Shipping charges depend on the geographic locations. Zone Rates or zone pricing are charges that companies have to pay when they are shipping outside of their designated zones.
Zones are big geographical areas that help to calculate the total distance of a shipment.
Understanding zone rates and how they work is not easy. In today’s article, we will talk about how zone rates work and how companies can offer free zone shipping.
What Is The Zone Rate?
Zone rates are one kind of freight rate. Zone Rate or zone pricing is based on how many geographical areas a shipping cargo has passed to finish the delivery.
If the delivery takes more zones to drop off delivery, then the freight rates also increase.
For instance, postal ZIP codes can be used as the basis of zone Rate. This can also be called the shipping cost.
What Are The Pros And Cons Of Zone Rate?
It is important to note that zone rates can differ from one geographical location to another.
The longer it takes to ship, the more money it will cost.
But they are very important in the shipping World. Here’s some pros and cons of zone rates.
Pros:
- Zone rates help to separate customers according to their geographic locations.
- Zone rates allow you to pay transportation costs easily so that you don’t get mixed up with other charges.
- Due to zone rate, Shipping charges are now very low. So companies can offer free shipping.
Cons:
- Zone rates are different in different places.
- Distant customers chose to prefer the closest shipping services to them.
- It’s an extra charge and keeping track of all the zones and different zone rates is very difficult.
How To Use Zone Rate In Your Business?
You can use zone rates in your business to gain more revenue. Here’s some useful strategies on how to use zone rates in your business.
1. Analyze Your Customers:
When your business is making strategies for zone rates, make sure to use all the data so that you can make proper zone rates for shipments. Analyze all the data of your customers. You can not charge too much or too little. Learn about how much your customers are willing to pay.
This can depend on various factors like the income of your customers, cost of living and if there are other companies that can offer the same services at less prices. This can help to attract more customers
2. Analyze Your Competitor:
After you analyze your customers’ database, you need to consider your competitor.
Learn which companies are offering the same services as yours and how much charges they are taking? Understanding your competitors can help to improve your business.
3. Use Item-specific Strategies:
You need to make different strategies for different zone prices. Mass retailers or specialty retailers used item-specific strategies for implementing zone rates.
For example, basketball equipment is more popular in the USA but not in India. So the zone rates will be much higher in India.
Customers have high price awareness on specific key value items (KVIs).
This can influence their perception of store value and customer traffic. Items that have less price awareness cannot be charged with higher shipping rates.
For instance, products that are popular among the customers sometimes have discounts and other offers on them, but products with less influence do not get any discounts on them.
Their prices remain the same.
Zone rate strategies will help to categories the specific products and can follow a different zone rules than others.
4. Use Technology For Handling Problems:
When you have created your strategies for zone rates implications, you need to execute the strategies.
There are many technological tools that can help your pricing teams to solve any problem regarding prices. It can also help you to track your zones and their rates easily.
What Are Some Examples Of Zone Rate?
Here’s an example that will give you a better understanding of zone rates.
For example, have you ever wondered why shoe industry suppliers sell the same brand of shoe to different retailers at different prices?
The reason is quite simple because the price varies from one location to another.
If one pair of shoes in L.A costs around 20 dollars, then that same pair of shoes can cost around 25 dollars in Taxes.
That is because of the zone rates. Zone rates are subject to change due to various factors like transportation costs, additional fees, etc.
How Are Shipping Zones Calculated?
Zone rates are based on different zones.
These zones are calculated using different methods. Usually, the zone starts from where the items will be shipped from.
So even if there are two different shipping origin points and their destination is the same, yet they can have different zone rates.
For instance, if the shipments are from San Francisco to Kansas City, then your shipping zone is zone 7. And if the shipments are from Texas to Kansas City, then your shipping zone is zone 4. Zipcodes are one of many tools to understand zone rates for your shipping.
Can Shipping Zones Affect The Revenue?
The answer to this question is yes, zone rates can affect the shipping cost.
The further your shipping location is, the higher zone rates will get. In other words, if you are shifting from a far place, then you may have to pay more for your shipments.
Shipping companies use geographical zones to create zone rates for their specific services. Many companies like USPS offer a flat rate for every zone.
Even though if you are shipping your package from a far place, your zone price will remain the same.
However, there are many services that do not offer a flat zone rate like Priority Mail Express, Bound Printed Matter, USPS Retail Ground, and Priority Mail.
You can also visit their website to see which services have flat zone rates i.e., First-Class Mail, Library Mail, Media Mail, and USPS Marketing Mail.
Which Shipping Services Have No Zone Rates?
Nowadays, companies offer free shipping nationally and internationally. Almost every company has free shipping options in the checkout section.
There are many shipping companies that offer flat zone rates for their services. Companies like USPS offer flat zone rates for their First-Class Mail, Library Mail, Media Mail, and USPS Marketing Mail services.
How Can Companies Offer Free Shipping Without Any Zone Rate?
Nowadays, almost every shipping company offers free shipping to their customers globally.
It is a very common strategy for E-Commerce businesses that not only attract more customers but also can increase their revenue.
Companies that offer free shipping usually have a minimum order amount. It forces customers to buy more. That way, companies earn more revenue. That is why they can offer free shipping.
Can You Reduce Zone Rate?
Many companies provide discounts on shipping charges and other transportation fees.
So there is a way to reduce zone rates.
Or you can just ship from your nearby shipping services so that you don’t have to pay extra zone rate charges for your shipment.
Does Weight Of The Items Affect Zone Rate?
Weight of your package can actually affect the cost of the shipping.
If you are shipping heavy items from one place to another, the shipping charges can change based on the weight of the items and its destination.
Zone rates can be higher if your package is heavy.
What Are The Zone Rates Of USPS?
USPS has different zone rates on services like Priority Mail Express, USPS Retail Ground, Bound Printed Matter and Priority Mail.
For example, as per 2021 zone rates USPS Priority Mail cost $8.10 in Zones 1 & 2, $8.58 in zone 3, $9.21 in zone 4, $10.43 in zone 5, $14.80 in zone 6.
What Are The Zone Rates Of FedEx?
As per 2021, FedEx Freight zone-based rates and additional pickup and delivery charges for shipments within the contiguous U.S. are bellow:
Zone 101: For packages weighted 1-150 pounds, the minimum rate is 385$ and for packages weighted for than 150 pounds is 421$.
Zone 102: The minimum rate of 1-150 pounds is 409$ and more than 150 pounds is 456$.
Zone 103: The minimum rate of 1-150 pounds is 420$ and more than 150 pounds is 465$.
What Are The Zone Rates Of UPS?
UPS offers domestic next-day Mail services that have different zone rates based on the package’s size. For packages weighed 1 pound, the rates are:
- Zone 102: 62.09$
- Zone 103: 77.51$
- Zone 104: 92.72$
- Zone 105: 100.26$
What Are Zone Rate Policies?
There are zone rate policies for different geographical zones. These policies reflect the common problems of transportation costs.
There are major two zone pricing policies, 1) Point of origin price policy and 2) Freight absorption price policy.
There are three different freight absorption price policies such as 1) Uniform delivered price policy, 2) Zonal price policy and 3) Basepoint price policy.
What Are The Two Types Of Zone Rate Structure?
There are two types of zone Rate structures in every shipping company. These are namely, 1) Point of origin price and 2) Freight absorption price.
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