Shipping Zones: What They Are and How They Affect E-commerce Business
When you’re starting out as an e-commerce retailer, the primary shipping questions you’re likely to be concerned with are which carriers you should be using and what your costs will look like.
However, as your business grows, you’re able to deepen your understanding of shipping processes — including more complex factors like US shipping zones. Even if you’ve never heard of shipping zones before, they play a major role in how the shipping costs you’ll pay are assessed.
Read on for more about what shipping zones are and how they can affect your e-commerce business.
What are Shipping Zones?
Shipping zones are geographical regions determined by distance from a shipment’s origin point, which carriers use to set the package’s estimated transit time and shipping costs.
Often, it’s easiest to understand shipping zones for e-commerce businesses by looking at an example. In the graphic below, the shipping zones associated with a package being sent by UPS® Ground from the 10001 zip code in New York are shaded with different colors.
Image Source: UPS
In this case, the bright yellow cluster represents the first shipping zone — nearest to New York — from which packages only require one business day for delivery. As the distance from this first zone increases, transit times grow — and, although they aren’t included on this graphic, shipping charges increase as well.
This image also demonstrates the dynamically generated nature of shipping zones. Because shipping zones are based on distance from a package’s origin point, no universal set of shipping zone maps exist. Instead, specific zone maps depend on the carrier being used, the original shipment location, and the destination the shipment is headed to.
How Shipping Zones Affect E-Commerce Businesses
Shipping zones primarily affect e-commerce businesses in two ways: price and transit time.
The Price Impact of Shipping Zones
The further your packages need to travel from your origin point, the higher your costs will be. Carriers assess charges this way to recoup their own transportation costs. But if you ship packages to multiple destinations around the country, it’s important to know that your per-package costs could vary significantly — and that you may need to account for this in your pricing.
For example, imagine that you frequently sell goods that ship in a 2-lb package measuring 8” x 5” x 1”. To ship your parcel from New York, NY to a Washington, DC residence via FedEx 2Day®, the retail rate for your delivery (as of this writing) would be $30.20. Yet, if you want to ship the same package to a further shipping zone such as Los Angeles, CA via the same service, your retail rate would be $55.34.
If you assess all customers a standard $30 charge for two-day shipping, you’ll break even shipping to Washington, DC, but lose more than $25 shipping to Los Angeles!
With Shippo’s Live Rates at Checkout, you can instead show your customer’s their accurate and least costly shipping options during the checkout process. Using factors such as the shipping zone your package is traveling and the dimensions of the package, your customers will see the cheapest shipping rates so that they don’t overpay and you don’t overpay.
Transit Times and Shipping Zones
Variable transit times across shipping zones can also affect how your e-commerce business plans its shipping strategy.
Take the UPS® Ground map shared above. If you’re shipping from New York, NY, and you’ve promised your customers two-day shipping, you should be able to meet expectations with UPS® Ground shipping for customers located in the yellow and brown areas of the map (excluding the possibility of carrier delays). Once you move into the green, red, or orange areas, however, you or your customers will likely need to pay for more expensive air shipping for your packages to arrive on time.
Even if you don’t plan to change shipping services based on transit time, you can still use shipping zone maps to communicate expected delivery windows to your customers. For instance, if you always ship from New York using the same carrier and service, you could publish a zone map to your website to set delivery expectations with shoppers and minimize confusion or disappointment after they’ve ordered.
How to Calculate Shipping Zones
Because shipping zones aren’t fixed, there’s no single web page you can go to that contains them all. Instead, you’ll need to use carrier websites or other third-party tools to calculate shipping zones and their associated fees.
Setting up a Shippo account will allow you to estimate transit times for different services, or you can visit the following carrier sites directly:
How to Decrease Costs Associated with Shipping Zones
If you’re a solopreneur shipping e-commerce goods from a single location, one option for decreasing costs related to shipping zones is to work with flat-fee shipping services.
For example, take the 2-lb package described above. Originally, shipping the parcel by FedEx 2Day® cost $55.34. However, the same goods could be shipped in a USPS Priority Mail Small Flat Rate box for a retail rate of $9.20 and still arrive in 1-3 business days. While there won’t always be a cheaper flat-fee service you can turn to, it’s still worth a look.
Further, as your volume grows, you may be able to further reduce shipping costs by partnering with fulfillment centers that are closer to your customers. Before taking this step, however, you’ll want to closely track purchase location and volume patterns, as well as to determine whether the potential savings from lower shipping costs justifies the additional expense of introducing a new step into your fulfillment process.
How Shipping Zones Affect Your Ability to Offer Free Shipping
Amazon has certainly upped the pressure on smaller merchants to offer the same free shipping services that Prime customers have grown accustomed to. But if you want to match this standard, you’ll likely need to either eat your shipping costs or make sure your shipping fees are incorporated into the final price of your products.
In either case, understanding your e-commerce shipping zones — as well as your customers’ pricing tolerance — will help you determine which approach is most reasonable.
You should also take into consideration what shipping zone your products are being delivered to. You might be able to cover the cost of shipping if your customer lives in Zone 1 but it may be too much to cover if you’re delivering your products to Zone 8.
How to Set Up Shipping Zones for Your E-Commerce Store
Several popular e-commerce platforms make it possible to integrate shipping zone calculations directly into your order processing mechanism. Once installed, these tools may be able to help you identify the lowest cost shipping solution for every order. For more, visit the following resources:
- WooCommerce Shipping Zones: A Step-by-step Setup Guide
- Shopify: Setting up Shipping Zones
- BigCommerce Shipping Setup: Shipping Zones
Another way to reduce your shipping costs is to register for a Shippo account. In addition to helping you compare rates across 85+ global carriers, Shippo can save you up to 85% off retail rates with select carriers. Learn more or sign up for your free account to get started.