Free shipping is a myth. There are no free freight shipments.
There’s no doubt the ruse of free freight can be very attractive to buyers. Many companies insist on free freight being included in their purchasing agreements and negotiations and will also make large purchases from vendors to qualify for it. There is no such thing as free shipping. Freight is never free. Someone has to pay for it.
When sourcing products, having free freight included in the purchasing agreement may feel like a win, but you are paying for the freight cost somewhere else in the cost of the product. Free freight is often used as a psychological selling tool, with the actual freight cost simply factored into the price of the goods you ordered. Some vendors will use this to their advantage and solicit business with the lure of free freight on qualifying bulk orders knowing that companies will place larger than normal orders simply to qualify for it.
When sourcing products, having free freight included in the purchasing agreement may feel like a win, but you are paying for the freight cost somewhere else in the cost of the product. Free freight is often used as a psychological selling tool, with the actual freight cost simply factored into the price of the goods you ordered. Some vendors will use this to their advantage and solicit business with the lure of free freight on qualifying bulk orders knowing that companies will place larger than normal orders simply to qualify for it.
The problem with placing orders big enough to qualify for free freight is that, in some cases, it requires a company to carry more inventory than what is normally needed. Carrying inventory costs money and the carrying cost can sometimes run as high as 20%-30% of the product. Storage, handling, and depreciation costs can add up quickly, especially if the product doesn’t sell in a timely manner.
Controlling inbound freight can be easily done with the right tools. By working with vendors to have all freight costs billed to and paid by them, a shipper can safeguard against higher than necessary vendor freight charges. Taking control of inbound freight can reduce and even eliminate vendor freight charge markup. Plus, the added inbound freight volume can be combined with existing outbound volume to increase purchasing power with carriers. The bottom line: freight is never free. Shipping costs money and someone has to pay for it.
Controlling Inbound Freight Costs
The practice of marking up freight charges is extremely common. One company’s inbound freight is another company’s outbound freight. More often than not, when shippers think of reducing freight costs and negotiating freight rates, they tend to instinctively focus on outbound freight easily dismissing or overlooking the opportunity to reduce inbound freight costs. Some businesses would simply rather not have to deal with it, as they cringe at the mere thought of having to plan, direct, and control inbound freight shipments and orders.
Controlling inbound freight can be easily done with the right tools. By working with vendors to have all freight costs billed to and paid by them, a shipper can safeguard against higher than necessary vendor freight charges. Taking control of inbound freight can reduce and even eliminate vendor freight charge markup. Plus, the added inbound freight volume can be combined with existing outbound volume to increase purchasing power with carriers. The bottom line: freight is never free. Shipping costs money and someone has to pay for it.