The Impact of Freight Costs on Dog Toy Pricing

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The Impact of Freight Costs on Dog Toy Pricing

Shipping costs can eat the profits of small business. Yet, with the right planning, small businesses can compete with th...

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Shipping costs can eat the profits of small business. Yet, with the right planning, small businesses can compete with the ecommerce giants and sometimes offer lower rates. Today, we will talk about practical and strategic ideas how businesses can minimize shipping expenses without sacrificing good customer experience. Because at the end of the day, companies work to satisfy their customers. Reducing costs at the price of customer experience can backfire.

Freight costs play a huge role in determining the final price of dog toys on store and e-commerce platforms. Shipping expenses can rise due to many factors, and understanding the impact of freight costs is a must for pet businesses.

Understanding Freight Costs

Freight costs consist of many factors, including fuel prices, transportation modes (by air, sea, rail, or truck), customs duties, tariffs, and labor costs. Dog toy manufacturers have to calculate these expenses from the very beginning of production when they source raw materials. The costs continue until the product reaches the consumer.

Companies manufacturing toys in China and ship them to the United State face higher container shipping costs due to global supply chains congestion.

During the pandemic, the cost of shipping containers from the US to China peaked. Since then, prices have stabilized, but any sudden supply chain shock can drive costs back up. For example, a port strike or geopolitical tensions.

Key Factors Affecting Freight Costs in the Pet Industry

Before we talk about strategies that companies can use to minimize freight costs, let’s talk about what drives the prices up. Here are three key factors.

· Fuel price fluctuations. When gas and diesel prices rise, the cost of transporting toys goes up, no matter the transportation mode. Fuel makes up about 25% of operating costs for trucking companies.

· Global supply chain disruptions, including factory closures, port congestion, and labor shortages, all have a direct impact on freight costs. For example, the Suez Canal blockage in 2021 delayed shipments worldwide and drove up container shipping rates for months. A similar incident can impact the pricing of toys imported from Asia, Africa, and other continents into Europe and the United States.

How Businesses Can Mitigate Shipping Fees

First, let’s answer the main question. Why is it so expensive to ship to the US? First and foremost, global chain supply disruptions. With the latest trade war between the US and China and the tariffs that Trump imposed on products from China, things can change. With that in mind, here are some strategies companies can use.

Use Flat Rate Shipping When Possible

With flat rate shipping, the cost is split into size, weight, or destination categories. The price of sending a package becomes predictable, which means cost-effective and straightforward. Flat rate shipping also lowers uncertainty at checkout, which reduces the chances of an abandoned cart. Companies can adjust flat shipping rate depending on shipping zone or orders. For example, one rate for orders below $50 and one for above.

Choose the Right-Sized Packaging

By making smart packaging choices, companies can vastly reduce shipping costs. Here are some tips:

· Reduce package size: do not ship air! Aim for the smallest possible package dimensions and use soft packing materials like poly mailers or padded envelops. They are lighter and smaller than cardboard.
· Look for free packaging options that some carriers offer.
· Consider reusing packaging when possible. It is environmentally friendly, and it communicates your brand’s values.
· Analyze order history to understand the size of packages you typically use. Select packaging that best matches your standard orders.
· Invest in custom packaging. While the initial costs are higher, they offset thanks to optimized shipment size and having fewer lost or damaged orders.
· Use “ships in own container” packaging. This means that the product packaging is what you add a shipping label to, so you don’t have to add a box on a box.

Bulk Shipping and Consolidated Logistics

To lower transportation expenses, pet companies can order products in bulk, reducing the cost per unit. The strategy helps maintain competitive pricing, especially for budget-friendly brands.

Move Production

Some companies have started shifting production closer to their target markets. It cuts down on freight costs. For example, a growing trend is nearshoring manufacturing to Mexico, for companies that want to sell in the US. It reduces long-haul shipping expenses.

Strategic Pricing

Companies can sometimes pass costs to customers, but without sacrificing user experience. For example, introducing premium toy lines at higher price points. Here is an example. A brand can continue offering its small chew toy at the same price. At the same time, they can introduce a larger version or a premium version at a slightly higher price. Sometimes, customers will go for the premium version, and over time, the large and premium varieties overcome the smaller ones.

Freight Costs and Their Impact on Retailers and Consumers

Freight costs have a huge impact on consumers because they might have to pay more to get a toy from a small business. Large retailers like Amazon and Walmart can negotiate better shipping rates due to their high order volumes. This keeps their prices lower, but that doesn’t mean they provide high quality as well.

Consumers have already witnessed increase of dog toy prices by 10 to 15% in the last few years. Further price adjustments may follow due to freight rates. Shoppers also may notice changes like fewer discounts, smaller package sizes, or some products disappearing from shelves. Companies that understand freight costs and use them to their advantage can get in front of customers. Or, they can always focus on bestsellers with higher profit margins.

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