Zip codes are essential in the world of order fulfillment. For eCommerce businesses to truly thrive, it’s important to understand what postal zones are, how they work, and how a 3pl can help streamline and automate fulfillment.
In this blog, we’ll explore how postal zones work and share some tips on how you can simplify and streamline your order fulfillment process.
what are zip codes?
Postal zones (also known as shipping zones) are used by carriers to measure the distance a package travels from the point of origin to its final destination. carriers use these zones to define price contracts where the price of each package is based on the destination zone.
Shipping zones are measured in zip codes, rather than miles. U.S. national shipping zones can be broken down into the following ranges:
- zone 1. the site where the packet was originally sent, also known as the point of origin.
- zone 2-8. The final location of the packet is called the destination zone. the zone number of the destination zone depends on how far you are from the point of origin (also known as zone 1).
Understanding UPS, USPS, and FedEx Shipping Zones
For businesses that still handle their own fulfillment, understanding what postal zones are and how to ship products through the more than 2,500 customer miles from coast to coast of the United States can be understandably tricky.
ups, usps and fedex shipping zones break down as follows:
- zone 1: 50 mile radius
- zone 2: 51 – 150 mile radius
- zone 3: 151 – 300 mile radius
- zone 4: 301 – 600 mile radius
- zone 5: 601 – 1000 mile radius
- zone 6: 1001 – 1400 mile radius
- zone 7: 1401 – 1800 mile radius
- zone 8: 1801+ mile radius
Anything a business ships within 50 miles of its fulfillment location would fall under zone 1.
The best places to determine the zip codes for your orders are below:
- usps national zone chart: click on the “get zone for zip code pair” tab. then, enter the zip code you’re mailing from and the zip code you’re mailing to.
- increase zones and rates for the contiguous 48 states: enter your origin zip code and download charts of zones to excel .
- list of fedex zones – select “yes” & “domestic” when generating a rate card. enter the postal code of origin. choose the type of shipping service, either the same day, 2 days or ground. download the zone chart for excel.
what is shipping transit time and how does it affect costs?
The cost of shipping a package generally depends on the distance it needs to be shipped. In most cases, the higher the destination’s shipping zone number, the more the carrier will charge to ship the package.
Most transport services are zoned, which means that they calculate shipping costs according to the zone 1-zone 8 formula. However, there are specific services that offer a flat rate.
Flat rates allow companies to pay the same price regardless of the destination of the package. USPS lists which services are zoned and which have a flat rate. In each case, it is important to visit the website of the selected operator for more information.
how to calculate shipping costs
The last aspect that affects shipping rates, in addition to the transport and shipping service, is the weight and dimensions of the order. it will cost more to send a heavier package, and sending a heavier package to a higher number zone will cost even more.
Shipping costs are calculated based on whichever is greater: the physical weight of the package or the dimensional weight, which is a metric based on the volume of a package. the following formula is used to calculate the shipping cost:
shipping zone x package weight = shipping cost
what about free shipping?
Amazon’s Free Two-Day Preferred Shipping Guarantee has customers expecting to receive their packages sooner and with lower shipping costs. While free two-day shipping is possible for a global corporation like Amazon, many smaller brands struggle to keep up with demand.
However, there are a few ways you can get creative to meet customer expectations and reduce shipping costs wherever possible. One option to consider is reducing the number of locations you offer shipping to.
reduce brand presence
This isn’t always the preferred option for businesses looking to expand their brand awareness, but shipping further afield costs more. By reducing the number of zones you ship to, you can save money on shipping costs. this can result in a higher net income, while serving fewer customers geographically.
Shipping to a closer area also takes fewer days. With almost half of online shoppers believing that 2-3 days is the maximum acceptable time to wait for package delivery (up from 5.5 in 2012), ensuring competitive delivery speeds could improve the customer experience and generate brand loyalty.
reduce transit times and shipping costs with a 3pl
for most retailers (unless they’re nike, amazon or another retail giant), shipping costs can eat up a lot of a product’s gross revenue and in some cases even cause a markup negative net. shipping heavy packages to far flung areas is often the culprit here.
many companies find that partnering with a 3pl costs less than the annual amount spent on personal order fulfillment costs. Technologically advanced 3pls will use what is known as “least cost routing software” to direct orders to the nearest and least expensive distribution center for fulfillment.
least cost routing (lcr) software is an effective model designed to help businesses reduce shipping costs. plots the delivery destination of a package based on the most effective and profitable route. this helps reduce transit time, which lowers shipping costs.
reduce shipping zones by increasing fulfillment locations
Another way to reduce transit time is to expand across the country and create strategically located facilities, an unlikely prospect for many e-commerce businesses. this is where partnering with a 3pl can help.
By outsourcing fulfillment, you gain more flexibility and control over where you can ship your products. If when looking at order history, you find that your customers are geographically distributed, finding a strategically located fulfillment center that can serve high-traffic areas can make a world of difference.
close to customers
If you decide to partner with a 3pl, the fulfillment center location you choose should be close to your primary customer base to reduce shipping costs. If your customers are scattered all over the US. In the US, at a minimum, select an East Coast and West Coast facility.
for example, if a business uses only one fulfillment center located in california, an order to new york will typically be in zone 8. by using fulfillment centers on both sides of the country, shipping zones can be reduced from 8 to around 6 zones.
develop a strategy for shipping zones
A well thought out e-commerce fulfillment strategy is crucial to meeting customer expectations for fast and affordable shipping. With rising shipping costs eating into every company’s profits, it’s more important than ever for retailers to understand every part of their fulfillment chain.
A good zone shipping strategy is short. Understanding what postal zones are and reducing the number of shipping zones your packages are sent to can help reduce shipping costs, increase delivery speed, and improve your bottom line.
take advantage of shipments by zones. select a fulfillment location based on the location of an existing customer base. and, if possible, opt for multiple distribution center locations to minimize the number of zones they ship to.
To better understand how partnering with a 3pl can help you reach your customers no matter where they are, contact us to learn more about our fulfillment services.
This blog was originally published on May 22, 2019. It was updated on October 12, 2021.