In the past, carriers would charge shipping costs based on the weight of the merchandise. However, charging light merchandise based on weight became unprofitable and environmentally demanding quickly. The merchandise took up too much space in the truck, aircraft, or ship, due to ineffective packaging.
How Can We Affect the Accuracy of Shipping Rates?
Imagine you want to ship two different products of different sizes but the same weight. The larger product will have higher shipping costs because not only does weight matter but also volume does. This is how carriers came up with dimensional weight calculations (DIM weight) that are based on product height, length, and width. The formula for dimensional weight is length x weight x height divided by shipping factor, which can vary from carrier to carrier.
DIM Weight = (L x W x H) / SF
If you use the DIM weight with a large and light-weighted product it is going to cost more than shipping based on the weight only. However, if you ship another product that is small in size but heavier than the first, you should go with DIM weight as it will be cheaper. Why? Because the DIM weight is less than the actual weight of the product. Comparing regular weight with the DIM weight and using the higher value is the way to get more accurate shipping rates from your carrier. However, this approach is not perfect as it ignores packaging that can significantly increase shipping volume and therefore affect the shipping rate. Therefore, the highest accuracy of shipping rates can be achieved if your carrier knows the exact parameters of packages (dimensions and weight) you are going to ship your order with.
That is when smart packaging was introduced as a better shipping method to increase the accuracy of your shipping rates and reduce shipping costs. Smart packaging is often called dimensional packaging or dimensional shipping. It is superior to the usual and approximate dimensional weight approach as besides product dimensions it considers the dimensions of the available packages.
What Is Smart Packaging?
Smart Packaging is an algorithm based on product and package dimensions that “pre-packs” an order into given packages in an optimal way in real-time. Afterward, carrier shipping rates (from UPS, FedEx, USPS, DHL, and others) are requested using the dimensions of the selected packages. This helps increase the accuracy of shipping rates displayed on checkout significantly and therefore make shipping cost-effective.
Why Use Smart Packaging and How It Improves Your E-commerce?
A better question is why aren’t you using smart packaging already? There are many reasons why companies switch to using Smart Packaging. Let’s name some of the reasons here:
Real-Time Shipping Rates
The accuracy of shipping rates based only on weight parameters is very low. Shipping rate accuracy increases with the calculated dimensional (also known as volumetric) weight compared to regular weight but it is still not a “silver bullet”. Whereas the highest accuracy of shipping rates is only achieved if you provide the carrier with the actual package dimensions and its weight that the order will be shipped with. With Smart Packaging, you can obtain the highest accuracy of your shipping rates.
Environmental Impact
If you start using algorithms that optimize your packaging, you will save space and reduce the waste coming from all the filling packaging materials. Likewise, you will save money on transportation by avoiding shipping of inefficiently packed orders. Smart Packaging makes shipping eco-friendly and reduces the harmful impact it has on the environment. Your customers will be happy to see that the orders are practically packed and use as little space and packaging material as possible. Therefore, by choosing smart packaging you also make sure that you are showing your customers that you care about the environment through packaging. Also, this is a very good branding line to use for your e-commerce. The right branding gives your e-commerce a competitive advantage and sets you ahead of all your competitors.
Decrease Your Shipping Cost
As it was mentioned before smart packaging reduces your shipping costs significantly. It is very easy to explain why. If you ship a small product in a bigger box than necessary, you pay more than you should have, because the parameters of the box are larger and the package takes too much space in the carrier’s truck. Thus, the carrier can not take on more products and divide the costs more efficiently. Using smart packaging helps reduce shipping costs charged by carriers.
Customer Loyalty
Smart packaging diminishes the gap between what the retailer and the customer need to pay for shipping and package delivery. Shipping costs requested using custom Smart Packaging are much more precise and sometimes even lower than those of standard shipping. This is because the costs of standard shipping are based on weight parameters only. Displaying accurate and fair shipping rates on the checkout definitely increases customer satisfaction, which ultimately leads to a loyal customer base.
How Does Smart Packaging Work?
The process of Smart Packaging is really simple and easy to comprehend. See the steps below to see how Smart Packaging works:
- Set the dimensions of your product (its length, height, and width) in your Magento.
- Add the dimensions, tare weight, and weight capacity to all the packages you ship with into the shipping software that supports Smart Packaging. Our Calcurates multi-carrier shipping software does that for you.
- Smart Packaging algorithm will choose the best packaging configuration for each order in real-time.
- Get the most accurate real-time shipping rates from carriers for all your smartly packed shipments. All the information is sent to the carriers automatically.
Turn on Smart Packaging Feature for Your E-commerce
There are many shipping extensions available to help your e-commerce with real-time rates and dimensional shipping. However, not many of them offer reliable Smart Packaging algorithms. Calcurates multi-carrier and multi-platform shipping solutions help you set up shipping methods, rate calculations based on conditions, and delivery dates displayed on checkout. To solve dimensional shipping tasks, Calcurates team has recently added the Smart Packaging feature that is already available for Magento.
Summary
Now that you understand what Smart Packaging is, how it works, and why it is important, you can take the next step and apply Smart Packaging to your e-commerce as well. Even if it might sound scary at first, dimensional shipping automating algorithms are in demand more and more, as they decrease shipping costs and reduce packaging waste dramatically. Whether you want to reduce waste or implement cost-effective and sales-stimulating shipping, you have to consider partnering with professional shipping software to achieve your company-specific goals.