Startup Order Fulfillment: Dimensional Weight for Beginners
Dimensional weight (also known as dim weight or volumetric weight) catches a lot of startup eCommerce sellers by surprise. Believe it or not, a mere fraction of an inch too much in any dimension can upend shipping cost estimates and wreck what might otherwise be perfectly sound business models. In this post, we explore dimensional weight; its calculation; and ways to manage, minimize, and potentially eliminate it — all from our perspective as a provider of startup order fulfillment services for scores of early-stage sellers.
Startup Order Fulfillment: What Is Dimensional Weight?
Dimensional weight is a somewhat uniform means of establishing minimum shipping weights for low-density packages which would otherwise be unprofitable for space-constrained carriers. Imagine, for instance, a very large shipping carton holding nothing more than a feather. Though it might take up as much space in a truck or plane as would multiple “normal”-sized packages, if priced by actual weight, it would generate only a fraction of the revenue. From the perspective of the carriers, therefore, a package such as this must be re-weighted in some way to account for the space that it is taking up – thereby leading us to the concept of dimensional weight. As of 2020, all major carriers in the United States – FedEx, UPS, USPS, and DHL eCommerce – incorporate some form of dimensional weight in their pricing structures.
Startup Order Fulfillment: How to Calculate Dimensional Weight
Dimensional weight is generally, though not always, defined as length x width x height (in inches) divided by either 139, 166, 194, or some other pre-determined denominator. If the dimensional weight of a package is less than its actual weight, the chargeable shipping weight will be set to the actual weight (rounded up to the nearest pound); however, if the dimensional weight of a package is greater than its actual weight, the chargeable shipping weight will be set to the dimensional weight (again, rounded up to the nearest pound).
Imagine a 17-ounce parcel with outer carton dimensions of 13” x 13” x 13” (a standard cubic foot box actually has 13” outer dimensions). The actual weight of this parcel would round up to two pounds for all carriers while the dimensional weight would round up to either 16 pounds (with 139 as the denominator), 14 pounds (with 166), or 12 pounds (with 194).
Absent dimensional weight, this package could ship via USPS Priority for between $7.64 and $11.19, depending on destination zone, with an expected transit time of 1-3 days. Factor in dimensional weight, however, and the spread shifts upwards and widens to between $13.27 and $48.61 – making USPS prohibitively expensive relative to FedEx or UPS Ground for all but the closest shipping zones.
For both FedEx and UPS, ground rates vary substantially depending on volume discounts (expected transit times also vary from 1-6 days, depending on destination); however, shippers can assume that all-in rates would be at least $12.00 for the package described – with twice or more of this amount being common especially for destinations subject to residential and/or rural area surcharges.
Startup Order Fulfillment: Managing, Minimizing, and Eliminating Dimensional Weight
Dimensional weight is a fact of life in eCommerce; however, it can frequently be managed, minimized, and (sometimes) even eliminated with proper planning.
Sellers often have no control over the major design attributes of their products; however, if such control exists, it’s generally better to minimize product dimensions, if possible, to avoid issues relating to dimensional weight. A good rule of thumb to keep in mind is that, from a logistics perspective, an ounce or an inch can make a very big difference.
Sellers do tend to have control over the major design attributes of their packaging materials. Though much of the eCommerce space is enamored with over-the-top unboxing experiences, an often-overlooked implication of such packouts is a material increase in shipping costs due to dimensional weight. Again, all it takes, in many cases, is an ounce or an inch too much to either make or break an otherwise sound eCommerce model.
High Volume Discounts
Lastly, high volume shippers are able to negotiate with the carriers for higher denominators which lower dimensional weight. Of course, startups usually have very little volume; however, options do exist for pooling shipments – such as by using a third-party order fulfillment provider like IronLinx.
As eCommerce volume continues to grow, the capacity constraints of the carriers are likely to lead to even higher dimensional penalties for low-density shipments. As such, startup eCommerce sellers should work to optimize their products, packaging materials, and shipping arrangements so as to either mitigate or eliminate their exposure to such shifts.