Posted by Alex Jackson on March 23, 2018
In a previous post, we looked at how Amazon is changing the way we receive our purchases, with their push to increase their physical footprint in the form of in-store pickup and Amazon kiosks. So why is Amazon doing this? It’s not to deter the package pilferers though this certainly is an added benefit. There is also a certain degree of comfort in not having to worry about missing the delivery of your precious purchase but that’s not the reason either. The simple reason is that it saves them money! It’s a pretty basic calculation, 20 deliveries going to 1 kiosk is a lot cheaper than 20 individual deliveries. It’s no secret either that most of the big names in shipping charge extra for deliveries to residential addresses and this is another reason for this move.
Why do carriers charge a premium for home delivery? Companies like FedEx and UPS primarily service other small or large businesses. Unlike the postal service, these carriers are not accustomed to servicing residential areas on a daily basis so they charge a premium for this service. These carriers determine your shipping cost based on whether the delivery is going to a commercial or residential address. You may think you can get around this because you run your business out of your home but think again. Carriers use a system to verify the addresses known as RDI short for Residential Delivery Indicator, this list is maintained by the US postal service so if they have you down as residential be prepared to pay extra. Want to check if you're residential or commercial? You can do a check here using the SmartyStreets single address verification tool.
These residential delivery fees also impact our wholesale liquidation customers who place smaller, lighter orders consisting of a box or two. With small lots consisting of less than 20 or 30 pieces, It’s not uncommon for us to see shipping costs sometimes equal half the cost of the lot when being delivered to a residential address. Want to avoid this costly frustration of additional delivery fees on your next order? Of course you do, put those additional dollars saved towards your next purchase instead. So here’s your cash saving tip, have your next order shipped to a commercial address. Don’t have access to a commercial address? You do, you just don’t realize it. FedEx our primary carrier for small ground shipments has literally thousands of locations that allow hold at location deliveries for small shipments. These are often located in drug stores like Walgreens or in their FedEx/Kinkos office locations. Want to know if there is one near your home? Simply check using FedEx’s find a location type in your zip code and make sure to select hold at location when you search to determine locations close to you that will accept the delivery. This would now be considered a commercial shipment saving you as much as 50% on some shipment costs. Are the savings worth the additional effort of picking it up? Absolutely, some customers save as much as 50% by having it shipped to a commercial address.
Of course the savings increase exponentially when ordering lots consisting of multiple heavy boxes. Note, that the difference in cost between residential and commercial delivery for freight is almost negligible. So your goal should be to start buying pallets as soon as possible. More items translate into more sales and that is a topic for our next blog entry.