I recently shipped a board game I printed to friends (more for fun than profit) and realized that shipping prices were a larger chunk of my budget than I intended. It got me thinking: how do big businesses like Hasbro afford to ship? Is there something I’m missing or is this just something they had to power through?
In: Economics
Volume discounts and non-linear pricing. If you have to ship one item from your door to someone else’s door it requires a lot of people handling it that need to be paid. The pickup driver, the warehouse team that unloads and sorts it and loads it, air freight cost, ground freight cost, loading it on to the delivery truck, and the delivery driver. All of these levels have related overhead costs that go up if the package is being handled by multiple companies.
If you ship one pallet to a store or distributor, you pay for the handling of a pallet and not each individual box. A pallet is a standardized size and can be on and off loaded as one unit. The store builds the cost of shelving it into their final price, and the customer handles taking it home themselves.
Once you start dealing in pallets you can look at scale pricing not just for one pallet, but for fractions of a shipping container or a whole container. What if you supplied a chain store? They would need multiple pallets or containers on a regular basis. If you have that kind of reliable output and revenue then you can invest in more efficient processes for making the product which saves you money. Then, maybe direct hire drivers and buy your own trucks and bring some of those overhead costs in house where you can mark them up and raise your price, but also offer new delivery options to customers. As a business scales up it finds new ways to save money and new ways to generate revenue thru more products and services, shipping is one aspect of that.
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