If you run a retail business, you may have already realized that the instances of cart abandonment on your website are significantly higher. Well, you are not alone. A study by Statista in 2021 showed that retail businesses had 80 percent of cart abandonment.
If we talk about the reasons for cart abandonment, Shopify data reveals that 55 percent of visitors do so due to high extra costs, including the shipping cost.
Visitors come to your retail store, add products to their cart and when they reach the checkout stage they find shipping costs are too high. It is enough to put off many customers, and they abandon their purchase entirely.
If you wish to be upfront and more transparent with customers about shipping costs, you also need to understand how to calculate these costs as a business owner.
Without clearly understanding the method of using dimensional weight, both you and your consumers may have to pay more for shipping than required.
Global shipping carriers such as FedEx, UPS, and DHL calculate shipping costs based on dimensional weight. If you think of hiring any of these carriers, you should how they do the calculation.
In this post, we will talk about the actual and dimension weight, and their impact on shipping costs.
When It All Started
The use of dimensional weight has been around for a few years. Major shipping carriers have been using this method for air and international parcels. It is because space on trucks or planes is always scarce. In 2015, global carriers began using dimensional weight pricing to calculate the shipping costs of all packages.
When the eCommerce market started growing fast, major shipping carriers found it difficult to accommodate more packages in their shipping vehicles. This pressure continued to increase because more consumers began shopping online than going to brick-and-mortar stores.
Although many ordered items were lightweight, the total size of the parcels could take up a lot of space in trucks (E.g., clothing items or shoes). This is why carriers came up with the dimensional weight method across all order fulfillment.
Defining Dimensional Weight
Dimensional weight or DIM weight is a method of calculating the weight of a package based on its height, width, and length. Generally, major shipping carriers charge for packages either considering the actual weight or the dimensional weight, whichever is higher.
The purpose of using dimensional weight is to cut down on using large packages for items that are possible to ship in smaller packages. Large parcels take up more space on planes/trucks and leave little room for other packages.
Using the dimensional weight method to calculate shipping costs is a better way to compensate for occupying space when shipping items. FedEx, UPS, and DHL can make more profits and work with better efficiency if they fill their delivery trucks with more packages.
Calculating Dimensional Weight
Carriers use the DIM factor or DIM divisor when calculating the dimensional weight of a package. It is a number set by carriers representing cubic inches per pound.
FedEx and DHL use a DIM divisor of 139. UPS applies a DIM factor of 166 for domestic businesses that pay retail rates. For international businesses paying daily rates, the UPS uses 139 as the DIM factor.
Let’s assume that your retail store is shipping packages through a carrier with the dimensions below:
- Length: 12 inches
- Width: 15 inches
- Height: 7 inches
In the first step, the carrier will multiply the length, width, and height to determine the cubic size of the parcel. In the example above, the total dimension of the package will be 1,260 cubic inches (12 inches x 15 inches x 7 inches). The formula for finding the dimensional weight is below:
Length x Width x Height / Divisor = Dimensional Weight
12 inches x 15 inches x 7 inches / 139 = 9 lbs
Actual Weight, Dimensional Weight, and Billable Weight
There are mainly three types of weights that you need to know when your carrier calculates shipping rates: actual weight, dimensional weight, and billable weight. Let’s see how they are different from each other.
Actual Weight: This refers to the real weight of an item in its packaging when weighing on a scale. The measurement of actual weight will be in kilograms or pounds rounded up to the nearest whole number.
Dimensional Weight: This is the weight of a parcel with specific dimensions, using all the space properly.
Billable Weight: This is the weight that a shipping carrier will use to charge shipping costs. This could be either the actual weight or the dimensional weight, whichever is higher.
The Impact of Dimensional Weight on Shipping Rates
If you are shipping a small but heavy package, the actual weight will probably exceed the dimensional weight. Here, the carrier will calculate the final shipping rate considering the actual weight of the parcel.
For example, if the actual weight of an item is 30 pounds and DIM weight is 28 pounds, the carrier will charge based on 30 pounds or the actual weight.
How to Reduce DIM Weighted Shipment Cost for Your Retail Store
It is natural to ask how to reduce these shipping costs for your online retail business. First, you need to make sure that you know about the accurate DIM weight of the packages you are shipping. You can check the websites of FedEx, UPS, or DHL to understand how they calculate the DIM weight.
Next, you need to review your packages, especially the large, lightweight ones. Think about how you can reduce the size of your boxes. Find out the shipping cost for multiple boxes, or send them in a non-assembled form. If you can reduce the size of your parcels even by an inch, it will substantially lower your total shipping costs.
How Do FedEx, UPS, and DHL Calculate Dimensional Weight
Here is what FedEx, UPS, and DHL consider while calculating the DIM weight of packages:
FedEx DIM Weight Calculation
Dimensional Weight: pounds
You can check the FedEx Rate Finder tool to calculate their shipping costs.
UPS DIM Weight Calculation
Select “Personal” or “Retail:”
Dimensional Weight: lbs
Check the UPS shipping calculator to find out accurate shipping costs.
DHL DIM Weight Calculation
Dimensional Weight: lbs
Here is the DHL freight shipping cost calculator.
By clearly understanding the dimensional weight and its calculation, you can package your products more efficiently.
When you reduce the size of your packages, you will not only save unnecessary shipping costs but also save on packing material. On top of it, you can make your customers happier when they bear lower shipping costs for their orders.