Courier for larger/heavier items

[flooring]

Hi, new member here. I am in the process of putting together a business plan, my business will be selling heavy items which are supplied in relatively small boxes (each box is approximately 100x15x5cm but weigh 14kg), although an average order could consist of 9 or 10 boxes so the total weight would be in excess of 100kg.

I am looking for a courier that can help in delivering my orders but as cost effective as possible. My competitors offer free delivery for orders over £200 but I cannot see how they can do this without losing money -

EXAMPLE (SMALL ORDER)-
ORDER VALUE: £240
MARGIN: 20%
PROFIT: £48

ORDER WEIGHT: 56KG
ORDER DIMENSIONS: 100 X 15 X 5cm (x4 packs) = 100 x 15 x 20cm

BEST DELIVERY PRICES I CAN FIND ONLINE:
UPS - £37.48 = £10.52 PROFIT (4.3% MARGIN)
TNT - £54.71 = £6.71 LOSS (-2.79% MARGIN)
DX - £57.95 = £9.95 LOSS (-4.14% MARGIN)

---------

EXAMPLE (REGULAR ORDER)-
ORDER VALUE: £525
MARGIN: 20%
PROFIT: £105

ORDER WEIGHT: 126KG
ORDER DIMENSIONS: 100 X 15 X 5cm (x9 packs) = 100 x 15 x 45cm

BEST DELIVERY PRICES I CAN FIND ONLINE:

TNT - £69.65 = £35.35 PROFIT (6.7% MARGIN)
UPS STANDARD MULTI - £77.82 = £27.18 PROFIT (5.1% MARGIN)

My company will have a warehouse but will be selling items online. At 4.3% margin before costs such as warehousing and website running costs and not to mention wages, I'm wondering whether I should even consider putting time into this unless I can find a courier that is much cheaper?

What do you think?

Thanks
Jon

 

[OMGVape]

Tuffnells would ship 126kg for £33+vat with our “special” rates.

 

[flooring]

Tuffnells would ship 126kg for £33+vat with our “special” rates.

Hi thanks for the reply, I tried opening a direct account with Tuffnells last week but they refused to, stating that they are predominantly a B2B (business to business) service rather than a B2C (business to consumer) which, as a retailer selling to consumers, is the category my business would full under.

Unless there's a workaround?

Thanks
Jon

 

[Mr D]

So do not charge the same as your competitors. Or have someone order one of their items and see how they get it delivered.

The bigger orders - can you send by pallet cheaper?

 

[OMGVape]

95% of my shipments is B2C, they charge extra for private addresses but that was included in my £33 example. They get around £1k per week from us but maybe they are not so keen to take on new business with no track record.

 

[MOIC]

Increase your selling price and/or look for cheaper suppliers.

There will be other hidden expenses that will bite into your 'assumed' profit.

 

[Ray272]

Is pallet network not the best option?

£15 A pallet UK 2 UK I believe but the B2C may pose an issue.

Seems like there is not enough profit in it. 20% without accounting for shipping is leaving you with next to nothing.

Shame about the length of the goods too, that length will drive cost right up.

Definitely sounds like your on the back foot where price of product is concerned.

Best of luck

 

[Chris Ashdown]

Your competition may be ordering far larger quantities than you and getting a far better price

Sometimes it's just a race to the bottom, you need to price on what you can sell at and if it does not work move on

What would happen if after you start up the competition lowers their price to undercut you, what would your next move be

Can you rebox into smaller lower weight size boxes

 

[Guy Incognito]

It will come down to volume to get good pricing. We now send a decent amount of stuff through TNT but are still on their £5k every 3 months rate, and I just priced that up.

Based on 4 packages, weighing 14kg each, dimensions 100 x 15 x 5 it is coming up as £27.80 + 7% fuel and VAT. If to a residential address then you need to add on £2.50.

 

[GraemeL]

Contract pricing is much better than 'what I can find online'. Parcelforce charge me less than £10 for cartons up to 30kg.

 

[Markmiller1]

Your competitors must be getting it on a lower price than you, they could be purchasing it in bulk or the supplier they have is sourcing them on much lesser price than you, who knows.

And according to your calculations, I really don't feel like there's any room where you can try to cut the prices to be more competitive.

 

[Mr D]

Contract pricing is much better than 'what I can find online'. Parcelforce charge me less than £10 for cartons up to 30kg.

Sometimes it can be better, yes.
Have had contract pricing with a courier and have had online pricing at times - sometimes one is cheaper sometimes it is not.
Volume does count as does the courier.

About 5 years back APC gave me a quote that was 30p per parcel more expensive than booking it online. UPS were about a pound more expensive in the quote than online at that time though that altered.
Parcelforce were far better for contract quote and we used them for a while.

