The cost of ShipStation automation rules might be higher than you think. While automation rules save you time, inaccuracies from static rules cause expense leakage on a meaningful portion of your shipments. Read this article to find out how high that cost can actually be.
To automate or not to automate? If you use ShipStation, that question might be harder to answer than you think. If you have no idea what I’m talking about, read the next paragraph. If you know what automation in ShipStation is, skip it.
ShipStation lets users create ‘automation rules’ which are basically composable ‘if this then do that’ statements. For example, you can create a rule that says if an order is less than 1lb, assign the order with the carrier USPS and service level First Class Mail. The goal is to allow businesses like yours to save time configuring very shipment by creating simple logic flows.
Experienced ShipStation users know that you can either configure every shipment in the dashboard manually, or you can create automation rules to configure each one based on some predetermined logic.
The tradeoff is relatively clear; if you configure shipments manually it takes more time, but it’s more accurate. If you automate, you can create rules that are ~80% accurate and save 45-60 seconds per order.
If you’re shipping hundreds of orders with ShipStation a day, 45 seconds per shipment adds up to a significant amount of labor time. So you may be leaning towards automation rules. And off the bat, 80% accuracy sounds great, but what’s the cost of orders being configured with 20% of them having some mistake?
To estimate the cost, we first need to consider what components of a shipment need to be configured in ShipStation that can result in expense leakage.
The first thing you configure is the weight and dimensions of the package you’re shipping. This input has 2 potential negative outcomes.
A major negative outcome of inaccurate weight and dimensions is dimensional non-compliance fees or adjustments. Carriers levy these when their rating table determines you owe more based on the actual weight/dims of your package than what you paid for the shipping label up front.
Another negative outcome of inaccurate dimensional weight is selecting a carrier and service level based that’s not actually the lowest cost. This is because different carriers and service levels have different rate tiers based on weight and dims. If the weight and dims you provide are inaccurate, you’ll get the wrong shipping label price and pay the difference on the backend.
The second thing you need to configure in a shipment, is what carrier and service to use. You can’t create an automation rule for every possible combination of ingredients that go into composing a rate for a shipment. And even if you did, those rules are static so when rates change they become inaccurate.
This means you must make generalizations about when automation rules should select one carrier and service level vs another. These generalizations are never fully accurate and means you select a carrier/service that’s too expensive some of the time.
In my experience the combination of adjustments, dimensional non-compliance fees, and selecting overly expensive carriers based on wrong dim weight adds up to ~$5 per inaccurate shipment. If you’re shipping 10,000 shipments a month, 2,000 (20%) of them have some sort of inaccuracy, and each inaccuracy costs you $5, you’re overpaying by $10,000 a month!!
All of this is to say, a 20% inaccuracy in automation rules can cost you A LOT of money. If instead you configured those shipments manually, assuming a $30/hr loaded wage, you would’ve only spent $0.38/shipment ($3,800) on configuring shipments.
So if you can afford the time, it often makes financial sense to configure shipments manually. If your entire business is DTC, it might make a lot of sense to configure every shipment manually. If your business sells heavily in other channels and DTC is a smaller portion, you might weigh the time savings more heavily and opt for automation rules.
At the end of the day, it comes down to what you believe is best for your business!
But what if I told you there’s actually a third option? One that affords you the time savings of automation rules, while maintaining or even improving the accuracy of configuring shipment manually.
I have good news for you! Businesses using ShipStation can integrate String to automatically select the right size package and lowest cost shipping service for every shipment. Today, String users save an average of $1.07/shipment without any major changes to their shipping process.
Businesses like Keto Chow, Veiled, IQBAR, Rise Brewing Co, and Build-A-Soil enjoy the savings String generates for them on a daily basis.
You can get a free savings analysis by visiting www.meetstring.com/shipping-test. We’ll test your actual shipping data to see how much you could save next month by integrating String into your ShipStation account.