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How Shipping Zones Affect eCommerce Fulfillment Costs and Transit Times

You are currently viewing How Shipping Zones Affect eCommerce Fulfillment Costs and Transit Times

Shipping zones are a crucial aspect of eCommerce fulfillment and third party logistics (3PL), as they can affect fees, efficiency, and time. Yet many businesses struggle to understand how to navigate the shipping zones and how they can affect the bottom line of the businesses.

What does shipping zone mean?

Shipping zones usually are numbered geographical areas that carriers ship to. They are named numerically which ranges from Zone 1 to Zone 8 for all domestic shipments in the US. Shipping carriers utilize zones to measure the distance a package travels. This is not calculated or based on miles but rather on groupings of zip codes, which is the distance from the origination point to the package destination.

The location where an order is shipped is the point of origin and is categorized as Zone 1. The location it is shipped to is referred to as the destination zone, which depends on how far the order travels from from its point of origin. A shipping Zone of 1 will be the nearest and a shipping zone of 8 will be the furthest destination.

How shipping zones are calculated

Shipping zones are always calculated dynamically. The calculation is based on where a package is shipped from (ie. the point of origin). This means that two separate points of origin that are shipping to the same destination may be shipping to different zones.

For example, if the point of origin is from San Francisco, California to Kansas City, Missouri, you are shipping to Zone 7. However if you ship from Austin, Texas to Kansas City, Missouri, you are shipping to Zone 4.

Below are useful tools for determining shipping zones for your orders:

  • UPS Shipping Rates for the 48 Contiguous States: Enter your origin zip code and export the zone charts to a spreadsheet
  • USPS Domestic Zone Chart: Click the tab “Get Zone for ZIP Code Pair.” Then enter the zip code you are mailing from and the zip code where you want to send to, and you will get the shipping zone for your destination

How shipping zones affect cost and transit times

How shipping zones affect shipping cost

Shipping carriers utilize the zones to calculate rates for certain services that they offer. For example, USPS offers a flat rate option that allows you to pay the same price no matter which zone the destination is located in. The USPS website shows which services are not zoned (First-Class Mail, USPS Marketing Mail, Library Mail, and Media Mail), and which zones fall under zoned pricing (Priority Mail Express, Priority Mail, USPS Retail Ground, and Bound Printed Matter).

For services that fall under the zoned category, in most cases the greater the zone the greater the shipping cost will wind up being.

How shipping zones affect delivery speed

If a package is sent near the point of origin (eg. Zone 1 or Zone 2) it will usually arrive in fewer days than a package that is sent further away (Zone 7 or Zone 8). It is important to cut down on transit time because slow shipping can cause a company to lose customers.

If all of your e-commerce inventory is fulfilled from a single location, for example outside of New York, shipping can take 5-6 days to deliver to customer in located in Oregon. Unsurprisingly, same-day shipping and delivery is only feasible in the lowest zone(s).

How order weight affects shipping cost by zone

Apart from the origination and destination zip codes, as well as the chosen carrier and service, the exact shipping costs of the order depend on the dimensions and weight of the order being shipped. For any order which weighs less than one pound, there won’t be much cost savings. For shipments that exceed one pound, the cost will be decreased only if it is shipped from a location closer to the customer destination.

How shipping zones factor in eCommerce fulfillment

How can businesses afford to offer free shipping?

Offering free shipping can be counterintuitive as it can be expensive to send orders to zones that are further from the point of origin. To offer free shipping, eCommerce businesses need to be strategic with their pricing strategy so that offering free shipping makes sense from a fiscal perspective. This can be accomplished using one of the options below:

  • Requiring a minimum dollar amount per order to help increase the order value
  • Shipping those orders that weigh under one pound so zones aren’t used in calculating the cost
  • They factor the shipping cost into the actual product price
  • Reducing the number of zones that they are willing to ship to
  • Partnering with a 3PL for reduced shipping costs

How a 3PL can automate fulfillment to help optimize shipping zones

A 3PL (third party logistic) provider can help in improving the fulfillment process by providing strategically located warehouse facilities that many businesses could not afford to own and operate by themselves. Technologically advanced 3PL companies can automate the order fulfillment process using powerful analytic tools, helping to route each order to the fulfillment center that is closest to the end destination. They can also generate tracking reports each step of the shipping process, which can then be sent to the merchant and shared with the customer.

Choosing the best 3PL warehouse location(s) to fulfill your orders

An e-commerce business can outsource their fulfillment, as opposed to self-fulfilling the order, then they will have much more flexibility over choosing the location order is fulfilled from. The perfect location that orders should be shipped from is near your customers, which can be determined by analyzing the past order history. If your customers are spread out geographically, outsourcing order fulfillment with a 3PL that has warehouses in large cities is the best, it can help to reach more customers faster. If you are shipping from a less densely populated area, it affects your ability to efficiently reach as many customers as possible.

When your 3PL partner has multiple fulfillment centers

If a company distributes their products across several fulfillment centers that are each geographically close to its customers, it can easily reduce the amount of time in transit for many of its orders. Again, using multiple fulfillment centers can help in offering two-day ground shipping in many regions, instead of relying on expensive air shipping.

Once businesses understand the concept of shipping zones, they can improve their order fulfillment strategy to meet customer expectations at affordable cost and also with fast deliveries. This helps improve efficiency by cutting down the distance and time shipments take in transit as well as productivity by generating more sales and decreasing the cost of shipping.

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