71lbs Puts Money in the Bank for Shippers Using FedEx and UPS

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71lbs founder and CEO Jose Li

FedEx and UPS provide a Money Back Guarantee, meaning if they don’t deliver your package on time, you are eligible for a refund. But many online sellers don’t have the resources to track late shipments and then file claims.

That’s where 71lbs comes in. We checked in with Jose Li who founded the company after a career in management and logistics, including his tenure at FedEx where he ran its billion-dollar Retail & eCommerce practice, helping customers achieve operational efficiencies.

We also asked him what sellers can do about surprise fees that come days and sometimes weeks after a seller has purchased a shipping label from the major shipping carriers.

Do shipping carriers really issue refunds for late deliveries, we asked Li?

Yes – FedEx and UPS provide a Money Back Guarantee (MBG) on their late shipments – even if they’re late by 60 seconds, he said.

The MBG applies to the following companies and services:

Next day air shipments:

  • FedEx: First Overnight, Priority Overnight, and Standard Overnight;
  • UPS: Next Day Air Early, Next Day Air, Next Day Air Saver.

International shipments:

  • Both FedEx and UPS Priority and Economy

Not surprisingly, the Covid pandemic impacted Money Back Guarantees, but what may surprise readers is that it continues to have an impact on some services – both UPS and Fedex suspended MBG for Ground shipments in March of 2020, and Li said they remain suspended.

“Air and international shipments are mostly refundable now, but ground is still suspended. Many of the add-ons like Signature services were impacted by Covid, as the carriers did not require specific signature anymore, the driver would just stamp these as “Covid-19.””

Do the carriers automatically refund shippers, or do shippers have to file a claim?

Refunds are not automatic – the shipper is entitled (that’s the key word, Li said) to get a refund, but they must claim it within 15 days.

“The process is manual, cumbersome, and inefficient. Most merchants/shippers are still not aware of the money-back-guarantee policy, and estimates show $2+ billion dollars are left unclaimed every year.”

How does 71lbs work in a nutshell, and with which carriers? And what’s the cost to sellers?

Li explained that 71lbs built systems and software that audit, file, and get refunds due to shippers.

“We help companies/merchants save money on their FedEx, UPS, and Amazon FBA shipping costs, primarily through automated refunds and contract negotiations. Merchants sign up for free on a contingency-based, shared savings model, meaning they pay no upfront nor monthly fees.

“We also analyze $1 billion in shipping costs, discounts, surcharges, and accessorials through our platform and help merchants benchmark their discounts & spend, negotiate better carrier agreements, and help lower their shipping costs, saving an average of 18.9% of their annual shipping spend with our Contract Negotiations services.”

How large do you have to be (in terms of shipping volume) in order to use 71lbs?

There is no minimum – some customers are small merchants that ship 1-2 packages per month, while the company also has billion-dollar companies that ship thousands of packages a day.

“Most of our merchants love using 71lbs as they equate it to having a free insurance policy without paying a premium,” Li said.

We hear from sellers who say surcharges from carriers often come as a surprise after they shipped their package (especially sellers buying labels on online marketplaces). Do you have any advice for sellers to avoid surprise fees?

“This issue happens often. The carriers charge “surcharges & accessorials” days and sometimes a few weeks after shipment. This makes it very difficult for merchants to calculate their true shipping costs, which many times is a fine line between red or black.

“In general, Total Shipping Costs are made up of Transportation charges (~70%), plus Surcharges & Accessorials (~20%) and Other (fuel, duties, taxes) (~10%).

“Advice would be to do a Pareto (80%/20%) analysis of their monthly/historical shipments.” (You can find the Pareto principle explained on this Wikipedia page.)

“If sellers know that 80% of their shipments are going residential to a remote area, then most likely they can estimate these shipments will be charged a Residential fee + Delivery Area Surcharge (DAS). If the online marketplace or shipping software doesn’t estimate it, they should consider penciling these surcharges on their Estimated Total Shipping Cost.

“Many of our customers like our 71lbs dashboard as we display these costs in an easy-to-understand way for merchants to be able to act on these insights.”

Have you seen changes at US Postal Service impact sellers choice of carrier? As rates at USPS go up – including brand new surcharges, should sellers evaluate alternatives?

“There are a number of merchants that are more inclined to choose the lowest form of shipping, regardless of service. And the USPS is a fair option.

“Through the years, some merchants have chosen to segment their own customers/products, and they ship with FedEx/UPS for a customer profile and USPS for another customer profile.

“Wise merchants are constantly evaluating alternatives, from the different national carriers, to regional and local couriers, to technology offerings and more.”

You can learn more by visiting 71lbs.com – and share your experiences in the comments below.

Ina Steiner

Ina SteinerIna Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She’s a widely cited authority on marketplace selling and is author of “Turn eBay Data Into Dollars” (McGraw-Hill 2006). Her blog was featured in the book, “Blogging Heroes” (Wiley 2008). She is a member of the Online News Association (Sep 2005 – present) and Investigative Reporters and Editors (Mar 2006 – present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.
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