Changes to Affect Online Shopping Items
FedEx Corp. has announced changes in the way it charges to ship larger packages and plans for “dimensional weight pricing” on all ground shipments effective January 1, 2015. The changes will increase shipping prices on items such as shoes, suits, large paper goods like toilet paper, and other bulky packages, and will result in a price increase to more than a third of its U.S. ground shipments.
Shipping costs will not only be charged based on package weight, but also by the size of packages delivered to your home or business. Consumer products that are bulky in size but light in weight are going to be the most heavily affected items. Here’s how FedEx describes the plan:
“Effective January 1, 2015, FedEx Ground will apply dimensional weight pricing to all shipments. Currently, FedEx Ground applies dimensional weight pricing only to packages measuring three cubic feet or greater. This change will align the FedEx Ground dimensional weight pricing with FedEx Express by applying it to all packages. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume—the amount of space a package occupies in relation to its actual weight.”
This will not only affect e-commerce shoppers and businesses, but it will affect luxury packaging business as well.
What it means to consumers
The e-commerce industry has been growing quickly, which has resulted in the increased need for shipping packages as well. There hasn’t been enough of a cost increase to manage this growth, and now consumers will be paying more for purchases to level out the current shipping supply and demand imbalance. According to Bloomberg, small packages shipped from businesses to consumers make up almost all of the volume handled by FedEx’s SmartPost unit and 30 percent to 40 percent of total volume at FedEx Ground.
Retailers may need to increase what they charge for shipping. Surveys show that shoppers abandon their online purchases at checkout when they see a large shipping fee. This could interfere with services that customers have used to pay for regular delivery of basic household items like paper goods.
Eventually, consumers will have to pay for the price increases even if they are not aware they are doing so. When shoppers see a shipping fee that they perceive is too much to pay, they will likely switch to another e-commerce site without a second thought, so retailers will most likely raise the price of the items they sell instead of charging more for shipping.
What it means to e-commerce businesses
E-commerce retailers will be affected by this price change in different ways. While bigger companies, like Wal-Mart Stores and Walgreens Co., may attempt to negotiate their current pricing rates, this price increase could be a major setback for small online retailers who have experienced growth in recent years because they offer free shipping. To remain competitive, small e-commerce stores will likely try to fit more items into smaller boxes with the hope that they will not need to charge customers shipping fees or increase the cost of their merchandise to absorb the rise in shipping fees.
What it means to luxury packaging
As a result of the price increases, many e-commerce retailers will likely opt to ship clothing in poly-bags, as opposed to boxes, to reduce their shipping costs. This choice could prove more costly, however, as items shipped in lighter, less sturdy packaging could arrive either damaged and/or wrinkled. The customer may then return the item in exchange for a new one, causing the retailer to ship the item again and eventually lose money in the process.
For luxury retailers, shoppers will continue to demand the same high quality packaging they have received in the past and, therefore, smaller or lighter packaging will not be a viable option. Regardless of the price increases, luxury items will still be treated and handled with the care they deserve by luxury packaging companies like Wrap & Send Services. Even with the new FedEx changes, luxury items will still require the care and handling that luxury customers have come to expect — even if it costs more to ship.