Does Dimensional Shipping Affect Me?

Firstly, we would encourage you to read Part 1 on Dimensional Shipping so you have a base understanding of it.

January is looming and it’s clear from our phone calls and enquiries, plus the articles such as that from Internet Retailer this week, that merchants are worried about Dimensional Shipping.

Dimensional Shipping really only comes into effect if you are selling items which are either light in comparison to their dimensions or awkwardly shaped goods. A good example is a golfing site. If you sell golfballs you probably wont need to worry about dimensions, because these are small, relatively heavy, and the weight is the most important factor.  If though you sell golf clubs dimensions come into play.

So lets give some other examples here. Sites that we don’t often see affected:

1. Apparel
2. Food
3. Electronics
4. Flowers

Sites that we see affected sometimes:

1. Furniture
2. B2B
3. Houseware
4. Office Supplies (large)
5. Sporting Goods

It’s worth bearing in mind that currently if you are selling LTL Freight most companies are not looking at volumetrics – right now. But there is a move to it, so in the future it will be a consideration. So start thinking about this and talk to your shipping reps.

If you are unsure about the affect on you of the recent UPS/FedEx announcements we encourage you to talk to your reps here as they will have been briefed about this change.  They should understand your product line and be able to advise on the impact to you in January 2015 when the switch over to charging based on Dim Weight happens.

We mainly see this as a problem for US clients right now. This is not to say that it is not a problem elsewhere. Volumetric charging is an issue in other countries, predominately Australia, UK and Europe. As we find a lot of time currently people use custom defined rates we offer other solutions to this problem via our ProductMatrix and Premium Rates extensions.  I’ll cover this in Part 3. For the rest of this discussion I will be focused on the 3 main carriers used in the US – UPS, FedEx and USPS.

How Does Dimensional Shipping work in Magento?

Well, right now it doesn’t. Worse than that there is no in built support to even split your products into separate packages aside from within bundled products. As of today the only splitting that will happen is if you exceed the maximum package weight (e.g. 150lbs).

So inside Magento you can only set up your products based on weight.  Any requests sent to UPS, FedEx or USPS will use weight, origin, destination as the primary factors in deciding the shipping.

The Mathematical Problem

We have spent significant time investigating the problem, and how it actually affects merchants.  Many companies propose that they offer a solution to the bin-packing algorithm, but in reality this is a NP-Hard problem, which means no-one has found a reasonable solution, and its been diagnosed as not possible to find an algorithmic solution that works 100%.

Any company that says they can solve all your dimensional problems 100% is lying.  Simple solutions unfortunately do not exist to allow packing of a cart so that all the time the best box is picked and its packed correctly.

There are very few solutions in this space for this reason. We have seen other extension providers come and go here, I suspect because customers have become frustrated and made chargebacks, etc. We have also seen open source versions, they do not work.

The reason primarily is that the best-fit algorithm that many propose to use for this is not actually suitable for merchants.

Best Fit works based on placing items in the fullest bin that still has room.  The problem with this is in deciding which box to use first, do you try to go for a large box, or a small box? How do you decide which box to use?  Best Fit does not look at shipping pricing, which is important, for instance it may be better to use 2 * smaller boxes rather than 1 larger in some circumstances.

How Does WebShopApps Help Here?

WebShopApps has spent 3 years building and refining an intelligent Dimensional Shipping solution. For us Dimensional Shipping is a a problem that we will continue to refine and build a solution out for. We are already hard at work building more features for merchants in our ShipperHQ.com offering and actively working with a number of clients that have highly unique requirements on this at present.

We take the approach of looking at how merchants view their products and their packaging boxes. We have an intelligent completely bespoke algorithm in our codebase which looks at the whole cart, the boxes assigned to each product, how you the merchant want to pack them. It is possible for a merchant to specify the following types of rules:

1. Identify whether a product ships in it’s own box (and if so how many fit in that box)
2. Enable the shipping of multiple product types in one box
3. Allow multiple boxes to be assigned to products and allow the algorithm to select the boxes that best work for the cart in question
4. Give the ability to split a product into multiple boxes in some scenarios (e.g. you can’t split a TV but you can split a bulk purchase of shampoo)
5. Allow the ability to have multiple boxes for 1 product (e.g. a table and chair bundle set)
6. Allow you to specify packing via qty that can fit in a box (which a lot of merchants want to do), or just use volumetrics and dimensions (which works well if you have lots of skus)
7. Allow for USPS Flat box sending when qty’s are under certain numbers, switching to UPS/FedEx when cart is too big
8. No requirements to set dimensions on all products, just on those that are dimensional large or you feel are an issue

There are many other features, too many to list here.  Unfortunately, as much as we would like to, we are unable to go into major detail due to the problems around protection of IP.  What we would say is come talk to us, we are here in Ohio and our doors are open to you and if you are a web design agency your clients.