 

[JEREMY HAWKE]

Sometimes it can be better, yes.
Have had contract pricing with a courier and have had online pricing at times - sometimes one is cheaper sometimes it is not.
Volume does count as does the courier.

About 5 years back APC gave me a quote that was 30p per parcel more expensive than booking it online. UPS were about a pound more expensive in the quote than online at that time though that altered.
Parcelforce were far better for contract quote and we used them for a while.

I believe that you are better off paying a little extra for UPS or APC as they give you and your customer a far better service.
There is no point in saving a pound on the parcel rates just to end up with unhappy customers .

For the OPs solution who has oversize freight I recommend XDP
https://www.xdp.co.uk/

 

[Guy Incognito]

XDP didn't want my business due to the items we sell...

At 1m long you are just about OK on the surcharges and have the pallet option too. It gets a lot tricker when you get over 150cm.

 

[JEREMY HAWKE]

Im looking at the OPs plan again and I don't think he has priced the product well . I would say it is under priced . You can take the competition into account but you don't know what they are doing . They could be running three or four businesses together .Who knows !
If there is not enough money in the job to pay the transport costs when the three company's in the OP have quoted very good rates. Then it is not a profitable business

 

[AbsolutNut]

Is pallet network not the best option?

£15 A pallet UK 2 UK I believe but the B2C may pose an issue.

Seems like there is not enough profit in it. 20% without accounting for shipping is leaving you with next to nothing.

Shame about the length of the goods too, that length will drive cost right up.

Definitely sounds like your on the back foot where price of product is concerned.

Best of luck

£15 A pallet UK 2 UK I believe but the B2C may pose an issue. - that's cheap, which company is this please?

 

[Mike Godwin]

Your margin is too small which means you need to negotiate better buy prices and/or increase your order size to achieve the same result. You wont find (much) cheaper transport rates so will need to accept this and either start looking at cost reductions elsewhere or accept you cannot run the business profitably and move on maybe.

 

[Deleted member 59730]

Your margin is too small which means you need to negotiate better buy prices and/or increase your order size to achieve the same result. You wont find (much) cheaper transport rates so will need to accept this and either start looking at cost reductions elsewhere or accept you cannot run the business profitably and move on maybe.

I find a lot of enquiries on this forum have a very low markup and expect to make a profit. I was told that cost of product should be 25% of my sales cost.

With order value of £240 I wouldn't expect my product to cost me more than £60

 

[flooring]

Hi all sorry I hadn't had any notifications of any replies to this thread! I have heard from the product manufacturers (who only sell to wholesalers) that some of my competitors are actually getting my suppliers (ie the wholesalers) to deliver the items to the public themselves, a kind-of dropshipping service I suppose. It's a bit naughty as it was always made out to me that these wholesalers will not deliver to residential addresses.

Since the wholesalers are based all around the UK this gives my competitors the advantage that they do not have to factor in delivery costs at all.

I haven't spoken with my suppliers about it - this will be my next step.

Thanks for all the replies.

 

[Oryza]

Hi, for B2C consigments (more than one parcel) get a quote from DPD LOCAL (not standard DPD as they charge per box, they don't care whether it's commercial or private addresses.

We send out similar parcels to you, so lots of 10/20 kg parcels to one customer and the rate is very good.

Also, I'm not condoning this but the guy who does my packing has sent lots of parcels say 10 boxes weighing 10kg each and only put 10kg TOTAL weight by accident and they have never picked up on it, lots of other businesses we use actually purposely put 1kg on everything.

 

[Oryza]

I find a lot of enquiries on this forum have a very low markup and expect to make a profit. I was told that cost of product should be 25% of my sales cost.

With order value of £240 I wouldn't expect my product to cost me more than £60

75% gross profit? What industry are you in?

 

[JEREMY HAWKE]

75% gross profit? What industry are you in?

He said the costs of the product that does not mean that he is running at 75% profit all the other costs may only make his profit 30% in the end !

 

[Oryza]

He said the costs of the product that does not mean that he is running at 75% profit all the other costs may only make his profit 30% in the end !

Which is why I said / asked gross profit? As in sales price minus the cost of goods sold?

 

[Mr D]

75% gross profit? What industry are you in?

Its not that uncommon to have high gross profit.
Even 90% plus.

 

[Oryza]

Its not that uncommon to have high gross profit.
Even 90% plus.

Which is why I asked what industry he was in!

I have some products that are that high GP, but generally only lesser priced products.

 

[Mr D]

Which is why I asked what industry he was in!

I have some products that are that high GP, but generally only lesser priced products.

Yes, its more common with lower priced products and imported products.
Your local big supermarket will have hundreds of products at 75% plus.