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Thread: Shipping always chewing in to your margin? Here's a cool way to get it back!

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    Default Shipping always chewing in to your margin? Here's a cool way to get it back!

    Hello All...As the regulars here know, I sell and I set up video game stores. My client list has grown to the point to where support calls are high volume, but I keep on them proudly and still am able to get to sales and set ups... I haven’t missed a deal yet. I have started a new proactive approach though to giving my clients support as I email them all every time I come up with a new innovation or realize some are doing some cool stuff that others are not. Anyway, the following advise is paraphrased right out of one of my client support emails and I realized something... this particular advise will help folks here too without really giving away to much of my secret sauce. Don’t worry... vendor names will be removed... this isnt an AD for any one company. If however you are interested in some specific folks that can help in the regard i'm about to go over, contact me one on one and I will happily share.

    OK... How about this common situation. You go to your favorite wholesaler’s site and order your product. You reach nice and deep into your pockets as you match your cost of goods sold amount for this time around making sure to replace your inventory in a way that will serve your customers well and keep your store on track for growth... It’s a solid order.. Your stoked.. You ordered enough units of each category to get extra discounts and wow... you are gonna see a bump in your per unit margins this time because you've got that cost down. Cool... let’s check out... what? Shipping is a third of the cost of your order? HOW...WHY!! Because you are thorough (because you've been taught by the man) you divide it out. thud... that’s your heart hitting your stomach... there go those per unit margins... they have plummeted. It almost feels like you could go to a retailer and do just as good. Hey... pick your head up off your desk... take a sip of coffee and listen to your guy for a second. It’s gonna be alright. Use a logistic company or shipping broker and save as much as 75 percent on shipping! Admittedly I don’t know ALL the details of HOW they ship for so cheap... but I know they DO. I'm going to give you two real world examples.

    1.Preowned product to new clients store setup. 720 pounds of JUST GAMES! two pallets..from Columbus OHIO to Columbia SC. fed ex (1300.00).. logistics company... (320.00) with 500,000.00 insurance!

    2.Vendor order... from huge/reputable distributorto remain nameless 3 pallets of video gme branded snacks (R2D2 mint tins) Pack man arcade cabinets filled with chocolates, Mario energy drinks.. tons of different items.. you get the idea... great margins... untill shipping comes back... 480.00 from the vendor! you call... you complain... you get "drinks are heavy" as the reason... your dollar energy drink cost just went to 2.60... your selling at 2.99 BLAH!! Either raise your price or lose your margin? NO! Call a logistics broker... All you got to do is contact them... they will tell you what you need to ask the shipping manager of your vendor in terms of dimension...remember.. your vendor will do this work for you, you just ask the questions. you give the broker the info... they quote you... you get the vendor quote and compare. in this example the quote dropped to 260.00!

    If you take the extra step its money saved and I recommend! Its tempting to go easy and just “pay the freight” of your vendors… but with just an
    extra phone call and an email or two, you can usually save on each order. You can track the shipment if you are vigilant and keep on the broker he can normaly get you the drivers number and you can call him directly which is what my clients and I
    typically do. This is the area where I see the trade off is.. well actually there are two... the first is obvious.. your vendor could ship directly today... the broker has to send a truck to your vendor, then to your destination. I see this typically add no more than two days. Also tracking isn’t the best because they use many carriers and they get your load handles at odd times, think of it as travelocity for trucking.

    Those issues aside I use shipping brokers religiously. I have one that I use over all and because they are so familiar with my business model and my vendors are all aware I will be using them, It has just become part of how I order and really has become routine... the savings are well worth it and help me and my clients to get our margins back!!

    I hope this tip finds you all well... Mikey OUT!!
    Michael Elliott, MBA
    http://gamestartstores.com
    Want to open a video game store? I can help! Check my site for max detail!

  2. #2
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    Also know that even when a broker gives you a number its still negotiable. Also try several brokers each time and try local companies on each end of the shipment. Depending on when your load picks up and delivers you may get better rates from one or the other. For example early in the week the broker where the shipment is originating from may get a better rate because they have a surplus of drivers looking to get out of town and get the week going. Towards the end of the week you may get a better rate from a local broker who has a truck stuck out on the road looking for anything that will get them home for the weekend.

    Larger national brokers work with bigger companies that can haul for cheaper so they're worth a call as well.

    May be extreme for most trying to save a few bucks but as an ex trucker I know a few of the freight lanes that always had more trucks than freight so if you can find a supplier in those areas they will haul cheaper just trying to get out of there in search of better paying freight.

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    Thanks for the info. Good stuff!

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    I'm curious at how often problems come up. Have deliveries been late or even not delivered? Have you had to use the insurance any? How reliable are things?

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    OldeOwl, I have never had to use the insurance... not even once... The product may be passed around between a few more shipping companies than normal.. but they ARE legit companies... no one wants the package lost. I have had some deliveries take a little longer than expected (lets say an extra 4 or 5 days over an already 2 day extention of delivery expectance) but in the end.. the product arrived... in my model deliveries are not really that time sensitive as my clients also take oin inventory from walk in customers (trade ins) If there is a specific timeframe I need to hit...say a pre-release party... I use vendor guarenteed freight. When I contrast the savings, with the delays, I feel like its a good trade off... I am dealing with small businesses who can really do alot with a few hundred dollar savings here and there... and... the indy stores that open that are thier competition many times arent using logistics brokers so they are paying full freight and losing the ability to price as low as my clients and still make a healthy margin. so it is just one of the many things that my clients have been taught do to give thier shop a competitive advantage. In my world... lots of baby steps end up to be a lot, and really help my owners succeed in a world where indie stores fold constantly.
    Michael Elliott, MBA
    http://gamestartstores.com
    Want to open a video game store? I can help! Check my site for max detail!

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    There's a reality show on A&E called 'Shipping Wars' that pretty much shows you how it's done from the perspective of the trucker.

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    Kimoonyx, this is great advice! Thanks so much for sharing.

    Do you have to be open to smaller or non-traditional shipping providers? How can a business owner make this work for a small, low volume ecommerce business?

  8. #8

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    I have two...possibly uneducated questions about this topic:
    1. Are shipping brokers used when shipping packages that aren't nearly as big as pallet size? Say, a few boxes of 10lbs of wax?
    2. Where do I find these companies? Can I literally phone the ones you find when you Google, "shipping broker?"

  9. #9

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    Alura - You really have to Vet a 3PL. They are not all created equal, I promise you. You do not need a "broker" for shipping a few ten lb boxes of wax. How big are these boxes? Using freight will likely be expensive in comparison just due to density. Tell me the size of the boxes and I will give you a suggestion of the best method to ship.

    If you need a shipping broker for other reasons, please be careful. There are a lot of different kinds of brokers, 3PL, Forwarders, you name it and it is very important to Vet them out to meet your business needs.

    Tell me what kind of products you sell and what you need and I can help guide you in the right direction.

  10. #10

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    As a freight broker agent I can tell you that LTL (less than truckload) shipments typically are 100 - 20,000 lbs and normally on pallets or crated, etc... Freight brokers provide a valuable service to business owners because they are able to save you time and money by negotiating freight rates, qualifying carriers, etc... Freight brokers also mediate claims, keep you up to date on the status of your shipment and more. I hope this bit of info helps. If anyone has more questions or is in need of freight brokering services please feel free to contact me.
    Freight Shipping Services
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