We have multiple packing algorithms, because not all merchants are the same.  Our experience with the many thousands of merchants we deal with has taught us they all have different needs, they sell different products and we need to account for that.

Can we Solve Everything?

Probably not. We are realistic, and we are honest. We believe that with our solution you can see a significant improvement in your rating in comparison to your shipment fees. We believe it works very well for specific scenarios, especially if you have clear and defined rules. If you stock millions of SKUs and have hundreds of box sizes its probably not going to work. If you don’t invest some effort yourself in understanding how and where you are affected by Dimensional Rates it will not work.  Any other software company that says this is easy is making light of what is a difficult problem to solve.

WebShopApps have assisted many merchants over the years in setting up their Dimensional Shipping and this I believe is what sets us apart. If you ring us up you as a merchant can have an intelligent conversation with us about your needs and we will advise you based on not just our own experience, but the experience we have had with prior merchants on how best we can assist. And if we can’t we will be truthful on that.

There is an investment of effort in testing any solution, you do not want your rates to change adversely and affect your sales. Likewise you do not want to suddenly find you are caught out by large unexpected shipping charges.

At WebShopApps we have the experience to assist, feel free to contact us for a risk-free no pressure assessment. You can ring us on 614-526-9534 on EST time to speak directly to Karen about your  specific needs.

The goal of WebShopApps is to enable it’s merchants, it’s web design agencies, and it’s logistic partners. We believe with Dimensional Shipping we have a solution that does that.

What is Dimensional Weight?

Dimensional Weight is the calculation of the weight of goods in terms of their dimensions.  The length, width, height of a package is used to give a volume, then this is usually increased by a multiplier to give a dimensional weight.

For example we may have an item that is Length 25inches, Height 20in, Width 32in.  If we use UPS as an example then for Domestic US Air shipments the Dimensional Weight is calculated as (25*20*32)/166 = 96. The Dimensional Weight would be 96lbs.

How does Dimensional Weight affect Shipment Pricing?

Traditionally the calculation of shipment pricing has been done using the origin, the destination and the weight.  I’ve clearly made a generalization in this statement as there are other factors such as the packaging container, account type, etc which affect pricing, but you can think of this as the general rule.

But, with countries such as the US space is of a premium. If you think in terms of an aircraft, let’s say I wanted to send 500lbs of cotton wool. Well this is going to take up much more room than say 500lbs of lead weight. So what logistics companies such as UPS and FedEx have done is created a calculation which takes into account this Dimensional Weight, if its relevant.  They look at what is known as the Billable Weight.

The Billable Weight can be simply viewed as the greater of the Dimensonal Weight and the Actual Weight.  So if we have the 96lb Dimensional Weight example from above the Billable Weight would be 96lb unless the actual weight is greater.  So a 120lb piece of gym equipment would result in a Billable Weight of 120lbs. A 34lb bike would result in a Billable Weight of 96lb. The lower value is ignored.

Why is this Important?

And the reason this is important?  Because you will be charged based on this Billable Weight, and not the actual weight. So if you were shipping that bike and only using the actual weight you would have charged the customer a much less lower price than its actually costing you to ship.

Why is this even more important in 2014?

The advent of online commerce has resulted in an explosion in shipments. Just a few years ago most goods were purchased via a visit to the local mall or the Home Depot/Warehouse.  Now we are seeing a mass move to getting our goods via the mail.

From a logistics carrier perspective they have been playing catchup with this move to online commerce too, and having to rethink how shipment pricing works as a result of the pressures on them in terms of space, fuel costs and sheer amounts of parcels now being delivered.

What has also happened is that companies like Amazon have realised its more efficient for them to have less box sizes, and use a larger box with more empty space rather than try to pack what we would call efficiently.  The best way to think about this is when you receive goods from Amazon do you notice that often there are ‘packers’ in the box and a big box with not much in it?  This is because this is easier for Amazon.  Its not easier for the carriers as this space is all taking up room in their vans and planes.

This image from Japan sums up the issue perfectly.

So, in 2014 Logistics Companies are fighting back. They want to pack more densely, and if they can’t then they want to charge appropriately for this. There have been three key announcements in recent weeks around Dimensional Weight based shipping:

1. FedEx announced they would be moving to dimensional pricing for Ground and Freight from Jan 1 2015
2. UPS announces Dimensional Pricing from Dec 2014 on Ground shipments (is already in place on Air/International)
3. UPS Freight announces a move to Density Based Pricing (aka Dimensional Pricing) in a move away from long held Classification Pricing (NMFC codes)

How does it work in Magento?

Right now in Magento there is no support for Dimensional Based Pricing. And its not easy to implement. Why? Because generally a package is made up of more than 1 item.  So you can’t just enter dimensions on products like you do with weights and solve this issue.  It’s deeper than that.

In Part 2 I’ll go over how we solve this at WebShopApps and in ShipperHQ.  In the meantime feel free to contact us or take a look at our Dimensional Shipping Extension if you are in need of a solution today.