PLs Can Optimize Shipping Zones
But for most retailers unless they’re Nike, Amazon, or another retail mammoth, building warehouses throughout the U.S. is not always feasible. Many e-commerce companies will outsource their shipping to a 3PL, Third-Party Logistics Provider, to maximize their geographic presence in the U.S.
Technology-advanced 3PLs will use least cost routing software to direct orders to the closest, least expensive distribution center for fulfillment.
A good zone shipping strategy is a short one. Reducing the number of shipping zones a brand’s packages are sent to can help reduce shipping costs, increase delivery speeds, and improve a business’s bottom line.
Take advantage of zone shipping. Select a fulfillment location based on the location of an existing customer base. Better yet, have multiple distribution center locations to minimize the number of zones shipped to.
LEARN MORE: Thinking about outsourcing fulfillment services? Contact the experts at The Jay Group to learn how our facilities and partner network can help you meet customers’ expectations around quick and affordable deliveries.