A Distributor Asks:
We recently questioned a $1,300 freight charge from a major supplier by providing quotes from an online freight quote center. The factory dropped the charges by $500 even though we showed that the discount should have been $800. We paid the product portion of the invoice within five days, but the factory would not release any further orders without full payment for the freight. We tried via phone, factory rep and e-mail to resolve this situation. The supplier’s vice president of customer relations said its invoice should be sufficient proof for an end buyer who questions a bill. We ended up discounting the freight bill by an additional $200 for the client. Was there a better way to handle this situation?
Kaeser & Blair, Inc.
The problem is many companies use shipping as a profit center. The problem this raises for the distributor is when he or she is competing with another company—you can lose the order.
I get shipping bids from ABF—any shipping company will do—with an open account for Kaeser & Blair, Inc. We get a large discount and offer it to customers. This endears us to them, and they realize we are trying to help them. It builds a better relationship. In this economy, we have to do anything that builds loyalty. What this distributor did by refunding $200 to the customer was the right thing to do. In the future, get your own shipping discount.
Rockland Embroidery, Inc.
In future instances, it will benefit you to request a freight quote from the vendor prior to placing the order. At this point, you can decide if it is reasonable or if you’d like to source a shipping method or company and have your supplier ship third-party. If you decided to take this route, remember to take things such as additional insurance, packaging requirements and standard versus priority transit times into account, as they can drastically affect your ultimate freight costs.
Senior Vice President, Sales And Marketing
From a distributor’s perspective, I would do my homework first and use my carrier or the clients’ number so there is never a problem. From a supplier’s perspective, we prefer distributors provide their means of transportation to best suit their needs. Otherwise, it causes a lot of wasted time and effort. Sometimes suppliers’ methods do not have the best shipping price. They cannot be faulted for this.
I suggest the distributor obtain shipping quotes from suppliers prior to providing purchase orders. At Aspenline, we get these types of requests daily. It always helps distributors to know up front what the estimated shipping charges will be.
Sharp Ideas, Inc.
Sadly, in this day of higher freight costs, we often get freight quotes before proceeding with an order. Yes, it is extra work, but being forewarned, we can discuss the matter with the client. If we have questions about a factory-provided quote, we get additional quotes directly and use independent shippers for weighty or bulky orders.
If a factory is unwilling to share discounts it receives with me and my clients, then I look for ways around it. Shipping is not rocket science, and there are a number of good freight forwarders who work with our niche businesses. I am first to say I want all my clients’ marketing dollars, but sadly, in this case, the distributor not only took a loss on the shipping, the client spent money on shipping that he or she might have spent on products.
Graham Marketing Group
There are two things the distributor could have done to avoid this problem.
One, PPAI provides members with freight discounts on trucking and parcel services. He or she could have gotten the shipment info from the supplier and rated it using an account for shipping third-party. If it was lower, he or she could have had the shipment billed to his or her account and the discount applied to the cost. Second, he or she could have fixed the problem before it happened by asking for a freight estimate before the shipment and then checking it online.
Suppliers have large discounts because of their volume. Also, they finance shipping when prepaid—most carriers demand net-15 payments. Bottom line: Suppliers are entitled to make a profit off of shipping when they take the risk.
Likewise, the distributor had no obligation to give the client a discount because they, too, could have checked the shipping cost and had it billed to them if they could get a better rate.
Know what you’re selling, and know your clients’ tolerance for freight and handling. If they have no idea of the cost to ship 2,500 mugs or large bags, etc., it is up to you to warn them.
It’s Not Too Late
Have your own two cents to add to this reader question? Leave your advice in the comments section below.