Shipping costs make up a large percentage of the budget for every ecommerce business. When shipping fees get too high it can cut into overall profit margin. This is why ecommerce brands should analyze their shipping carrier’s performance regularly to ensure they are getting the most value from their carrier and shipping services.
Choosing the best shipping service depends on the needs of your product and of your customers. There are many types of carriers to choose from, and some are known for specific services. USPS, for example, is well known for having a great flat rate shipping option. While FedEx and UPS also have flat rate options, USPS ships to more addresses in the US than any other carrier, and they also have consistently low rates.
Shippers need to fully understand how flat rate shipping works, including its limitations, advantages, and when to use the service for optimal cost savings.
The TL;DR on Flat Rate Shipping for Ecommerce Brands
Flat Rate Shipping isn’t for all ecommerce brands. Here are some common features about the service as it relates to ecommerce shipping:
- Simplifies some aspects of packaging and shipping
- Provides a consistent shipping rate—no surprise fees
- Products may not be as secure due to limited box sizes and shapes
- Boxes or envelopes are not usually branded
How Does Flat Rate Shipping Work?
Many major shipping carriers now offer flat rate options. While each carrier has a variation to the service (like shipping zones that apply, weight requirements, or transit time options) they all operate in the same general way.
The common denominator between all flat-rate shipping services is that products that meet the carrier’s criteria will be shipped for one price. Here are a few other distinguishing characteristics of flat-rate shipping.
- Packaging. Most carriers with a flat-rate option require shippers to use specific flat-rate boxes and envelopes. These come in a small variety of shapes and sizes. It’s the responsibility of the shipper to properly package their products for safety within flat-rate packaging. UPS Simple Rate is the exception to this rule—the UPS service allows shippers to use their own boxes.
- Weight. Many flat-rate shipping services have weight restrictions. For example, to ship via FedEx OneRate, a parcel needs to weigh limit of 10 lbs. for envelopes, or 50 lbs. for parcels. USPS Flat Rate is up to 70 lbs.
- Distance. Some flat-rate services have zone restrictions. USPS allows shippers to ship into any zone within the contiguous US, but FedEx One Rate charges based on zone, so that the “flat rate” is determined by how many zones a parcel will cross.
When to Use Flat Rate Shipping?
The biggest benefit of using flat-rate shipping is having consistent shipping fees. If your products meet the criteria to use these shipping services, using flat-rate shipping will make forecasting your transportation budget slightly simpler.
Here are products and scenarios when flat-rate shipping is a good idea:
- Packages with a high DIM rate (they are heavy for their size) are the best candidate for flat-rate shipping.
- Packages that need to travel through many shipping zones, USPS Flat Rate Shipping is an excellent cost saver.
- Companies with very slim profit margins (often startups and smaller companies) may need to know their overall shipping fees in advance, making flat rate shipping a great option.
- Flat-rate shipping services are also generally exempt from peak season surcharges, making it an affordable option for high volume shippers during the holiday season.
Limitations of Flat Rate Shipping
While flat-rate shipping may seem like a great deal, there are specific requirements that products need to meet to qualify for the service. These are some of the common limitations of using flat-rate shipping.
- Dangerous goods cannot be shipped via Flat Rate or Priority mail. This includes any types of explosives, alcohol (including perfumes), lithium batteries, gasoline, and more.
- Transit times may be slower than other services. If your products need to get to customers quickly, flat-rate shipping may not be the best for your brand.
- Products that are very heavy cannot be shipped with a flat-rate service (over 70 lbs. for USPS, over 10 lbs. envelopes or 50 lbs. parcels for FedEx).
- With carrier-supplied packaging and slow transit times, flat-rate shipping may not create the most customer-centric option.
Is Flat-Rate Shipping Right for Me?
Flat-rate shipping is one of many ways to reduce overall shipping costs. If you are a small or midsized ecommerce business, looking for a low-cost shipping option, see if your products meet the criteria for flat-rate shipping.
It’s a great option for brands who are fulfilling in-house, versus outsourcing to a fulfillment provider.
There are many benefits to working with a third party logistics company (3PL), if you are seeking ecommerce fulfillment support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.