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Start-Up Mart

Make sure the company you choose can deliver the goods.

Overnight shipping: it's almost an afterthought, a "no-brainer." To most people, overnight shipping means one company: Federal Express. Their name has become a generic term, as have "Kleenex" and "Xerox"; when you want something shipped overnight, you "FedEx" it. The company even officially changed their name to the more ubiquitous version, acknowledging its growing status as a household term.

This has proved a profitable practice for FedEx, making them the largest express delivery company in the United States-a $9 billion company that delivers nearly 40 percent of all overnight domestic packages, according to Beacon Research Group Inc.-but how does this affect your company? In business, the underdogs will often go to greater lengths to win over customers and gain market share. There's money to be saved if you just do a little comparison shopping.

This is true of the overnight delivery business. In an effort to become your "Kleenex" of overnight delivery, FedEx's competitors are often willing to tailor their pricing structure to your business' needs by offering discounts on the types of shipping you do most. You can also tailor the way you use each company to get the best price on each item you need shipped. For instance, you could take advantage of the excellent pricing on two-day shipping offered by Roadway Package Systems-keeping in mind that they do not offer overnight services. Another example: If you can schedule an overnight shipment one day in advance, United Parcel Service (UPS) will deduct $3 per package. You may also wish to reconsider the wisdom of sending everything by the most expensive morning delivery, as opposed to afternoon delivery-will your package just end up sitting on someone's desk for a couple of hours until they get back from lunch? Instead of insisting on delivery by 9 a.m., could you use UPS's 10:30 a.m. delivery?

Some simple comparison shopping can save you hundreds, even thousands, of dollars a year. If, on average, you ship just three overnight letters per week, choosing the right shipping company could save you $750 over the course of the year.

Volume Discounts. Virtually every shipping company discounts shipping for high-volume customers. If your needs speak loudly enough (say, an average of three packages per day), you can expect some kind of volume discount, and should approach your sales representative about it. However, if you're using your total shipping volume to get a discount, consider the pricing structure for all the types of shipping you'll need. A 20 percent discount on overnight letters won't help if 80 percent of your packages are boxes weighing over 10 pounds.

Local vs. Distance Shipping. Are you shipping across town, or across the country? The difference can mean money out of your pocket. Most companies will charge you the same amount to ship something one town away or to the opposite coast. However, UPS and Roadway Package Systems both offer pricing structures based on geographical zones, with local shipping receiving more favorable rates.

Heavy Discounting. Some companies specialize in shipping heavier items, as opposed to overnight letters. You may wish to use one company to ship your documents, and a different one for your oversized, bulky packages, especially if you have enough volume in both areas to warrant discounts.

Drop Off & $ave. If you're looking to economize your shipping budget, look into discounts for dropping off packages at service centers or drop-off boxes. Again assuming an average of three overnight letters per week, you could save over $450 per year in fees.

Insurance Costs. Another item that is worth noting is whether or not it costs extra to insure valuable items. You may not know exactly how much you're shelling out each time for insurance, how much liability is included, or what deductibles apply. You can imagine how quickly the right amount of coverage can save you money-you would only have to lose one package to feel a real economic toll.

Guarantees. Most companies guarantee your package will be delivered on time or they will refund your money. Others may charge you for a lesser service: If your package arrives after lunch when they promised it by 9 a.m., they'll charge you the lesser, afternoon delivery rate. Some other companies give you no recourse-if it's not there, it's your problem. Be sure you know the policy before you give them your money.

Computer Shipping and Tracking. With software provided by FedEx, UPS and others, you can now use your PC to schedule your shipments, receive an electronic record of all your packages shipped, and even store all of your clients' addresses and phone numbers. Furthermore, you can use the same software to locate your shipments en route yourself. The newest trend is tracking packages through the Internet, which allows you to check on your shipments from anywhere in the world.

Success Rate. Of course, what good is it to track your shipments from the Australian outback if your packages are consistently not delivered where and when you need them? If you are disappointed in your shipping company, call one of their competitors. Even if you're not anxious to switch carriers, you could possibly leverage the competition's rates against your current carrier to work out a better deal. Good delivery companies will do whatever they can to keep you as a contented customer.

International Shipping. You would do well to aggressively comparison shop for international delivery services, as there are many more variables at work. For instance, the location of a carrier's U.S. hub for international shipments (the point of departure from the U.S.) could add a day to the delivery time if the package has to take two planes to get out of the country. Then, customs must be cleared; some companies may have better customs brokers than others, or may have better ones in given countries.

The competition kindled by FedEx's domination of the overnight delivery market has provided hitherto unseen measures of value for your dollar. You and your business would do well to capitalize on this situation. All it takes is a little legwork, and the attitude that no decision should be a "no-brainer."

Byron Veale is a frequent contributor to national magazines, and often uses overnight carriers to deliver his work.

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This article was originally published in the September 1996 print edition of Entrepreneur with the headline: Start-Up Mart.

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