How Zone Skipping Saves Your Brand Money
Every ecommerce merchant is looking for ways to say on shipping costs. It’s often the most expensive part of fulfillment and costs continue to rise as national and regional carriers institute increases regularly.
One way to save on shipping costs is to use a tactic called zone skipping. In this case, the zone is referring to different postal zones which are how most carriers determine how much it will cost to ship a package from one location to the other.
With zone skipping, there’s a good chance you can generate some savings, while still meeting your service level agreements and getting products into customer’s hands in a timely manner.
What is Zone Skipping?
Rather than shipping individual parcels, zone skipping involves consolidating your many ready-to-mail packages into a single truckload, then sending the shipment to a specific zone as one. From there, the individual items can be distributed to customers at a closer proximity, with the shipping cost reflecting only one delivery zone.
If you’re sending products from California to customers in New York, you can send the items directly to the New York area. Customers then pay for shipping in a single zone, instead of paying for a cross-country shipment.
By sending an entire shipment or orders to a single zone, you avoid the financial burden of multi-zone shipping. For brands struggling to keep up with the low-cost shipping options offered by competitors like Amazon, zone skipping presents a distribution method that can provide an avenue for a lower cost of shipping.
Not only does this lower the price for your customer, but the closer your items are to their doorstep, the quicker they’ll be able to arrive. Since the order is already in the customer’s delivery zone, they can expect the parcel to arrive in a matter of days.
Major benefits of Zone Skipping
Zone skipping offers a lot of benefits, with the primary one being cost savings. However, some of the other benefits you can reap from Zone Skipping include…
1) Decrease the number of package handlers
Shipping a package from California to New York using the traditional method means it will go through a variety of locations on the way to its final destination. The more people who touch your package, the more chance there is for mistakes to be made or damage to occur.
By moving packages farther distances via zone skipping you’re cutting down on the number of people handling your packages, reducing your error and damage rates.
2) Cost reduction
When moving single packages from your warehouse to their final destinations, you’re paying the full shipping cost. However, with zone skipping you can save on those fees, by grouping together shipments heading to the same metro area and delivering them to the final mile carrier.
Here’s an example of possible cost savings:
You have 300 packages shipping from Los Angeles to each of their final destinations, all near a large metro area, like New York City. The total shipping fee for each package is $18, totaling $5,400 in total shipping costs for that day.
Compare this with moving 300 packages from Los Angeles to the final mile carrier’s sorting facility in New York via your own network, at a cost of $900. This is zone skipping.
Then add the cost of your local rate— from the carrier’s facility in New York to the customer, at $11 each. The total for the zone-skipped material comes to $4,200 for a total savings of $1,200 or 22%. Multiply that by 252 business days and the cost savings are substantial.
3) Reduce your carbon footprint
By cutting down on the number of shipments, especially by air, you will drastically decrease your carbon footprint, leading to a more sustainable fulfillment option.
4) Reduce reliance on national carriers
By moving packages closer to the final destination, it’s also possible to reduce your reliance on national carriers, and work with more local and regional carriers. This will help to strengthen your fulfillment network in these areas and continue to spread out the number of packages among carriers to hopefully reduce bottlenecks.
When to consider Zone Skipping
While zone skipping is a great way to get products to customers quicker and for a smaller price, it might not be an ideal solution for every ecommerce brand. Let’s take a look at when online retailers should consider zone skipping as a feasible fulfillment strategy.
Cross country shipments
If you’re regularly sending orders to customers on the other side of the continent, zone skipping offers clear opportunities to help your brand excel. However, if your primary customer base exists locally, or is just a zone or two away, sending orders to that delivery zone might not be worth the investment.
To determine if zone skipping is the right choice for your brand, you’ll need to calculate the cost of shipping grouped packages combined with the expense of delivering each product to its destination. If that amount is less than sending each item individually, then zone skipping might be worth looking into more.
Large order and product volume
The more packages you’re shipping to a metro area, the more cost savings you’ll get from a strategy like zone skipping. If you’re consistently sending hundreds of packages to specific markets, then zone skipping will have a significant impact on your bottom line.
Product tracking capabilities
One of the major disadvantages of zone skipping is that it makes tracking packages a little more complicated. It may also show packages not “moving” through the carrier network because they are being moved in bulk before getting scanned at the final mile carrier. This could create some concern amongst a subset of customers who watch their packages very, very closely.
It’s important to have quality reporting and visibility tools in place before you opt for zone skipping. That way, you and your customers will never be left in the dark when it comes to where products are on their delivery journey.
How to implement Zone Skipping to benefit your business
The most important element of successful zone skipping is organization. You’ll need to keep clean inventory and order management records – using tools such as Flxpoint – to ensure you know where your products are and where they’re going.
It’s important to leverage a partner with multiple locations, like ShipHero – who can get you into any zone for your customer spread. With our 8 owned and operated warehouses across North America, we have a location near most of the major metro areas, making it easy for us to use zone skipping for our clients.
Innovation is the way to keep costs down and profits high. Finding new and different ways to get your products from point A to point B could lead to huge cost savings, which is what zone skipping can afford.
This is a guest post from Maggie M. Barnett, Esq., the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. Follow Maggie on Twitter & LinkedIn.
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