In early June, our CEO Maria Haggerty had the honor of speaking at the annual Internet Retailer Conference and Exhibition (IRCE). She and James Rhee, CEO of Ashley Stewart, delved into our partnership with Ashley Stewart. Together, the two companies faced a challenge that increased shipping costs by 13 percent and had the potential to impact the customer experience: dimensional pricing (also known as dim pricing.) Dimensional pricing is a policy change from the major carriers that places more emphasis on volume than weight in determining shipping prices.
Maria previously covered the basics of adapting to dim pricing in her Multichannel Merchant column, but working with Ashley Stewart presented several additional challenges and opportunities. Here are a few takeaways that James and Maria shared.
Keep the customer experience front and center
Ashley Stewart fans have come to expect flat rate shipping, and shipping items from lingerie to clothes to shoes in brown boxes practically guaranteed that shipping rates would go up under the new policy. Switching to poly bags seemed like an easy solution, but Ashley Stewart didn’t want to compromise the customer experience. As a result, the company asked its consumers about their packaging preferences directly on Facebook, and found that poly bags would be an acceptable change. A simple swap saved money and allowed the company to continue everyday flat rate shipping.
Search for hidden benefits
While many consider the benefits and drawbacks of dim pricing from a B2C side, few have explored the B2B benefits. After dim pricing went into effect, Dotcom recommended that Ashley Stewart systematize its shipments to retail stores. By shipping pallets that were more uniform in size and by shipping less frequently, Ashley Stewart qualified for “hundredweight” pricing. The UPS service gives discounts to those shipping a substantial number of packages on the same day. The hundredweight savings might have been unexplored if dim pricing hadn’t gone into effect.
Know the basics
It helps to approach dim pricing as a simple math problem rather than a convoluted series of rules. The major carriers simply want to make the truck space they have available more efficient, increasing available volume. Focus on making items as compact as possible, and remember this equation:
Image credit: UPS
For more on the basics of dim pricing (including how to negotiate the divisor in the equation above), check out our tip sheet.