The Hidden Margin Killer
Shipping costs are often the difference between profitable and unprofitable reselling. A 10% improvement in shipping efficiency can mean 20% more profit on each sale.
Understanding Carrier Options
USPS
Best For
- Items under 1 lb (First Class)
- Flat Rate boxes for dense items
- Regional Rate for mid-weight packages
- Media Mail for books and media
Pros
- Cheapest for lightweight items
- Free package pickup
- Saturday delivery included
Cons
- Slower than competitors
- Less reliable tracking
- Size limitations for First Class
UPS
Best For
- Heavy items (over 2 lbs)
- Large packages
- Business shipping with volume discounts
Pros
- Competitive rates for heavy packages
- Reliable tracking
- Strong damage protection
Cons
- Expensive for lightweight items
- Dimensional weight pricing aggressive
- Surcharges add up
FedEx
Best For
- Similar to UPS profile
- Express shipping needs
- Business accounts with volume
Pros
- Fast transit times
- Good tracking
- Volume discounts available
Cons
- Expensive without discounts
- Dimensional weight pricing
- Residential surcharges
Dimensional Weight Explained
Carriers charge based on actual weight OR dimensional weight—whichever is higher.
Dimensional Weight Formula (Length x Width x Height) / DIM factor
- USPS DIM factor: 166
- UPS/FedEx DIM factor: 139
Example Calculation
Box: 12” x 10” x 8” Actual weight: 2 lbs
DIM weight (USPS): (12 x 10 x 8) / 166 = 5.8 lbs DIM weight (UPS): (12 x 10 x 8) / 139 = 6.9 lbs
You’d be charged for 6-7 lbs, not 2 lbs.
DIM Weight Optimization
Use the right size box
- Don’t ship air
- Custom cut boxes to fit
- Use poly mailers when possible
Consider USPS for light, bulky items
- Higher DIM factor = lower DIM weight
- First Class ignores DIM under 1 lb
Packaging Optimization
Cost Per Package
Calculate your true packaging cost:
- Box cost
- Tape
- Fill material
- Labels
- Your time
Reducing Packaging Costs
Buy in Bulk
- Box prices drop 40-60% in bulk
- Stock standard sizes you use most
- Consider recycled boxes for savings
Use Poly Mailers
- No DIM weight concerns
- Cheaper than boxes
- Great for soft goods, clothing
Right-Size Your Inventory
- Stock 3-4 box sizes that cover most items
- Specialty sizes for common products
- Avoid one-size-fits-all approach
Carrier Rate Comparison
For a 1 lb Package (Zone 5)
| Carrier | Service | Cost |
|---|---|---|
| USPS | First Class | ~$4.50 |
| USPS | Priority | ~$8.50 |
| UPS | Ground | ~$9.00 |
| FedEx | Ground | ~$9.50 |
For a 5 lb Package (Zone 5)
| Carrier | Service | Cost |
|---|---|---|
| USPS | Priority | ~$14.00 |
| USPS | Flat Rate Medium | $17.10 |
| UPS | Ground | ~$12.00 |
| FedEx | Ground | ~$12.50 |
Rates are approximate and vary by account and volume
Volume Discounts
USPS Commercial Pricing
Available through:
- eBay shipping labels
- Pirate Ship
- Stamps.com
- Most shipping platforms
Savings: 10-40% off retail rates
UPS/FedEx Negotiated Rates
Requirements:
- Shipping volume (typically 50+ packages/week)
- Account history
- Negotiation
Savings: 20-50% off published rates
Free Shipping Strategy
The Psychology
Buyers strongly prefer free shipping, even if the total price is the same.
$50 item + $5 shipping = hesitation $55 item + free shipping = confidence
Making Free Shipping Work
Build shipping into price
- Calculate average shipping cost
- Add to item price
- Offer “free shipping”
Set minimum for free shipping
- “Free shipping on orders over $35”
- Increases average order value
- Protects margins on small items
Category-specific approach
- Free shipping on items with margin room
- Calculated shipping on heavy/expensive-to-ship items
Shipping Automation
Label Printing
Thermal Printers
- Faster than inkjet
- No ink costs
- Labels always readable
Recommended Models
- DYMO 4XL (budget)
- Rollo (mid-range)
- Zebra (professional)
Integration with Marketplaces
eBay
- Print labels directly
- Automatic tracking upload
- Commercial rates
Amazon
- Buy Shipping for FBM
- Tracking auto-populated
Common Shipping Mistakes
Mistake 1: Not Weighing Accurately
Estimated weights lead to:
- Overcharging (lost sales)
- Undercharging (lost profit)
- Get a scale and use it
Mistake 2: Ignoring DIM Weight
That lightweight item in a big box? You’re paying for the box, not the item.
Mistake 3: One-Size-Fits-All Carrier
Different carriers win for different packages. Compare rates for each shipment.
Mistake 4: Skipping Insurance
For valuable items:
- Built-in insurance often insufficient
- Third-party insurance (Shipsurance) is cheap
- Calculate insurance into pricing
The Shipping Optimization Mindset
Every dollar saved on shipping is a dollar of profit. Treat shipping as a cost center to optimize, not just a necessity to accept.
- Measure everything - weight, dimensions, costs
- Compare constantly - rates change, carriers compete
- Optimize packaging - right size, right materials
- Automate - efficiency saves time and money
- Build shipping into pricing - protect your margins