Fulfillment Tip- Is Insurance worth the cost?
Sometimes little changes can make a big difference in your profitabilty by rethinking appoaches to business. Recently we went through a series of meetings with FedEx and UPS Logistics Management seeking cost savings tips for our clients. One topic came up being insurance. If you ship out packages with a value of more than $100, never pay the carrier for insurance as it is covered with the shipment. If the shipments are valued in excess of $100.00 then what is your real cost of damage verses purchasing insurance. Let’s review an example…
Winery A wants to ship 2000 release shipments. The release is a 6 bottle shipment valued at 480.00 per shipment. The cost of insurance for these 2000 shipments would be aproximately $5000.00. 2000 shipments X $2.50 Insurance Expense per order = $5000.00 Total.
Traditionally the carrier loose or break 1 package out of every 1650 shipped so the exposure is S480.00 in retail loss verses an insurance payment of $5000.00. The insuring of packages is a major revenue source for the carriers with a minimal payout.
Fulfillment Savings Tip: Insure as little as possible to improve your profit margins.