Warehousing & Fulfillment

Small Parcel Shipping: Best Practices for eCommerce Merchants

Warehousing & Fulfillment
January 21, 2022
7 min read

Understanding the differences between small parcel and freight shipping allows fast growing eCommerce sellers to reduce shipping costs and maximize profitability.

In today’s anything, anytime world, delivery speed and cost have become a make-or-break part of the business. Thanks to Amazon Prime, shoppers expect inexpensive 1-2-day nationwide delivery from all stores, regardless of size, and consumer data also shows merchants that prioritize fast shipping have a distinct advantage over rivals. 

But how can SMBs deliver on these high expectations without negatively impacting the bottom line? 

While other areas of the business such as working capital optimization and return on advertising spend traditionally receive more attention, reducing delivery costs goes a long way towards increasing profitability. 

One way to minimize shipping costs is understanding the differences between small parcel and freight delivery. 

What Is Small Parcel Shipping?

Also referred to as light freight or parcel package delivery, small parcel shipments usually weigh less than 70 pounds, can be lifted without assistance, and are shipped in businesses’ own packaging or carrier-supplied boxes. 

Typically, they’re handled by carriers such as UPS or courier services in local areas. For example, trucks or vans that drop off goods in the last mile to consumers’ doorstep or mailbox.  

Small parcel shipping usually also has the following characteristics:

  • Under 150 pounds
  • Low dimensional weight (DIM weight) 
  • Delivery trucks/vans aren’t longer than 28 feet.
  • Delivery trucks/vans can have 50-100 parcels
  • Delivery trucks/vans that make multiple stops during the day at customers’ doors. 

What Is Freight Shipping?

Generally reserved for larger shipments, freight shipping is much more complex and requires more management than small parcel delivery. Freight is packaged on pallets or in sturdy cargo containers and moved long distances by multiple modes of transportation like rail, ship, airplane, and truck.

The complexity of freight includes evaluating freight consolidation, transloading, cross-docking, and other strategies to reduce the cost of getting goods to customers. Further, with freight shipping, logistics managers must consider whether to utilize full truckload (FTL) or less-than-truckload (LTL) shipments to reach warehouses or retailers. 

Unlike small parcel delivery, the sizes and quantities of cargo in freight are far too large to stack in the back of a UPS truck to reach the end destination. This is why freight shipping is the best value for safely forward stocking heavy and bulky inventory to guarantee 1-2-day nationwide delivery.  

What Transit Modes Are Used in Freight Shipping?

Many modes of transportation can be used in freight shipping, and freight is moved across every link of the supply chain, from importing to final mile: 

Ocean – Ocean freight is ideal for shipping bulky and large quantities of product because it’s much less expensive than air. As such, ocean is often a better option for international transit than air.

Air – Goods arrive at the end of their journey in the shortest amount of time, which is why air is the most expensive shipping option.

Ground – Ground shipping is an inexpensive way to transport wares across the country. Full truckload (FTL), also known as TL, is ideal for customers moving enough inventory to fill an entire truck, while less than truckload (LTL) shipments are too small en masse to require a full truck. As a result, FTL shipments are regularly priced with a flat rate and less expensive than LTL, along with offering added security because goods aren’t repacked. Plus, with fewer stops, FTL transit is faster. 

FTL works well for big companies transporting large volumes, whereas LTL is suitable for fast growing eCommerce companies with smaller shipments. In LTL, packages are combined with other companies’ cargo traveling along the same route, so the cost of transportation is shared. This makes LTL a more cost-efficient option than FTL; however, LTL takes longer to arrive than FTL due to multiple stops and repacking requirements. 

When Should eCommerce Merchants Use Small Parcel Shipping?

Small parcel shipping is an economical option for merchants sending a few smaller, lightweight packages to several disparate locations. It works best for residential and small-to-medium-sized retail businesses that handle fulfillment in-house and aren’t moving enough volume to make freight a move cost-effective option. 

Normally, small parcel delivery makes the most financial sense until shipments exceed a certain number of packages and DIM weight.

For instance, an online direct-to-consumer t-shirt store should rely on small parcel delivery to send four packages from Atlanta to Philadelphia next-day to consumers, who have a higher expectation for orders to arrive quickly and on time. However, if the same shop needed to mail 20 large boxes of t-shirts weighing 330 pounds from Atlanta to Philadelphia to a wholesale partner within one week, LTL is the better option. 

What are the four best practices of small parcel shipping?

  1. Understand the Costs – The price of parcel shipping may not be as straightforward as it seems. Check for accessorial fees and volume discounts. Some carriers may charge extra for rural shipments, weekend deliveries, and address changes.
  2. Same Day Delivery – Less complexity than freight means small parcel should be used when fast – even same day delivery – is required. Usually, a carrier or local courier service would handle this service, but air could even be involved if buyers are willing to pay the high price tag for the fastest shipping option. Keep in mind that forward stocking inventory to warehouses based on demand forecasting allows merchants to take advantage of small parcel shipping to guarantee 1-2-day nationwide shipping.
  3. Easy Tracking Can Come With a Cost – Small packages regularly go through multiple facilities and checkpoints, allowing for tracking at each stage as items get closer to the buyer. However, this visibility can come at a cost. More links in the supply chain equates to greater risk of lost, delayed, or damaged parcels. 
  4. Outsourced Fulfillment Saves Time & Money – Truck brokerages, freight forwarders, and third-party logistics (3PLs) providers provide various consultative services and services to help eCommerce merchants ship orders cost effectively. In particular, 3PLs take over much of the fulfillment process, freeing up time and capital for small-and-medium-businesses (SMBs) to invest in growing the business. However, the rigid contracts and seasonal surcharges of 3PLs are leading more SMBs to outsource fulfillment to fourth-party logistics (4PL) partners with a nationwide warehousing network. 

The Bottom Line

Ware2Go is a 4PL created by UPS to help fast growing eCommerce shops across many industries offer affordable 1-2-day delivery coverage. To learn more about how Ware2Go can help you utilize small parcel shipping effectively, please reach out to one of our fulfillment experts.

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